The New York Stock Exchange has slapped Bear Stearns with a $1.5 million fine for a variety of problems in its record-keeping. According to the NYSE, the investment firm failed to keep adequate records of index arbitrage trading, did not report trades on a timely basis, failed to supervise accounts with suspicious activity, and failed to have a policy to deal with improper communications by one of its research analysts. In one example of a violation, says the exchange, Bear Stearns misstated in index arbitrage order with an amount as $4 billion instead of $4 million.
“These violations, though diverse in nature, all point to a weakness in internal controls,” said Susan Merrill, chief of enforcement, NYSE Regulation. “Executives must understand that the cost of doing business always includes sufficient resources and personnel to fulfill operational and compliance requirements and also to remedy problems when they are uncovered.”
