Bear Stearns' ( BSC) clearing division is losing two of its larger back-office customers amid indications that a two-year-old investigation into the firm's role in the mutual fund trading scandal is nearing an end.

Thomas Weisel Partners is in the process of moving its stock-clearing business away from Bear Stearns to Fidelity's National Financial clearing subsidiary, say people familiar with the situation.

Weisel, which earlier this month filed for an initial public offering, recently notified Bear Stearns of its intention to take its business elsewhere, says a person close to the company. National Financial came up with a better deal than Bear Stearns on the cost of processing trades.

A spokeswoman for the San Francisco-based brokerage founded in 1998 by Thomas W. Weisel, the former chairman and chief executive of Montgomery Securities, was not available for comment.

Weisel is the second major clearing customer to bolt Bear Stearns in recent months. In August, Automated Trading Desk, a South Carolina stock-trading firm, jumped from Bear to the clearing division of Bank of New York ( BK). Automated Trading officials confirmed the move.

Of the roughly 350 small and midsized brokerages for which Bear Stearns provides back-office services, Weisel and Automated Trading Desk ranked in the top 20 in terms of clearing fees generated, say several former Bear Stearns employees.

The customer losses come at an awkward time for Bear. It has been operating under a cloud since the Securities and Exchange Commission voted in May to authorize a civil lawsuit in connection with its alleged role in processing and financing abusive mutual fund trades for numerous hedge funds and small brokers.

The SEC also has notified four top executives in Bear Stearns' clearing division that they could face potential regulatory sanctions over their activities.

The ongoing investigation of Bear Stearns wasn't a major factor in Weisel's decision to move its business. But a source said some at Weisel believed that Bear Stearns' customer service had suffered at the division, in part because of the impact of the probe on the morale of the Wall Street firm's employees.

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