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Microcap & Penny Stocks : HITSGALORE.COM (HITT) -- Ignore unavailable to you. Want to Upgrade?

To: Bill Ulrich who wrote (2618)	6/29/1999 12:27:00 AM
From: bob sims	Read Replies (2) \| Respond to of 7056

AP Business Writer WASHINGTON (AP) via NewsEdge Corporation - Bear Stearns & Cos., a large Wall Street securities firm, has agreed to pay $25 million in a settlement with the Securities and Exchange Commission, which was investigating its relationship with a small brokerage that defrauded investors. The settlement, disclosed Monday by Bear Stearns, would head off a civil lawsuit by the SEC which was believed to be imminent. But New York-based Bear Stearns still faces related criminal investigations by Manhattan District Attorney Robert Morgenthau and federal prosecutors. ''Bear Stearns is not out of the woods,'' said Aegis Frumento, a securities lawyer who represents customers of and investors in A.R. Baron & Co., the now-defunct small brokerage that failed in 1997. ''There's probably a lot more to be seen here.'' Bear Stearns likely will neither admit to nor deny wrongdoing in the settlement, which is normally the case in such agreements with the SEC. SEC spokesmen declined comment on and would not confirm the agreement in principal for a settlement, which Bear Stearns disclosed in a routine corporate filing submitted to the agency. The precise nature of the SEC's allegations have yet to be made public. By settling the case, the company would avoid extensive civil litigation, said Stuart J. Gordon, a former chief counsel in the SEC's enforcement division who now is a private attorney. From the SEC's standpoint, he said, it would have been a difficult case to prove because of the complexities of securities law concerning companies accused of helping others commit fraud. ''It was the most pragmatic thing to do. Pragmatism carried the day,'' said Gordon. ''This lessens the stigma tremendously'' for Bear Stearns. Bear Stearns said that under the settlement, it will pay a $5 million civil fine and an additional $20 million to settle unspecified private claims, presumably those of customers who lost a total of $75 million with New York-based A.R. Baron. The investors, some of whom have sued, have maintained that Bear Stearns, which processed transactions for A.R. Baron, should have noticed signs of fraudulent activity at the smaller firm. Bear Stearns has denied wrongdoing and said it is the responsibility of the brokerage firms themselves, not the companies that process their trades, to detect and prevent fraud. Morgenthau won securities fraud convictions in 1997 and 1998 against several A.R. Baron executives and brokers. He has been investigating Bear Stearns's role in the smaller firm's failure for about a year, according to attorneys familiar with the case, who spoke on condition of anonymity. In addition, federal prosecutors in New York City also are investigating Bear Stearns as part of their case against Sterling Foster, another failed small brokerage that used Bear Stearns to process its trades, The New York Times reported recently. Spokesmen for Morgenthau and U.S. Attorney Mary Jo White declined comment on the matter Monday, as did a spokeswoman for Bear Stearns. Bear Stearns said in its filing that the settlement payments would have no significant effect on its business or financial condition. The filing did not mention any agreement concerning executives of its transaction-clearing division who may be under investigation by the SEC. The agency may still be planning to pursue enforcement actions against them.