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Ex-Bear to pay SEC $1M
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April 20, 2000: 4:36 p.m. ET
Harriton, former Bear Stearns official, settles case, maintains innocence
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NEW YORK (CNNfn) - Richard Harriton, the former president of investment bank Bear Stearns' trade clearing unit, agreed to pay $1 million to settle a fraud case filed by the Securities and Exchange Committee, the SEC said on Thursday.
Harriton, 65, had been charged with propping up a now-defunct brokerage, A.R. Baron & Co., with capital despite its allegedly illegal activities and charging Baron customers for stock trades that he knew were unauthorized.
He was also accused of seeking to profit from initial public offerings sold by A.R. Baron, during the time that New York-based Bear Stearns (BSC: Research, Estimates) Securities Corp. was the clearing broker for Baron.
"The Commission found that Harriton caused violations of the antifraud provisions of the federal securities laws and aided and abetted violations of the net capital and contingency offering provisions of the federal securities laws," the SEC said in a statement.
Banned, but no admittance or denial of charges
Harriton has been banned from conducting business in the securities industry and from associating with any broker dealer, with a right to reapply in two years for the privilege of operating as a member of the industry, an SEC spokesman said.
Under the agreement, Harriton did not admit or deny the SEC's charges.
A.R. Baron had been charged by the Manhattan District Attorney's office with defrauding investors of $75 million by urging them to buy certain stocks, manipulating markets and making unauthorized trades.
He "decided to settle this civil case as a result of the SEC having agreed to limit its finding to a charge consistent with negligence by Harriton in his actions," his New York attorney, Howard Wilson, said.
"The SEC has dropped all of its previous allegations that Harriton received a payoff from Baron and was a direct participant, or an aider or abettor, in Baron's fraud on its customers," he added.
Bear Stearns agreed last August to settle civil fraud charges related to activities with Baron for $38.5 million. That payment included a $5 million fine to the SEC, and $30 million to a restitution fund for Baron investors.
The SEC began its investigation into Bear Stearns in May 1997 after A.R. Baron shut down. At that time, the Manhattan district attorney's office charged Baron and 13 of its executives and brokers with defrauding investors of about $75 million. All 13 Baron officials subsequently pleaded guilty or were convicted of securities fraud.
"We're gratified that the SEC and Mr. Harriton have reached a settlement and we wish him well," Bear Stearns officials said. 
-- from staff and wire reports
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