WASHINGTON -- Salomon Brothers Inc. and two hedge funds yesterday agreed in federal court to pay $100 million to settle lawsuits charging that the companies sought to manipulate the Treasury note market in 1991.
Besides Salomon Brothers, the settlement involves Steinhardt Management Co., related affiliates, and Caxton Corp. The terms require Salomon to pay $66 million while the two hedge funds pay the remaining $34 million, court officials said.
The settlement includes $25 million in lawyers' fees plus another $3.5 million in legal expenses incurred by the plaintiffs.
The lawsuits were brought by holders of two-year notes, who charged that they were hurt by a market "squeeze" involving notes auctioned by the Treasury Department in April, May, and June of 1991. The plaintiffs alleged that Salomon and the hedge funds conspired to create a shortage of the notes, driving up prices for those who needed the securities to cover their positions in the market.
The settlement was approved in the U.S. District Court in Manhattan by Judge Robert Patterson Jr.
-- Stephen A. Davies