Bear Stearns had fired three clearing executives for aiding Canary Capital Partners illegal trades, and the senior managing director of the unit has taken voluntary leave, The Wall Street Journal reports.
Facing potential civil and criminal charges, Bear Stearns role in the fund scandal could be deeper than originally thought, according to The Journal. But what is certain is that scrutiny of back-office clearing and settlement units for their role in the fund scandal is going to intensify.
The three employees who have left are: Brendan Devane and Christopher Welsh, managing directors, as well as Christopher Fulco. Michael Zackman, a senior managing director, recently began an "extended leave."
Clearing can be a lucrative business for investment firms. Last year, it accounted for 13% of the net revenue at Bear Stearns, which, along with Bank of New Yorks Pershing unit, is one of the leading clearing firms in the nation.
Earlier, James Nesfield, a consultant to Canary Capital, said that Bear Stearns "would bend over backwards to help Eddie [Edward Stern, head of Canary Capital] late trade."
A spokeswoman for Bear Stearns told the WSJ: "We have completed a comprehensive internal review into these issues and have taken appropriate action. We are continuing to cooperate with all regulatory authorities."