Nov. 22–Federal prosecutors in New York are jumping into the widening investigation of improper mutual fund trades.
The U.S. attorney for the Southern District in Manhattan, James Comey, has subpoenaed Bear Stearns & Co. “seeking information regarding trading in shares of mutual funds.”
The giant Manhattan-based brokerage revealed Comey’s involvement in a regulatory filing Friday. Bear Stearns also said it has received a subpoena from the Securities and Exchange Commission. Bear Stearns had previously said it received a subpoena from New York State Attorney General Eliot Spitzer, whose September charges of improper trading by a hedge fund sparked numerous investigations of mutual funds and brokerages.
Robert Heim, a former SEC lawyer, said Friday’s action marks Comey’s first involvement in the mutual fund probe and that it “significantly raises the stakes” for Bear Stearns and the other companies suspected of improper mutual fund trading.
Spokesmen for Comey and Spitzer declined to comment. A spokeswoman for Bear Stearns said she couldn’t comment beyond the filing.
Earlier this month, Bear Stearns, which has said it is cooperating fully with the inquiries, fired six employees in its private-client services unit in connection with improper mutual fund trading.
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