ROANOKE TIMES 
                      Copyright (c) 1995, Roanoke Times

DATE: Tuesday, December 19, 1995             TAG: 9512190048
SECTION: BUSINESS                 PAGE: C6   EDITION: METRO 
DATELINE: WASHINGTON  
SOURCE: Associated Press 

TREASURY TO EYE BIG PURCHASERS DEPARTMENT HOPES TO PREVENT FRAUD

The Treasury Department is going to keep closer tabs on major buyers of government securities, hoping to prevent a repeat of the 1991 scandal involving Salomon Brothers Inc.

The Treasury published proposed rules Monday that will require those who hold $2 billion or more in any single government security - bonds, bills and notes - to keep detailed records and make them available to the department on demand.

The purpose is to help regulators determine whether any price distortions or shortages in an issue are due to manipulation, the Treasury said. The agency said it will try out the system by selecting some of those with such large holdings to report to the government at least once a year.

The new rules are an outgrowth of the 1991 scandal in which Salomon submitted false bids and controlled almost all of a two-year Treasury note. The law bars any company from buying more than 35 percent of a new issue.

Salomon agreed to pay $290 million in fines to settle charges of fraud and phony bookkeeping. The penalty is among the largest ever assessed in the securities industry.

The Treasury said the new rules are not unnecessarily burdensome but will help assure the public the bond market is free of manipulation.

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