Bear Stearns Wins Fight With Investor in Sterling Fraud Case
Washington, Jan. 8 (Bloomberg) -- Bear Stearns Cos. fought off an investor's U.S. Supreme Court bid to revive claims that the securities firm took part in an illegal scheme to manipulate stock prices.
The lawsuit by Howard Greenberg is part of the fallout from Bear Stearns's work as the clearing firm for Sterling Foster & Co., a brokerage that closed down in 1997 after regulators accused it of orchestrating a $75 million fraud.
The justices, without comment, refused to consider Greenberg's contentions that Bear Stearns had reason to know that Sterling Foster was defrauding investors and therefore should be held responsible.
Greenberg sought to reverse an arbitration panel decision clearing Bear Stearns of wrongdoing. A federal appeals court upheld the ruling in August.
The dispute centered on allegations that Sterling Foster arranged an initial public offering for ML Direct Inc., while simultaneously selling the company's stock short.
At the Supreme Court, Greenberg argued that a federal trial judge was too deferential to the conclusions of the arbitrators. Bear Stearns said in a court filing that its actions ``were consistent with the normal provision of clearing services to introducing brokers.''
Sterling Foster, which once had 275 brokers, closed after the FBI and U.S. postal inspectors raided its offices in 1997. Several people affiliated with Sterling Foster -- including former President Adam Lieberman -- pleaded guilty to charges they helped manipulate stock prices.
The case is Greenberg v. Bear Stearns, 00-699.
Jan/08/2001 10:11 ET
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