Bear Stearns Says SEC Weighs Charges

Bear's disclosure was contained in the company's earnings release, which showed net income rising more than 20% to $347.8 million, or $2.49 a share, in the second quarter from $280.4 million, or $2.05 a share, last year. Revenue jumped 17.8% to $1.7 billion.

Analysts had been forecasting earnings of $2.23 a share on revenue of $1.60 billion. The strong earnings from Bear Stearns comes on the heels of an equally impressive second-quarter earnings report from Lehman Brothers(LEH Quote).

Among segments, revenue in Bear's capital markets division rose 14.7% to $1.35 billion, while revenue in global clearing rose 19.4% to $223.7 million, and revenue in wealth management surged 41.9% to $176.5 million. The gain in capital markets reflected a 33.1% rise in institutional equities revenue to $252 million; a 10.4% rise in fixed-income revenue to $844.4 million; and a 14.1% rise in investment banking revenue to $254.9 million.

On the expense side, compensation as a percentage of net revenue was 49.9% in the second quarter, compared with 47.3% in the year-ago quarter. Noncompensation expense was $352 million in the quarter, up 2.7% from a year ago, primarily reflecting the consolidation of the results of Bear Wagner Specialists, which became a majority owned subsidiary when partner John Mulheren died last December.