Salomon allowed to drop monthly reports to SFA

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The Independent Online
The Securities and Futures Authority, the securities regulator, yesterday spared Salomon, the giant US investment bank, from further humiliation by lifting the special conditions imposed on the bank a year ago after the discovery of sloppy accounting procedures dating back 10 years.

In October 1995 the SFA ordered Salomon Brothers International, the London arm of the US bank, to submit monthly reports. These reports were "designed to highlight any problems that arise in the reconciliation of general ledger accounts and to track the satisfactory resolution of those problems". Once a quarter the bank's auditors had to review the monthly filings and submit a report to the SFA.

The unprecedented measures followed a $194m pre-tax book-keeping loss in Salomon's 1994 accounts, generated by a series of accounting problems in London which in the fourth quarter of 1994 forced the bank into $278m of pre-tax charges.

The SFA said Salomon had breached its rules which required control systems keep pace with the expansion and complexity of its business as set out in the Securities and Investments Board's principles.

The regulator said yesterday: "Based upon the information that the SFA required Salomon to submit for the 12-month period from 12 October 1995, the SFA is satisfied that the changes implemented are operating effectively, and the conditions can be discontinued."

A spokesman for Salomon said: "Twelve months ago we had corrected the problems and were in full compliance with the rules. The decision to lift [the reporting requirements] is confirmation of that."