Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: E. Charters who wrote (82361)	2/20/2002 6:33:04 AM
From: long-gone	Respond to of 116815

Tuesday February 19, 8:01 pm Eastern Time U.S. Treasury tight-lipped on bidding violation (UPDATE: adds Secret Service quote, background) By Mark Felsenthal WASHINGTON, Feb 19 (Reuters) - The U.S. Secret Service is probing a rare violation of bidding rules during recent Treasury bill auctions, Treasury Department officials said on Tuesday, while offering few details about the breach. ADVERTISEMENT ``We have an investigation that deals with fraudulent purchases of Treasury securities from the Department of Treasury's securities auction,'' said Jim Mackin, a Secret Service spokesman, who declined to discuss the investigation further. In auctions held the week of Feb. 4, a single bidder submitted noncompetitive tenders for Treasury bills and notes worth $905 million through the TreasuryDirect electronic system but did not pay for them, even though the bids were accepted, officials told reporters. The unidentified party bid between $74 million and $86 million more than permitted amounts in bill auctions, and more than $370 million over the limit in two note auctions, said Eric Foster, vice president and associate general counsel at the New York-based Bond Market Association, which regularly advises Treasury on market issues. Treasury officials said that the limit on noncompetitive bids in a U.S. Treasury bill auction for any single bidder is $1 million. For notes, it is $5 million, added officials, who played down the impact of the alleged infraction, but would not discuss its specifics on the grounds they could hurt the investigation. Treasury is responsible for managing the nation's debt, handling auctions of debt securities worth hundreds of billions of dollars a year. Recently, the department earned market criticism when it inadvertently announced on a Web site it was scrapping the venerable 30-year bond before releasing the information to the public. DISCREPANCY PICKED UP QUICKLY But this time, the BMA praised Treasury's internal controls, which apparently picked up the discrepancy promptly. ``It's a one-time unique situation that will not recur due to additional controls that were put in place,'' one official said. Officials declined to identify the bidder. The Secret Service, which also guards high-level administration officials including the U.S. President, is an arm of the Treasury. It has a financial crimes division that investigates computer and credit card fraud, among other violations of the law. Treasury issued amended figures for sales of 13-week and 26-week T-bills and of 4-3/4 year and 10-year notes sold from Feb. 4 to Feb. 6. It reduced the amount of bids awarded through TreasuryDirect by a total $905 million but the prices, yields and percentages allotted at the high rate or yield from the auctions remained unaffected. The bidder did not get the securities bid for because of Treasury controls, officials said. ``The controls are there -- we don't get the money, you don't get the securities,'' another Treasury official said. Additional controls are now in place to prevent a recurrence, Treasury added. ``This should not have any impacts on future auctions,'' the first Treasury official said. The BMA's Foster praised the department for catching the alleged violation. ``It shows that Treasury is on its toes and catching violations of its rules,'' Foster said. ``It's great for market participants to know that.'' He added: ``You have bids that are in clear violation of the auction rules...You had somebody doing something they should not have been doing, and Treasury caught them.'' biz.yahoo.com