Salomon Bros. Admits It Broke Securities Rules

Salomon Bros. Inc., a top player in the U.S. bond market, said Friday it violated rules on Treasury auctions in bidding for more securities than one dealer is allowed.

The firm also said it bid for the securities in the name of people who did not authorize them, giving Salomon a bigger position than it would otherwise have.

The Wall Street firm said it violated the rules in three auctions, involving two-year Treasury notes, four-year notes and five-year notes starting in the December, 1990, auction.

It said the government is investigating.

The firm said it suspended two managing directors who were in charge of its Treasury securities trading desk and two other employees. It also appointed John Meriwether, a vice chairman, to manage the government bond department.

“Since the review and investigations are not complete, Salomon cannot predict what action might be taken by the government agencies or the results of materiality of such actions or of any related litigation,” Salomon said in a statement.

A Salomon spokesman would not comment beyond the press release.

The firm also said: “Salomon believes that the irregularities it has discovered did not result in any financial loss to the government.”

Under government rules, no buyer can bid for more than 35% of an issue at Treasury auctions.