[8] In 1978, Billy Salomon named Gutfreund to succeed him as head of the firm,[9] becoming the highest paid Wall Street executive at the time.

Paul Mozer, head of the Government Bond desk at Salomon Brothers, was submitting bids in excess of what was allowed by the Treasury rules.

[11] The exposure of Mr. Mozer's repeated violations of U.S. government bond auction rules resulted in a significant scandal during which regulators and some politicians called on the firm to be stripped of its Primary Dealer status.

This action would have threatened the survival of the firm, then the largest participant in the U.S. government and mortgage bond trading markets.

Warren Buffett, who through Berkshire Hathaway had recently acquired a $700 million preferred equity position in Salomon, became alarmed by the activities of the firm.

[13][14] Gutfreund was featured prominently in the 1989 book Liar's Poker by Michael Lewis, a former employee of Salomon.