A group of four law firms has filed additional investor arbitration claims against Bear Stearns Cos. and a fund manager alleging the firm was less than candid with investors in one of its hedge funds.
“Our investigation indicates that officials at Bear Stearns engaged in a concerted effort to conceal the true state of affairs at this hedge fund, for an extended period of time before it imploded and that the victims of this nefarious scheme included both individual investors and professional money managers from around the world,” said Steven Caruso of Maddox Hargett & Caruso, one of the law firms.
The claims were filed with the Financial Industry Regulatory Authority on behalf of investors in Bear Stearns’ High Grade Structured Credit Strategies Fund. Last summer the fund failed along with the company’s High-Grade Credit Enhanced Leveraged Fund, costing investors $1.6 billion.
Since then, a variety of entities have started investigations, or filed suit alleging malfeasance, including the Securities and Exchange Commission and the states of New York and Massachusetts.
Representatives of Bear Stearns and J.P. Morgan Chase & Co., which closed its $1 billion acquisition of the brokerage last week, were not immediately available for comment.
The Financial Industry Regulatory Authority (FINRA) is a self-regulatory organization that oversees U.S. broker-dealers to protect investors and ensure market integrity. Established in 2007, FINRA was formed by merging the National Association of Securities Dealers (NASD) and the regulation, enforcement, and arbitration functions of the New York Stock Exchange (NYSE). Its primary responsibilities include writing and enforcing rules governing the activities of its member firms, conducting regular examinations to ensure compliance, and providing a dispute resolution forum for investors and broker-dealers.
FINRA also focuses on investor education, offering resources to help individuals make informed investment decisions and recognize potential fraud. One of its key tools is BrokerCheck, a public database providing detailed information about brokers and brokerage firms, including professional backgrounds and disciplinary histories. By maintaining stringent regulatory standards and emphasizing investor protection, FINRA plays a crucial role in fostering trust and stability in the U.S. securities markets.