Another Bear Stearns Exec Warned of SEC Action
Regulators looking into Bear Stearns' (BSC) role in the mutual fund trading scandal are considering bringing an enforcement action against a second top executive in the firm's securities clearing operation.
The Securities and Exchange Commission has notified Michael Zackman, a Bear Stearns senior managing director, that he could face civil charges for assisting hedge funds and brokers engaged in abusive trading of mutual fund shares. The SEC's New York office, which is heading up the 16-month-old investigation, notified Zackman of its intentions last month, according to a copy of his broker registration statement obtained by TheStreet.com.
Zackman, responsible for overseeing Bear's relationships with the hundreds of small brokerages that clear stock trades through the firm, has been on a leave of absence for nearly a year. On his registration statement, Zackman said "there is no basis for the SEC to bring a proceeding against him in this matter."
Martin Auerbach, Zackman's attorney, could not be reached for comment.TheStreet.com reported last week that Peter R. Murphy, another senior managing director and one of the highest-ranking executives in the clearing division, also received a so-called Wells Notice from the SEC. Murphy, who also denies doing anything wrong, remains in his current post. In all, at least six current and former Bear employees are facing potential civil charges in the investigation, including Vincent Dicks, a top manager in Bear's private client group. People familiar with the investigation say regulators are continuing to investigate the matter and additional Wells notices against other employees may be soon forthcoming. The looming regulatory actions against the employees come nearly seven months after the SEC first notified Bear that it is considering bringing a civil action against the firm and its large clearing subsidiary. Late last year, the firm increased its litigation reserve by about $100 million to cover the cost of a potential settlement with securities regulators.
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