The list of top executives at

Bear Stearns

(BSC)

facing potential civil charges in the mutual fund trading investigation has grown by two.

The

Securities and Exchange Commission

recently informed Ronald Suber, a senior managing director, and Russell Miron, a managing director, that they each face possible regulatory action stemming from "matters related to certain mutual fund trading practices,'' according to updated versions of the executives' broker registration statements.

Suber and Miron, each of whom denied any wrongdoing in their registration statements, received so-called Wells notices from the SEC in early March. Both are executives in the company's stock-clearing and prime brokerage division. The potential SEC actions were disclosed a few days ago.

To date, at least four top executives in Bear's global clearing operation are facing potential SEC regulatory action, including the division itself.

Suber is one of the highest-ranking executives in Bear's clearing group, which is led by Richard Lindsey, a former top SEC official. Suber oversees a nationwide sales force that forges relationships with small brokerage firms and hedge funds that use Bear Stearns to clear trades for them, as well as provide back-office services.

Last year,

TheStreet.com

first reported that the

New York Stock Exchange

, which is also investigating Bear, had asked Suber to provide a statement to its regulators.

Reached by telephone at his San Francisco office, Suber declined to comment. Miron, who works in Bear's Chicago office, could not be reached for comment.

Earlier this year, the SEC sent similar Wells notices to two other senior managing directors in Bear's clearing operations,

Peter R. Murphy and

Michael Zackman. Except for Zackman, who has been on a leave of absence for nearly a year, all the executives remain in their current jobs.

In all, at least eight 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. The list of former Bear employees facing regulatory action includes three former brokers who were fired by Bear in the autumn of 2003, shortly after the investigation in mutual fund trading abuses began making headlines.

The latest action by the SEC is an indication that securities regulators are not backing down in their investigation of Bear Stearns, which has emerged as a central player in the now two-year-old investigation into improper mutual fund trading.

The looming regulatory actions against the employees come nearly nine 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.

Regulators believe Bear played an important role in processing and financing abusive mutual fund trades for dozens of hedge funds and small brokerages that have been implicated in the far-reaching scandal. So far, mutual fund companies and brokerages have paid nearly $2.5 billion in fines and restitution in the investigation.

Bear spokesman Russell Sherman declined to comment on the latest SEC action. Instead, he pointed to an earlier statement by the firm, in which Bear said it has "conducted an in-depth internal review of mutual fund trading practices'' and "took swift and decisive disciplinary action -- including the termination of certain employees."

In going after Suber, Miron, Murphy and Zackman, the SEC is striking at the heart of Bear's clearing operation, which is one of the biggest on Wall Street. The firm's global clearing operation, which includes Bear's prime brokerage business, accounts for 13% of the firm's net revenue.

Clearing is the arcane but crucial service on Wall Street by which a firm acts as a middleman for parties doing stock and bond transactions. The clearing divisions of big Wall Street firms like Bear are crucial to the 350 small brokerages -- known as "correspondents" -- that lack the financial resources and back-office muscle to make sure big sales of securities go off smoothly.

Bear's clearing operation is overseen by Lindsey, a former SEC director of market regulation who was brought into Bear in 1999 to clean up the division's reputation after another scandal investigation. Lindsey joined the firm just as it agreed to pay a $38.5 million to settle allegations that it let A.R. Baron, a rogue brokerage, carry out a stock manipulation over the firm's clearing platform.

Bear has shown little inclination to settle the current mutual fund trading investigation. Indeed, the current scandal hasn't affected the stock, which is up 22% since the firm was notified that the SEC might bring an enforcement action against it.

However, current and former employees of Bear's clearing division say the continuing investigation is zapping morale.

People familiar with the investigation say regulators are seeking a potential fine of at least $250 million from Bear to resolve the matter.

Early on, regulators also floated the idea of Bear selling off its retail stock-clearing business as a way to end the investigation. People familiar with the investigation say that Bear, which views its hedge fund and clearing division as intimately linked, adamantly opposed the idea.

Still, there is precedent in the mutual fund investigation for Wall Street firms exiting clearing -- either by choice or by force.

The brokerage arm of

Bank of America

(BAC) - Get Report

, as part of its settlement pact, agreed to get out of the clearing business.

Just days before the SEC filed civil fraud charges against

J.B. Oxford

(JBOH)

, the small Los Angeles brokerage announced it was selling its small clearing subsidiary. Regulators contend the J.B. Oxford clearing unit facilitated hundreds of illegal and abusive mutual fund trades.

Fiserv

(FISV) - Get Report

, another firm that has disclosed the SEC is investigating its roles in clearing abusive mutual fund trades, sold its clearing arm last year to

Fidelity Investments

for $365 million.

The clearing arms of all three firms were much smaller than Bear's.