In Brief : NYC Bars Drexel From Bond Sale
New York City said today it has temporarily suspended Drexel Burnham Lambert Inc. as a co-manager for city bonds and will not permit Drexel to participate in the sale of about $500 million in general city obligation bonds tentatively scheduled for February.
Drexel agreed last week to plead guilty to six criminal counts, including mail fraud and securities fraud, and pay a $650-million fine. The investment banker has also been charged in a massive civil suit brought by the Securities and Exchange Commission.
New York City’s action is the latest sign of trouble for Drexel after its guilty plea.
On Thursday a federal judge in Boston said the plea “raises profound questions” about Drexel’s financial condition and its ability to assist in completing a $1.3-billion unsolicited takeover attempt for Prime Computer Inc. made by MAI Basic Four Inc.
“We are dismayed by the fact that Drexel Burnham Lambert, a leading investment firm in New York City as well as a co-manager for the sale of our general obligation bonds and New York City Water Authority revenue bonds, has agreed to plead guilty to serious charges of corporate misconduct, according to the U.S. attorney for the Southern District,” said a statement by Mayor Edward Koch and City Comptroller Harrison Goldin.
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