SEC Probing Bribery Allegations in San Bernardino County Suit

The Securities and Exchange Commission is looking into allegations by San Bernardino County that Citigroup Inc.’s Salomon Smith Barney and a broker bribed officials to win as much as $7.5 billion in bond and other business, a lawyer for the county said Tuesday.

David Romanski, of the Steinhart & Falconer firm in San Francisco, said the SEC asked the county for further information on a 45-page lawsuit the county filed last month against Salomon broker Peter L. Morrison and others.

“SEC contacted us and wanted background information on the allegations that are set forth in the [county’s] complaint,” Romanski said in a phone interview. The suit alleges that Salomon and the broker paid “bribes and kickbacks” to a county treasurer and county investment officer, said Romanski, a former SEC assistant general counsel.

Salomon spokesman Arda Nazerian said the firm believes it “has no liability” to the county. “As always, we would cooperate fully” with any investigation, she said. Morrison still is employed by the firm, but has “limited duties” during the investigation, she said.

The SEC inquiry was reported by the Wall Street Journal. Sandra Harris, associate director of the SEC’s regional office in Los Angeles, declined comment.

Romanski said the suit alleges that “a lot of securities business was steered to this broker by these county officials--over $7.5 billion from 1994 to 1998,” including commercial paper, agency notes, tax revenue anticipation notes and other business.