The US Securities and Exchange Commission (SEC) has authorized its staff to initiate an enforcement action against the company and its Bear Stearns Securities Corp. unit, according to an SEC filing. The company said this could lead to the repayment of ill-gotten gains, civil monetary penalties or other sanctions.
The mutual fund trading scandal has focused on late trading, market timing and certain other sales practices.
Bear Stearns said in the regulatory filing that it believes it has a strong defense to fight potential claims and intends to continue talks with the agency.
In February, the SEC fined Wall Street brokerage Brean Murray $150,000 for improper trading of mutual fund shares on behalf of several hedge funds. The SEC said Brean handled the trades through an unnamed clearing firm. Canary Capital Partners, a hedge fund involved in the fund scandals, was accused by the SEC of being key to this case, as well, according to a Reuters report.
From August 2001 through September 2003, New York-based Brean accepted and executed more than 3,500 trades in fund shares after the 4 p.m. ET trading close on behalf of Canary and at least four other hedge fund customers, the SEC said in February (see PIMCO Hit with Garden State Trading Suit ).
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