WASHINGTON -- Firms that use false or misleading statements in connection with bids in government securities auctions would face federal fraud charges and stiff civil fines under legislation introduced yesterday by Sen. Christopher Dodd, D-Conn.

The bill, sponsored by the chairman of the Senate Banking Committee's subcommittee on securities, is Capitol Hill's latest response to revelations by Salomon Brothers that it manipulated the market for Treasury securities earlier this year.

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