States Plan Joint Probe of Salomon Bros.

Regulators in 33 states--including California--and the District of Columbia said Tuesday that they will conduct a coordinated investigation of the Salomon Bros. bond scandal.

Federal investigators already are conducting civil and criminal investigations into Salomon’s admission that it violated rules governing Treasury securities auctions, as well as the government bond market at large.

States can revoke or suspend Salomon’s license to sell securities within state borders. In previous cases, states have imposed heavy fines on firms as part of settlements allowing them to keep their licenses.

“The goal of this multi-state effort will be to simplify the inquiry of the participating states and to recommend appropriate remedies when the probe is completed,” New Mexico Securities Division Director Nancy Smith said.

Salomon last month admitted that it made illegal bids at Treasury auctions without customers’ knowledge and bypassed a federal rule preventing bidders from acquiring more than 35% of any government security at auction.

Meanwhile, a published report Tuesday quoted unidentified Wall Street lawyers as saying that Paul Mozer, Salomon’s former government bond desk chief, has approached the government about negotiating a deal.

However, the government and Mozer’s lawyer, Lee Richards, disagree over whether some of the activities in question were crimes, the New York Times reported.

Salomon has blamed much of the illegal bidding on Mozer. Salomon executives have admitted that they waited several months before reporting the violations to authorities.

Richards was said to be in a meeting and did not immediately return a telephone call for comment.

Salomon already is under scrutiny from federal investigators in New York and Washington, including the Justice and Treasury departments, the Securities and Exchange Commission, the FBI and the Federal Reserve Board.

The North American Securities Administrators Assn., the group of state regulators, met Tuesday with representatives of the National Assn. of Secretaries of State to map strategy in the Salomon probe and plan a joint effort.

In 11 states, the securities regulator is a division of the secretary of state’s office.

The state regulators said they have already met with SEC officials, spoken to Salomon lawyers and planned to meet with investigators at the Treasury, Fed and congressional investigative committees.