County Investigating Sales by Salomon

Officials in San Bernardino County said they’ve ended all trading with brokerage Salomon Smith Barney as they investigate some mutual-fund sales the firm made to the county.

County Treasurer Dick Larsen said that Salomon charged San Bernardino, the largest county in the United States in area, commissions on its trades at the rate it would charge a retail customer.

With $1.6 billion in government money to invest, San Bernardino County could have traded without paying commissions by dealing directly with the mutual funds whose shares it bought.

Larsen said in an interview that his predecessor, former Treasurer Tom O’Donnell, and former county investment officer Sol Levin had unethical, close personal relationships with brokers in Salomon’s Newport Beach office.

“There were many too many lunches and that sort of thing,” Larsen said.

O’Donnell and Levin both pleaded guilty to felony charges last week in a local bribery scandal. Neither could be reached for comment.

A Salomon Smith Barney spokesman declined to immediately comment. The brokerage is a unit of Citigroup Inc., the biggest U.S. financial services company.

Larsen said he ended the county’s relationship with Salomon’s Newport Beach branch when he took office last November and sold mutual fund shares the county had acquired through the Newport Beach brokers.

He said the county will bring in experts from outside county government to continue his investigation.

“If there are any improprieties involved in this matter, it’s my intention to pursue full restitution to the county taxpayers,” Larsen said in a statement.