Salomon makes new confession 2 more violations of rules admitted

September 21, 1991|By Kurt Eichenwald | Kurt Eichenwald,New York Times News Service

NEW YORK -- Salomon Bros. Inc. admitted yesterday that it had committed two additional violations of the rules governing the Treasuries markets and said that even more violations were expected to be uncovered.

The admission of the additional violations took the firm to a new level of uncertainty in its struggle to regain its footing since it admitted last month that it had submitted illegal bids in Treasury auctions.

The newly discovered violations, both of which government officials said occurred in 1990, mean that the firm was violating Treasury rules even earlier than had previously been acknowledged.

In both violations, the firm submitted a bid for Treasury securities in a customer's name without the customer's authorization. The firm then kept for itself all of the securities awarded in the bogus bids.

Salomon said that no additional employees had been implicated in wrongdoing. "We have no reason to believe that persons other than one or more persons from the government trading desk, already implicated in misconduct, were involved," Salomon said in a statement.

Paul W. Mozer, former head of the Salomon government desk, was involved in numerous instances of illegal bidding that were disclosed in August, Salomon said. The firm also said that Thomas Murphy, a chief aide to Mr. Mozer, had been involved in the improper bidding.

Salomon also said that it would continue to disclose the violations as they were uncovered.

"It seems to us likely that still other instances of similar behavior will be uncovered in the future through our internal review or by the investigating authorities," the statement said.

The illegal bids continue to cost Salomon customers. Steven Kornrumpf, assistant director of the New Jersey Division of Investment, said that the agency's board decided Thursday night that New Jersey should suspend business with Salomon.

A government official said Salomon had learned of the additional violations after receiving bidding documents from the Federal Reserve Bank of New York that did not match the firm's own records. Salomon did not have the Fed documents in its own files.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.