NEW YORK -- Warren E. Buffett, the interim chairman of Salomon Brothers, has laid out a set of guidelines for behavior at the troubled firm. His message: Losses will be tolerated; anything that damages the reputation of the firm will not be.
At the same time, Salomon's stock rallied more than $2 on reports that Laurence A. Tisch, the chairman of the Loews Corporation and CBS Inc., had bought a big block of the firm's stock last week. Traders involved in the purchase confirmed the reports yesterday.
"If you lose money for the firm by bad decisions, I will be very understanding," Buffett said yesterday at a regular meeting of employees. "If you lose reputation for the firm I will be ruthless."
Buffett addressed the staff in the 39th-floor auditorium where eight days before he had announced the firm's acceptance of the resignations of its top officers. The resignations followed Salomon's acknowledgment that employees had violated bidding rules in the Treasury securities markets and that top officials had known of one violation for months before reporting it.
According to excerpts provided by the investment bank, Buffett also said: "Everyone must be his own compliance officer. That means everything you do can be put on the front page of the newspaper, and there will be nothing that cannot stand up to scrutiny."
But the firm continued to be troubled by the reaction to its violations, including the loss of important customers, numerous lawsuits and the effects of continuing investigations by the Securities and Exchange Commission and the Justice Department.
Salomon could not put a specific figure yesterday on the total loss of customers. But a spokesman said the firm had lost 5 percent of its public fund business, which is just part of the firm's overall business. The public funds area includes public institutional clients like the World Bank and the California Public Employees Retirement System.
Duff & Phelps, the credit agency, put Salomon's debt on its rating watch with an unfavorable bias, which means the rating could be lowered. Other leading ratings agencies had already taken similar steps.