A confidential report for the Securities and Exchange Commission concluded that a brokerage firm bent its own rules to help Sen. Alfonse D'Amato make $37,000 in one day, The Wall Street Journal said Thursday.
The report called the Republican senator's dealings with Stratton Oakmont Inc. "atypical," the paper said. The story does not allege that the report found anything illegal.Stratton had fought to keep the report under seal for more than a year and a half, but a federal judge Wednesday ordered the portion dealing with D'Amato unsealed, at the request of lawyers for the news-paper.
U.S. District Judge Joyce Hens Green said the material "involves matters of significant public interest." The rest of the report remains under seal.
D'Amato has never objected to releasing the SEC report.
As previously reported, his $37,125 profit in a single day in 1993 was made on a initial public offering, or IPO, underwritten by Stratton Oakmont, based in Lake Success, N.Y.
That trade and others by the senator were investigated by a special outside consultant overseeing Stratton's compliance with a 1994 settlement with the SEC to resolve allegations that the company cheated customers.
The consultant, lawyer Charles Loewenson, concluded D'Amato was allocated a much larger number of shares of a hot new issue, Computer Marketplace Inc., than other Stratton clients.
When successful, IPOs - the first time a stock in a given company is issued - yield very high returns in a very short time, and brokers usually offer them to their biggest and best customers.
But Loewenson said the senator "didn't come close to meeting Stratton's qualification criteria," an apparent reference to the modest size of D'Amato's account.
"Stratton's bending of its own rules to service a United States senator who, through his status as senior minority member of the (Senate) Banking Committee, wielded influence over the SEC, raises suspicions about Stratton's motives," Loewenson said.
D'Amato has since become chairman of the Banking Committee, which oversees banking and financial interests and sets federal policy regulating the industry.
He later converted the Stratton account to a blind trust managed by Bear Stearns, the Journal said.
The SEC won a $2.5 million settlement in 1994 after it sued Stratton, alleging fraudulent sales practices. Three Stratton executives were fined a total of $300,000 and one was suspended in that case. Stratton has denied wrong-doing.
When D'Amato's relationship to the firm was first revealed in 1994, the senator said he was "absolutely confident" he didn't receive "special treatment" at Stratton.
"I am no Hillary Clinton," D'Amato said.
As head of the special Senate Whitewater committee, D'Amato has questioned the first lady's success in the commodities market while she was in Arkansas, suggesting the profits resulted from political favoritism.