Investigators subpoena Salomon

The House Financial Services Committee has issued a subpoena requesting details about how the investment bank channelled new share issues to selected clients.

The subpoena is part of the investigators' inquiry into the allocation of initial public offering (IPO) shares to senior executives at the beleaguered US companies WorldCom and Global Crossing.

Investigators are trying to establish whether some shares in some hi-tech firms were made available to Salomon's investment banking clients during the dot.com boom as a way of rewarding them for their loyalty.

They are also making inquiries into allegations of "spinning" - a practice where executives would be allowed to buy new shares at the initial offer price even after the market price had risen.

No evidence

The subpoena was the second to be issued against Salomon.

In an earlier statement, Salomon said the last subpoena had found "no evidence" of any wrongdoing.

Released documents have showed that the former WorldCom chief executive, Bernard Ebbers, made at least $11m from his investment in newly issued shares which had been made available by Salomon.

Salomon has responded by insisting that "the allocations at issue fit well within the range of discretion that regulators have traditionally accorded securities firms in deciding how to allocate IPO shares".