NYSE fines Bear Stearns $1.5 million

The NYSE found that Bear Stearns repeatedly failed to report and record the details of arbitrage trades between 2001 and 2003, as exchange rules require. The firm also failed to supervise 10 trading accounts controlled by a foreign customer that was under suspicion of fraud. The NYSE also alleges one of Bear Stearns’ analysts did not disclose the risks associated with a 2003 IPO during the roadshow.

Bear Stearns agreed to pay the fine but refused to admit or deny the charges.

The failure of supervision was linked to Bear Stearns employee Donald Redfern, who failed to inform the company about "allegations of fraud and financial improprieties" involving a customer between 1998 and 2002, the NYSE said. Redfern was charged by the NYSE on January 5 this year. The customer, the chairman of a foreign bank, was not named.

The roadshow, held in April and May 2003, was apparently for the IPO of the US online payment processing company iPayment. Bear Stearns analyst James Kissane praised iPayment's prospects but did not discuss any of the associated risk, the NYSE said: "Neither the analyst’s introductory comments nor any of his other statements on this internet road show presented fair and balanced information," the exchange said.
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