Word: salomone
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...effort to clean up Salomon Brothers' tarnished image, Warren Buffett, the Wall Street investment house's new interim chairman, has announced plans to form an in-house compliance committee, hired an outside accountant and handed down commandments designed to strengthen the firm's integrity, if not its balance sheet...
...Still, Salomon is plagued by the sins of its past. Last week it was disclosed that Paul Mozer, the bond trader said to have arranged the illegal trades in Treasury bills and bonds that initially got the firm into trouble, had sold 46,000 shares -- or about $1.7 million -- of Salomon stock before the scandal went public. The timing of the sell-off is crucial; Mozer could be charged with violating insider-trading regulations. Through his attorney, Mozer denies that he "sold the shares based on insider information" but also says he is willing to rescind the sale. Salomon...
Though New York State last week decided to allow Salomon to bid on some state treasury and Urban Development Corp. transactions, Moody's Investors Service was not so lenient: it downgraded Salomon's credit rating. The downgrading may further weaken investors' faith, making Buffett's job that much tougher...
Buffett's internal reforms, announced shortly after he and Maughan took up their posts, could cost Salomon some of its high-flying bond traders, who could bolt from the firm once they receive this year's bonuses. If individual bonuses are decoupled from the performance of business units in order to eliminate the motivation for overly aggressive trading, some traders may jump ship. Says a former Salomon trader: "People who have had deals like that know they can get them someplace else...
Despite the desertions and a plunge in stock price of more than a third since the scandal broke, few are counting Solly out. The firm still maintains substantial resources and a loyal following. Says Samuel Hayes III, a finance professor at Harvard University: "Salomon will emerge from this episode, bloodied and bruised, but just as potent a force on Wall Street...