Bear, Stearns & Co., Inc. and Bear, Stearns Securities Corp.

On March 16, 2006, the SEC instituted and settled administrative and cease-and-desist proceedings against Bear, Stearns & Co., Inc. and Bear, Stearns Securities Corp.  The SEC alleged that Bear Stearns facilitated unlawful late trading and deceptive market timing of mutual funds by its customers and customers of its introducing brokers.

As part of the settlement, the respondents must pay $250 million, consisting of $160 million in disgorgement and $90 million in civil penalties for distribution to the mutual funds and shareholders harmed as a result of market timing and late trading.  For more information on the SEC’s action, you can read In the Matter of Bear, Stearns & Co., Inc. and Bear, Stearns Securities Corp., 33-8668 (Mar. 16, 2006).

Under the terms of the SEC’s Order, an Independent Distribution Consultant must submit to the SEC a distribution plan for the distribution of the Fair Fund containing $250 million to investors.  According to the Commission’s Rules of Practice, notice of the proposed Distribution Plan must be published for at least 30 days, specifying how copies of the proposed Distribution Plan may be obtained, and describing the process by which persons may comment on the Plan.

A link to that Notice will be provided on this website and the Notice shall be published in the SEC Docket.  The SEC anticipates that Notice of the Plan will be published on or after November 15, 2007.  After publication and comment, the proposed Distribution Plan will be submitted to the SEC for approval.  When the SEC approves the proposed distribution plan, with modifications as appropriate, distributions will begin pursuant to that plan.  The SEC anticipates that distribution will begin in winter/spring 2007/2008. 

http://www.sec.gov/divisions/enforce/claims/bearstearns.htm