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Salomon's IPO Practices Under Microscope

Aug 5, 2002 | FT.Com

A US Congressman is calling for renewed pressure on Salomon Smith Barney to disclose the way that it allocates shares of initial public offerings.

Paul Kanjorski, a Democarat from Pennsylvania, sent a letter to the chairman of the House Financial Services subcommittee on Monday urging him to subpoena information from Salomon on any IPOs that it awarded during the last five years to senior WorldCom executives.

Mr Kanjorski also said that recent reports called into question Salomon's IPO practices and the veracity of Congressional testimony on the matter last month by Salomon's telecommunications analyst, Jack Grubman.

A Salomon Smith Barney spokeswoman said, "We will continue to cooperate with the committee as its inquiry broadens into an examination of this process industrywide."

Mr Kanjorski has been probing recent allegations by a former Salomon broker that the bank awarded shares of sought-after IPOs to top executives in exchange for their companies' investment banking business.

The broker claimed that Mr Grubman played a key role in determining which telecom executives received shares.

Mr Grubman said in a July 8 hearing that he could not recall whether or not WorldCom executives had been granted IPOs. Salomon has maintained that its allocations policies were in line with industry standards.

In addition to calling for a subpoena, Mr Kanjorski has also requested broad hearings on Salomon and other banks' IPO practices this fall.

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