Salomon Ex-Chief Said to Have Misled Treasury Official
Salomon Bros.’ former chairman and chief executive, John H. Gutfreund, went to Washington in late June or early July to answer a Treasury undersecretary’s questions about a possible “squeeze” in a May Treasury auction but denied knowledge of it and never mentioned that he knew of earlier wrongdoing by the firm, sources confirmed Thursday.
A Salomon spokesman said he couldn’t confirm the exact date of the meeting with Treasury Undersecretary Robert Glauber. But the spokesman said: “It is my understanding that the meeting did take place.”
Salomon has admitted that Gutfreund and other senior executives learned in late April of wrongdoing by the firm in Treasury auctions and did not notify regulators for months. But details of the meeting with Glauber provide the first suggestion that Gutfreund remained silent even though he was directly asked about possible wrongdoing by a senior government regulator.
Lawyers at Howard, Darby & Levin, the New York law firm representing Gutfreund, declined to comment on the meeting.
A spokeswoman for the Treasury Department said Glauber was out of the country, and she also declined to comment on the meeting.
Separately, the Securities and Exchange Commission and federal prosecutors were said to be focusing closely on the disclosure Wednesday that Paul Mozer, the fired head of Salomon’s government bond trading desk, sold 46,000 shares of Salomon stock just before the firm publicly admitted wrongdoing.
The stock at the time was worth about $1.7 million. It plunged after Salomon announced its misdeeds beginning Aug. 9. Salomon has said it froze the proceeds of the sale and notified the SEC. Lawyers involved in the case said the sale appeared to be a blatant instance of illegal insider trading--buying or selling stock based on material non-public information that when revealed would affect a stock’s price.
Lee S. Richards III, the attorney said to be representing Mozer, failed to return repeated phone calls seeking comment.