International Herald Tribune – Bear Stearns reached a $250 million settlement with U.S. regulators over claims it cheated investors by helping clients illegally trade mutual fund shares, two peoplewith direct knowledge of the matter said.
The agreement with the U.S. Securities and Exchange Commission and the New York Stock Exchange resolves a two-year investigation of Bear Stearns’s role in helping hedge fund clients improperlytake advantage of price discrepancies in the mutual fund market. The industrywide scandal followed an investigation by the New York State attorney general, Eliot Spitzer, whose claims sparked acrackdown that has yielded more than $3.5 billion of penalties against at least 30 companies.
Bear Stearns may announce the agreement with the SEC and the New York exchange later this week, said the people, who declined to be identified before the deal was made public. Bear Stearns willnot admit or deny wrongdoing under the agreement, which the SEC approved last week, the people said. The firm said in December that it offered $250 million to close the case.
“It lifts one cloud,” said Marshall Front at Front Barnett Associates, which is based in Chicago. “But investors who have money in Bear Stearns and other investment banks have to be aware thatthese issues will arise from time to time. It’s a hard reality.”
