Focus in Fund Scandal Turns to Bear Stearns

Bear Stearns(BSC Quote) is emerging as a critical player in the fast-expanding mutual fund trading investigation, according to sources and court documents.

The big investment bank, which previously reported receiving subpoenas from investigators, is drawing scrutiny from regulators because it processed and cleared trades for a number of small broker-dealers that may have permitted hedge funds to engage in improper trading of mutual funds.

Two brokerages under regulatory scrutiny that used Bear Stearns to process and clear some of their customers' mutual fund trades are Kaplan Securities and Empire Financial Holding, both of Florida. ...