Bear Stearns has finally settled a two-year-old probe into allowing hedge funds to market time and late trade mutual funds by agreeing to pay a $250 million fine, people familiar with the matter have told Bloomberg. The Securities and Exchange Commission and the New York Stock Exchange will announce the settlement later this week, according to the sources.

The settlement, which reportedly includes a requirement for Bear to hire an independent consultant to review its trading policies but does not require it to admit guilt, would be among the largest brought against companies implicated in the three-year-old mutual fund trading scandal. One of the hedge funds whose trades Bear processed was Canary Capital Partners.

However, in spite of the $3.5 billion in penalties that companies have paid thus far due to this scandal, some skeptics in the industry think illegal trading practices will continue

"It lifts one cloud," fund manager Marshall Front of Front Barnett Associates told Bloomberg. "But investors who have money in Bear Stearns and other investment banks have to be aware that these issues will arise from time to time."

On Dec. 15, Bear Stearns Chief Executive Officer James Cayne issued a statement saying the firm was fully reserved to cover the cost of a settlement.

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