Word: auctioning
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Dates: during 1990-1999
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...grow worse for the 81-year-old Wall Street firm before it got better. In fact, Buffett's salvage job began even before he was able to warm his new seat. The Treasury Department, in an attempt to restore confidence in the market, barred Salomon from bidding at further auctions. In a series of telephone calls with vacationing Treasury Secretary Nicholas Brady, Buffett successfully lobbied for leniency. Salomon was permitted to trade, but for its own account only, not on behalf of clients. The decision was more than symbolic, since Salomon, one of only 40 firms designated as primary dealers...
...Buffett immediately brought in Deryck C. Maughan, 43, who until recently ran Salomon's Asian operations from Tokyo, and jettisoned two bond traders. Executives admitted that the firm had violated the rules that prohibit any one bidder from buying more than 35% of a single issue at a Treasury auction, and that they had skirted regulations barring a firm from submitting bids in its customers' names without their authorization in order to conceal such illegal efforts to influence the market...
...seeking detailed information from all dealers, brokerages and commercial banks authorized to trade Treasuries, as well as from individual bond traders employed at those firms. The Treasury Department is re-examining the records of every auction since 1986, a total of more than 200, searching for evidence of collusion with customers to violate the 35% rule. Industry analysts expect only minor infractions to turn up. Still, says Howard Sirota, a New York City securities attorney, "this proves that the market isn't quite as pristine and squeaky clean as its participants would have us believe...
...very existence, of the 81-year-old firm. The trouble began Aug. 9, when Salomon said it had suspended managing directors Paul Mozer and Thomas Murphy and two other employees. Their major misdeed: violating federal rules against acquiring more than 35% of Treasury notes and bonds at a government auction. The ceiling is designed to prevent large firms like Salomon from purchasing enough of an issue to dictate the price of the securities when they resell them to smaller buyers...
...issue is the integrity of the most important financial marketplace in the world." Markey blamed lax regulation for permitting Salomon to display "a cavalier disregard for the rules." Democratic Senator Christopher Dodd of Connecticut demanded that Treasury Secretary Nicholas Brady conduct a "full review" of the department's auction rules. With a $300 billion federal budget deficit to finance, Washington cannot afford to scare any bond buyers away...