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2 More Firms Settle With Orange County

November 26, 1998|E. Scott Reckard

Two more Wall Street firms accused of contributing to Orange County's bankruptcy have settled the county's lawsuits for a total of nearly $8 million. SBC Capital Markets Inc. will pay $6.5 million and Paribas Corp. $1.42 million, said Thomas W. Hayes, the former state treasurer overseeing the county lawsuits. Settlements in the case now total $781.1 million--nearly half the $1.64 billion lost when interest-rate hikes devastated the county's investments. SBC Capital was a Swiss Bank Corp. subsidiary in 1994, when the county's huge portfolio of rate-sensitive derivative securities was hammered. SBC, which had sold the county four derivative securities, was accused of supplying unsuitably risky investments. SBC lawyers couldn't be reached for comment, but county attorneys said the firm admitted no wrongdoing in settling the case. Paribas, a subsidiary of France's Banque Paribas, had provided financing in November 1994, that enabled former county Treasurer Robert L. Citron to buy more securities with borrowed funds. Paribas lawyer Robert A. Meyer said his client was an insignificant player in the debacle and always maintained it did nothing wrong. Michael Swartz, one of the lawyers representing the county, said additional settlements are expected.

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