In light of the government bond scandal rocking Salomon Brothers Inc., the Treasury Department recently suggested one of the firm's veteran officers, Gedale B. Horowitz, resign from a committee that advises it on borrowing practices.
As a result, Mr. Horowitz, a long-time member of the committee, stepped down from the committee two weeks ago.
The fallout from the firm's troubles, however, is not expected to disrupt Mr. Horowitz's association with another securities industry trade group and a public authority, officials with both entities said yesterday. Mr. Horowitz is chairman of the Securities Industry Association, an industry trade group, and the New York State Local Government Assistance Corp., a revenue bond authority.
Mr. Horowitz, a senior executive officer with the firm, declined to comment on the action.
Earlier this month, Salomon Brothers admitted that it violated Treasury auction rules. The firm fired two of its senior government bond traders and then saw four of its senior officers, including its chairman, John Gutfreund, resign.
The Securities and Exchange Commission and the United States Department of Justice are conducting investigations into the bidding scam. Cheryl Crispen, a spokeswomen for the Treasury Department, said, "In light of the ongoing investigation, the Treasury Department thought a resignation was appropriate."
Morgan B. Stark, president of Chemical Securities Inc. and vice chairman of the Treasury borrowing advisory committee of the Public Securities Association, said Mr. Horowitz's resignation "was totally voluntary."
The borrowing advisory committee advises the Treasury on its borrowing and debt management practices, including its quarterly borrowing. Potential members of the committee are selected by the chairman of the commitee, and members do not represent their firms.
A PSA spokesman said that while the borrowing advisory committee is associated with the trade group, it acts independently of it.
Mr. Stark said Mr. Horowitz "made significant and valuable contributions for the lengthy time" he served on the committee. Mr. Horowitz once served as chairman of the committee and is one of the founders and a former chairman of the PSA.
Last week, the PSA took its own action in the wake of the Salomon Brothers disclosures, naming William D. Shaw Jr., a senior executive at Bear, Stearns & Co., chairman of its government trading practices committee. Mr. Shaw replaced Thomas Murphy, a senior bond trader, who was fired by Salomon Brothers after the firm admitted its illegal bidding practices.
Arthur Samansky, a vice president and spokesman for the Securities Industry Association, said Mr. Horowitz "will continue as chairman of the SIA until the end of his term." Mr. Horowitz's term expires in early December.
And when asked if Mr. Horowitz would be required to relinquish his post on the Local Government Assistance Corp.'s board, Marvin Nailor, a spokesman for state Comptroller Edward V. Regan, said, "No, not to our knowledge," Mr. Regan also is a member of the board.
Mr. Nailor added, "Mr. Horowitz is highly respected for his integrity and has done a good job with LGAC, guiding it through its first year. We certainly don't visualize any change."
The corporation, which was created in the spring of 1990 to bond out the state's annual short-term borrowing program, is expected to sell on Sept. 12 about $400 million of revenue bonds in a negotiated offering.