WARREN BUFFETT READ IT HERE FIRST
This magazine has long prided itself on being ahead of the news--uncovering events, trends, and even scams that are, or will eventually become, highly significant. Last June, our reporters began hearing rumors on Wall Street that Salomon Brothers was cornering the market on two-year Treasury notes.
At first, it was just a blip on trading screens--a change of a few hundredths of a percentage point in bond prices. But in the highly leveraged world of bond trading, a tiny change can mean millions of dollars. Our reporters--mainly Markets & Investments Editor Gary Weiss in New York and Correspondent Dean Foust in Washington--went to work. They talked to numerous traders and government officials, gathering crucial evidence that a squeeze had indeed occurred during the May 22 auction. Then they called Salomon Brothers, which denied any wrongdoing. We printed the story in the issue dated July 1, which began reaching our readers on June 21. The scandal broke publicly on Aug. 9.
One of our readers was Warren Buffett. Listen to his testimony during Senate hearings in September. Senator Christopher J. Dodd of Connecticut asked Buffett why he and other Salomon directors hadn't discussed the May 22 squeeze at Salomon's June 5 board of directors meeting. Replied Buffett: "The story that I read that really related to this was a BUSINESS WEEK story. That happened to come out by July 1, and Salomon denied everything in that story. . . . On June 5, I was not that aware personally about the squeeze, not until I did read that BUSINESS WEEK story."
We're saddened by the scandal at Salomon Brothers, and we hope Buffett cleans up the mess he inherited. But we are proud that BUSINESS WEEK played the role the press is supposed to play when necessary: ferreting out evidence of wrongdoing without fear or favor.