Salomon trader admits charges

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The Independent Online
(First Edition)

NEW YORK - Paul Mozer, the Salomon Brothers bond trader at the centre of a US Treasury auction scandal, pleaded guilty yesterday to two criminal charges of lying to securities regulators and agreed to pay dollars 500,000 to cover damage claims, writes Larry Black.

Mr Mozer admitted misusing client names in an attempt to monopolise an auction of US government securities two years ago, but continued to maintain that his illegal bid resulted in no potential or actual economic advantage to Salomon. A special court hearing will now decide whether his actions in fact caused any losses.

If the losses to clients or the US Treasury are put at more than dollars 1m, the former trader could face more than two years in prison. He also faces potential further criminal prosecution by the US Justice Department for his anti-competitive bids as well as a likely civil suit by the US Securities and Exchange Commission for violating its regulations.

Salomon Brothers settled its own charges for the incident by paying a fine of dollars 290m. The firm's three senior executives, who resigned in August 1990, will pay penalties totalling dollars 225,000 to the SEC for withholding the violation from the regulators.

Mr Mozer's lawyer, Stanley Arkin, said yesterday that the Salomon management's failure to report the violation caused it 'to be blown out of all reasonable proportion' by the media.