Warburg Linked to Disclosure Violations

The U.S. Treasury Department released an exchange of letters between the agency and S.G. Warburg Dillon Read Inc., in which the brokerage firm acknowledged violations of disclosure rules in 12 U.S. Treasury auctions during 1995 and 1996. Warburg failed to disclose, as required, its “net long position”--or current holdings of Treasury securities--when it submitted bids in those auctions. The Treasury Department decided not to punish Warburg, concluding that the violations were not deliberate and resulted from employees’ failure to follow the firm’s auction procedures. In any event, the brokerage never received an amount at auction that, when added to its previous holdings, exceeded the maximum limit of 35% of a securities issue. The rules are intended to prevent bidding firms from secretly “cornering” an issue.