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Then he’s not running his investment bank, Bear Stearns Cos. chairman and CEO James Cayne is usually off somewhere playing bridge — friendly matches with the likes of Bill Gates and Warren Buffett or high-level amateur competitions held around the country. To Cayne, bridge isn’t just a game, it’s a way of life, a philosophy. As a young man he paid the bills with bridge winnings and dreamed of making a career as a card shark. Today he has no trouble making ends meet — he earned $28.4 million last year and is worth more than $1 billion — and attributes his success in finance and bridge to the same principle: The best players make the most of the hands they’re dealt. Comparing cards to business, Cayne told a group of interns in July, “Bridge requires skill and preparation, not luck.”

That’s the mind-set with which Cayne approaches his other great love: running Bear. During 13 years as CEO, he has repeatedly foiled predictions of his firm’s imminent decline. Skeptics have long dismissed 83-year-old Bear, the smallest of Wall Street’s

big, publicly traded securities houses, as prime takeover bait, a déclassé firm too narrowly focused to survive in a business where size — and reputation — are all-important. Unlike Goldman Sachs Group and Morgan Stanley, Bear can’t lay claim to an elite client list. It lacks the diversity, global reach and beefy balance sheets of the universal banks, such as Citigroup, Deutsche Bank and JPMorgan Chase & Co., that are making inroads on traditional Wall Street’s turf. And Cayne’s firm has run into regulatory hot water. In March it agreed to pay $250 million to settle Securities and Exchange Commission charges that its clearing unit helped customers engage in illegal late trading of mutual fund shares This came seven years after Bear paid $35 million and hired an independent compliance consultant to settle SEC allegations that it failed to detect and take action against fraudulent conduct by one of its clearing clients, the notorious (and now defunct) boiler room brokerage A.R. Baron & Co. Bear was one of 12 big brokerage houses that in 2003 and 2004 settled charges by federal and state regulators that it had published misleading stock research in an effort to win corporate underwriting and advisory business.