Salomon Inc. said Wednesday that it is selling many of its securities holdings to help finance operations because of difficulty borrowing money.
The firm, which has admitted violating rules governing Treasury auctions, said its borrowing costs are up because of the scandal.
In a filing with the Securities and Exchange Commission, Salomon said the securities sales were designed to reduce its dependence on unsecured sources of funding, which are harder to come by.
A large percentage of Salomon’s $134 billion in assets consists of reliable securities such as stocks and bonds that can be sold easily.
Salomon did not identify the securities it has sold in recent weeks or reveal their values. It has repeatedly said it is not in financial jeopardy.
Since the scandal broke last month, Salomon’s stock price and credit ratings have dropped. Several big customers have suspended business dealings with it. Disgruntled shareholders, investors and competitors have also hit Salomon with scores of lawsuits.
Salomon has cut its reliance on commercial-paper borrowings substantially since early August, relying on secured borrowings--IOUs backed by assets or other collateral--and repurchase agreements, which are short-term borrowings backed by government securities.
Commercial paper is a short-term corporate IOU issued by banks and corporations to large investors, such as pension funds, with temporarily idle cash.
Although not secured by other collateral, commercial paper generally is considered a good investment because it is issued only by top-flight organizations and usually backed by bank lines of credit.