Judge Sets Decision on Firms’ Liability in O.C. Bankruptcy

A ruling on the extent of brokerages’ liability for Orange County’s bankruptcy was delayed Monday by a judge who grilled lawyers for an hour before saying he will rule next month.

A ruling against the brokerages could set the stage for Orange County to recover large sums beyond the $739 million in settlements it already has reached.

The county still has active suits against 15 Wall Street firms, including Fuji Securities Inc., that helped finance former county Treasurer Robert L. Citron’s multibillion-dollar speculations on interest rates.

Unlike Merrill Lynch & Co., which settled civil claims for $437 million, none of 15 remaining firms had a close relationship with Citron. But the county contends they are still liable for its entire $1.6-billion loss for aiding an investment scheme so risky that Citron had no authority to undertake it.

Arguing before U.S. District Judge Gary L. Taylor in Santa Ana, Fuji lawyer Nancy J. Sennett contended that state law permitted Citron to make his investments.

Taylor said he would rule in writing “in a couple of weeks.� If he decides Citron acted within his authority, the county could recover at most about $8 million from Fuji and little or nothing from other brokers, county lawyers said.

Suits based on different theories continue against Standard & Poor’s, which gave county municipal bonds top ratings before the December 1994 bankruptcy, and against Dain Rauscher Inc., which advised the county on issuing those bonds.