Scandals: Salomon's Minefields

Congress opens its probe by thrashing regulators and promising new rules

Though it reigned over the freewheeling government-securities market, once mighty Salomon Brothers now finds itself on terrain every bit as treacherous as Wall Street. Last week the firm's interim chief executive, Warren Buffett, was summoned along with financial regulators to Capitol Hill for the first public hearings on illegal bond-bidding practices revealed last month. Inquiring congressional committee members had nothing but praise for Buffett's efforts at reform. Beyond firing or suspending top executives, Salomon departed from past practices and decided against paying them compensation, severance or their future legal expenses. Buffett also revealed during testimony that Salomon's loose trading practices allowed...

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