Bear Sterns Cos. has disclosed that it faces a possible enforcement action by the Securities and Exchange Commission because of improper mutual fund trading, Reuters reports.

The SEC has authorized staff to bring an enforcement action against the brokerage that could result in repayment of ill-gotten gains, civil monetary penalties or other sanctions. Bear Stearns has stated that it believes it has a strong defense against potential claims and plans on continuing talks with the SEC, but the company has declined to comment further.

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