Word: salomon
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ALSO: Scandal shakes Salomon...
...most powerful government bond dealer on Wall Street, Salomon Brothers has long been known for its swagger and for a rough-and-tumble culture that reveled in practical jokes. But the scandal that stunned the giant firm last week was no laughing matter. With the company's stock collapsing in the wake of disclosures that Salomon had repeatedly tried to corner the market for Treasury securities, chairman John Gutfreund and president Thomas Strauss said they would offer their resignations at an emergency board meeting on Sunday. The firm said directors would also consider the fate of vice chairman John Meriwether...
...resignations came after a whirlwind week in which the trading scandal grew to menace the health, and possibly the 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...
...Salomon's infractions stopped there, the firm might have contained the damage. But Salomon dropped a bombshell last Wednesday when it admitted that Gutfreund, Strauss and Meriwether had learned last April of a trading violation but had failed to report it "due to a lack of sufficient attention" to the matter. The firm later found still more irregularities but apparently did not disclose them until faced with a government investigation. "The fact that they believed they didn't have to obey the rules is shocking," said Stephen Miller, a Philadelphia securities lawyer. "To be seen to have violated the rules...
Time Warner shareholders must decide by Aug. 5, when the rights expire, whether to participate in the stock offer. But the company is virtually assured of selling all 34.5 million shares because such Wall Street firms as Salomon Brothers, Goldman, Sachs and Merrill Lynch, which are underwriting the offer, have agreed to purchase any unsold stock. "This deal is done," says John Reidy, an analyst for Smith Barney. "It's over...