‘Practical Joke’ Ends Firm’s Ties to Salomon : Securities: Pacific Investment Management Co. of Newport Beach is the latest of the brokerage’s customers to halt dealings with the firm.

The investment company involved in a $1-billion “practical joke” bond transaction with Salomon Bros. Inc. on Monday suspended its Treasury bond business with the scandal-tarnished firm.

Pacific Investment Management Co. is the latest Salomon customer to halt dealings with the firm because of admissions that it violated federal rules governing auctions for government bonds.

The Newport Beach-based money manager, known as Pimco, participated in an attempted “joke” that a Salomon bond executive wanted to play on a retiring saleswoman. But the joke flubbed and a bid for $1 billion in government bonds was made in Pimco’s name.

In a separate development, Salomon Chairman Warren E. Buffett continued efforts to restore the firm’s reputation by announcing Monday that it no longer will do business with the Switzerland-based commodities firm Marc Rich & Co. The Swiss firm is owned by Marc Rich, who is a fugitive wanted on U.S. criminal charges. Salomon’s Phibro Energy Inc. unit had used Marc Rich & Co. as a broker.

As Salomon continued efforts to contain damage from the scandal, a Justice Department official confirmed reports that the government’s investigation into Salomon and the Treasury bond market appeared to be widening.

The official, who requested anonymity, said federal prosecutors were conducting civil and criminal investigations along with the Federal Reserve Board, Securities and Exchange Commission and Treasury Department.

The investigation initially was led by the Justice Department’s antitrust division to examine whether traders colluded to “squeeze” the market, or control enough securities to increase profits from their sale to investors.

Now, however, the U.S. attorney’s office in Manhattan and the Justice Department’s criminal division are involved in the case, the official said.