Salomon Brothers

Salomon Brothers was a Wall Street investment bank, acquired by Travelers Group (now Citigroup) in the late 1990s. During its time of greatest prominence in the 1980s, Salomon became noted for innovation in the bond market, creating the first mortgage backed security. Later, it moved away from traditional investment banking (helping companies to raise funds in the capital market and negotiating mergers and acquisitions), to almost exclusively "proprietary trading" (the buying and selling of stocks, bonds, options, etc. for the profit of the company). Salomon had an expertise in fixed income trading, betting large amounts of money on certain swings in the bond market on a daily basis. The bond traders called themselves "Big Swinging Dicks", and were the inspiration for the books The Bonfire of the Vanities and Liar's Poker.

In the mid 1990s, Salomon submitted false bids to the U.S. Treasury in an attempt to manipulate bond pricing in its favor and got caught. This caused it to receive the largest fine ever given to an investment bank at the time, weakening it and eventually leading to its acquisition by Travelers Group. During the acquisition, it was speculated that the parent company would not appreciate the volatile profits and losses caused by proprietary trading, instead desiring more slow and steady growth. This was proven true when Salomon suffered a 100 million dollar loss when it incorrectly bet that MCI would merge with Sprint instead of Worldcom. Subsequently, most of its proprietary trading business was disbanded.

External links

• Salomon Brothers Asset Management (http://www.sbam.com/)
• New York Book Distributors: Wall Street Photographic Coffee Table Book (http://www.nybookdistributors.com/wall_street/feature/salomon.html)