(September 26) – “Federal securities regulators have launched an inquiry into whether a Salomon Smith Barney broker bribed officials of San Bernardino County, Calif., in exchange for fees and excessive commissions on more than $7.5 billion of investments for the county,” writes Gregory Zuckeman in today’s Wall Street Journal.

“The investigation by the Securities and Exchange Commission comes on the heels of a lawsuit filed last month by the county against the firm, now part of Citigroup Inc. The suit alleges that the broker, Peter Morrison, bribed county officials with cash, trips to foreign hot spots, entertainment and dinners for six years ending in 1998; charged excessive commissions; and put the county in inappropriate investments.”

“County officials say the losses resulting from Mr. Morrison’s actions could total more than $30 million. Mr. Morrison and Salomon Smith Barney have not filed a response to the suit, filed in San Bernardino County Superior Court.”

” ‘The SEC last week made contact with county officials, they’re concerned and asked questions about the case,’ said Dick Larsen, treasurer-tax collector of San Bernardino County. He added: ‘It’s a preliminary inquiry that may lead to a formal investigation.’ “

“SEC officials declined to comment on the inquiry. The county’s district attorney has not decided whether to pursue any case related to the lawsuit. ‘It’s under investigation,’ said Assistant District Attorney Dan Lough.”

“Mr. Morrison’s lawyer, Richard Marmaro, said Mr. Morrison ‘denies the allegations of the complaint and intends to vigorously defend himself.’ “

“Salomon Smith Barney was contacted by the SEC several months ago regarding the matter, but has not had recent contact, according to people close to the situation. ‘We continue to believe the firm has no liability to the county,’ said a Salomon Smith Barney spokeswoman. ‘As always, we would cooperate fully with any SEC inquiries.’ Mr. Morrison is still employed by Salomon Smith Barney, although he has curtailed his work to deal with the suit, according to a person close to the matter.”