Word: buffetts
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Dates: during 1990-1999
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Though it reigned over the freewheeling government-securities market, once mighty Salomon Brothers now finds itself on terrain every bit as treacherous as Wall Street. Last week the firm's interim chief executive, Warren Buffett, was summoned along with financial regulators to Capitol Hill for the first public hearings on illegal bond-bidding practices revealed last month. Inquiring congressional committee members had nothing but praise for Buffett's efforts at reform. Beyond firing or suspending top executives, Salomon departed from past practices and decided against paying them compensation, severance or their future legal expenses. Buffett also revealed during testimony that...
...effort to clean up Salomon Brothers' tarnished image, Warren Buffett, the Wall Street investment house's new interim chairman, has announced plans to form an in-house compliance committee, hired an outside accountant and handed down commandments designed to strengthen the firm's integrity, if not its balance sheet...
Though New York State last week decided to allow Salomon to bid on some state treasury and Urban Development Corp. transactions, Moody's Investors Service was not so lenient: it downgraded Salomon's credit rating. The downgrading may further weaken investors' faith, making Buffett's job that much tougher...
...Buffett, who owns 16% of Salomon's preferred stock and a legendary reputation for his investing, if not his investment-banking, savvy, assumed Solly's chairmanship after the board forced chairman John Gutfreund and two other top executives to step down. 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...
...Buffett's internal reforms, announced shortly after he and Maughan took up their posts, could cost Salomon some of its high-flying bond traders, who could bolt from the firm once they receive this year's bonuses. If individual bonuses are decoupled from the performance of business units in order to eliminate the motivation for overly aggressive trading, some traders may jump ship. Says a former Salomon trader: "People who have had deals like that know they can get them someplace else...