Gubernatorial candidate Bill Simon’s family firm was censured and fined

The Associated Press
Saturday May 18, 2002

SAN FRANCISCO — The family firm of millionaire Republican gubernatorial candidate Bill Simon was fined and censured by securities regulators in the 1990s, the San Francisco Chronicle reported Friday. 

William E. Simon & Sons of New Jersey received three fines, two of which also involved censures, from the National Association of Securities Dealers. That included a $10,000 fine levied in 1999 against the firm’s municipal securities division for mislabeling a payment to a securities company co-owned by the chief of staff of then-Gov. Jim Florio of New Jersey. 

The National Association of Securities Dealers said Simon & Sons mislabeled the payment it made to Armacon Securities Inc. “in the hope of developing a relationship” with another firm, according to documents obtained by the Chronicle. 

The fine came during an investigation of so-called “pay-for-play” schemes in which investment and securities companies curry favor with politicians who can steer them lucrative government bond projects. The practice violates security rules. 

Simon declined comment on the issue when questioned by reporters as he left a newspaper editors’ convention in Anaheim on Friday, except to criticize the Chronicle article as factually erroneous. 

Aides said the article neglected to distinguish between William E. Simon & Sons and William E. Simon & Sons Municipal Securities Inc., which are distinct entities. The $10,000 fine was against the latter firm. 

A Simon strategist denied impropriety and said there was no pay-to-play violation. 

“This was a paperwork violation for misreporting a management fee paid to Armacon,” strategist Jeff Flint said Friday. 

Democratic Gov. Gray Davis attacked Simon over the issue during his own appearance before the editors’ group and in comments to reporters afterward. 

“Mr. Simon has a lot of gall criticizing me when his own firm was fined three times and censured twice for contributing to treasurers who gave business to his company,” he told reporters.