I don't mean to be petty, but this sort of thing is pretty common--what may appear to be just a simple, typographical error, may be part of a deliberate pattern to obscure, hinder or frustrate the reader's comprehension. At issue, is the Mozer-Basham rule, and it's not "so-called" since it is what passes for a binding regulation between the New York Fed and the dealer-brokers who handle trillions of dollars of bonded U.S. government debt. It's single and sole purpose was to prevent insiders from cornering a bond issue and thus manipulating values--i.e. raising the costs to the purchasers of the bond, and securing even greater profits for the dealer as middleman
This article was published about three years after the scandal that brought an end to John Gutfreund's career as head of Salomon Brothers, so it highlights the longer-term fundamental risks to an entity like the U.S. Government when it turns over responsibility for something as basic as deficient borrowing to a private corporation like the Federal Reserve. This private corporation then contracts with a favored class of private financiers who together manage the nuts-and-bolts reality of our national economic policy.
In this case, they might as well have said the "so-called rule" since the secret, clubby, swinging-door relationships in this vastly powerful and profitable game not only play by their own rules, they create their own reality.
When the Washington Post publishes an article titled, $12 Billion Question: Is Cornering A Treasury Market an Illegal Act?; Intent Is Key Factor in a Tricky Wall Street Issue, could anybody answer that but the intent in every case of cornering a bond issue is to make more profit than is possible under a fair, open and equitable circumstance? It never has, nor will have, a benign or beneficent motivation, so why even ask the question?
The behavior here was so egregious and on-going, that in the year preceding the set of recurring episodes from February to May, 1991, which constituted the scandal, the same or similar actions necessitated that a rule---or "the understanding," if you will---be enacted, and it was named after the future felon-perpetrator, and the official at "the Treasury" who within a matter of months was a job applicant knocking at the door of one of the same firms he had responsibility for regulating, is common sense and not news.
Moreover, "the Treasury" doesn't even conduct or manage the auction exchange process--that is handled by the New York Federal Reserve. So any rule promulgated by the Treasury is a political ploy meant to assuage the public's principles, and not for the principals to abide by. And as for compliance--what if the Fed and the primary dealers are co-conspirators, as I believe?
November 23, 1994, The Bond Buyer, Basham replaces recently retired Williams at First Fidelity. (Michael E. Basham, Alexander S. Williams, First Fidelity Securities Group) by Joyce Hanson,
Veteran municipal market executive Alexander S. Williams retired last week as head of trading and banking at First Fidelity Securities Group in Newark, N.J.
Michael E. Basham, a former debt official at the U.S. Treasury Department and managing director at Smith Barney Inc., replaced Williams effective Monday, a firm spokesman said. Williams ended his tenure with the regional bond firm last Friday. Williams could not be reached for comment.
The spokesman said Basham, like Williams, will hold the title of executive vice president. In his new role, Basham will serve as manager of First Fidelity's capital markets group. Williams served as manager of the securities group.
Williams, who joined the firm in 1970, worked in a variety of Treasury market and investment banking positions. Williams also worked at the firm of Drexel, Hardman, Ripley Inc. in New York City as a vice president in charge of national municipal bond trading.
Basham, who also could not be reached for comment, resigned from Smith Barney several months ago, a spokesman for the firm said. Basham joined Smith Barney in August 1991.
Previously, Basham worked in the U.S. Treasury Department as assistant secretary for federal finance. He served as an adviser to former Treasury Secretary Nicholas Brady in formulating the government's debt management policy.
In that role, Basham also worked as a liaison between the Treasury and government securities dealers. In 1990, Basham clashed with former Salomon Brothers trader Paul W. Mozer, who allegedly orchestrated the firm's illegal bids of Treasury securities.
Afterward, the Treasury adopted the so-called Mozer-Basham role, prohibiting firms from acquiring more than 35% of any Treasury offering sold at auction.
Market sources have speculated that First Fidelity may see more top-level public finance executives leave the finn.
'There is a major house cleaning going on at First Fidelity;' said a source with knowledge of New Jersey public finance.
In response to the speculation, company spokesman Paul Levine said, "As a matter of policy, we don't comment on minors. The only personnel rumors we respond to as policy are retirements and new hires."
Among senior managers nationwide, First Fidelity Securities Group has ranked 391h in 1994, with 62 issues totaling $558 million for a market share of 0.4%, according to Securities Data Co. For all of 1993, the firm ranked 361h, with 100 issues totaling $974.5 million for a market share of 0.3%.
For New Jersey bond sales so far in 1994, First Fidelity Securities Group ranked third among senior managers for competitive sales and fourth for negotiated sales.
So far this year, First Fidelity was senior manager on 17 negotiated New Jersey issues totaling $152.8 million and 38 competitive issues totaling $350.1 million.