Salomon Bros. Agrees to Pay Ahmanson $30 Million to Settle Suit

Salomon Brothers Inc. has paid more than $30 million to Los Angeles-based H.F. Ahmanson & Co. to settle a lawsuit in which Ahmanson accused the Wall Street investment bank of inflating its fees for advice on the purchase of Bowery Savings Bank in 1987, sources confirmed.

The settlement came shortly before the case, filed in 1989, was slated to go to trial in Los Angeles Superior Court.

The suit claimed that Salomon gave self-serving advice to Ahmanson, parent of Home Savings, and inflated the fees in the deal. Ahmanson became suspicious, the suit alleged, after Salomon disclosed that it had made a serious math error in evaluating part of Bowery’s assets.

Discovery of the error led Ahmanson “to question Salomon’s judgment and whether Salomon was playing straight,” said Lisa D. Norlander, a lawyer with the Los Angeles firm Belin Rawlings & Badal, which represented Ahmanson.

After some investigation, she said, “it appeared that their work was wholly deficient, and they were really looking out for the best interests of Salomon rather than their client.”

Ahmanson claimed that it lost $200 million because of Salomon’s alleged negligence, breach of contract and breach of fiduciary duty.

The settlement, signed in September, was first disclosed Tuesday in the Wall Street Journal.

Salomon spokesman Robert F. Baker Jr. confirmed the settlement Wednesday. He said: “This was a very complex dispute arising out of events that occurred six years ago. We decided that a settlement was preferable to the expense and uncertainty of a trial.”