FOR IMMEDIATE RELEASE                                       99-94

    Bear Stearns Securities Corporation to Pay $35 Million to
      Settle SEC Charges That It Caused Fraud at A.R. Baron
                                
   Bear Stearns President Richard Harriton Charged with Fraud

     Washington, DC, August 5, 1999 -- The Securities and
Exchange Commission today found that Bear, Stearns Securities
Corporation ("Bear Stearns"), the clearing broker operation of
Bear Stearns & Co., Inc., caused violations of the antifraud
provisions of the federal securities laws in connection with its
clearing relations with A.R. Baron & Co., Inc. ("Baron").  (Baron
collapsed in 1996 after engaging in numerous violations of law,
operating as a criminal enterprise, and causing millions of
dollars of investor losses.)  The Commission also charged Bear
Stearns President Richard Harriton with fraud and aiding and
abetting Baron's fraud.  An Independent Consultant will be named
to review Bear Stearns' supervisory and compliance procedures and
recommend improvements.  Bear Stearns will pay a $5 million fine
to the U.S. Government and pay $30 million into an investor
restitution fund.

     The Commission's Order finds that Bear Stearns caused
violations of the antifraud provisions in a variety of ways.  For
example:  although Bear Stearns was aware that Baron was engaging
in unauthorized trading in customer accounts, Bear Stearns
charged unauthorized trades to Baron customers instead of to
Baron; Bear Stearns took money and securities from customer
accounts to pay for the unauthorized trades; and Bear Stearns
refused to return the customer property it took, even after Baron
admitted that certain trades were unauthorized.

     Specific instances of misconduct include:

*    Bear Stearns' liquidation of $1 million worth of securities
  in a customer's account to pay for a trade after the customer
  presented Bear Stearns with irrefutable evidence that the trade
  was wholly fictitious -- Bear Stearns' confirmation slips that
  clearly had been forged by Baron;

*    Bear Stearns' seizure of, and refusal to return, securities
  of a customer to pay for trades Baron had expressly acknowledged
  to Bear Stearns were unauthorized;

*    Bear Stearns' refusal to allow Baron to repurchase from a
  customer approximately $2 million of securities that Baron had
  purchased for the customer without authorization, even after
  Baron had agreed to make the customer whole; and

*    Bear Stearns' acceptance, without customer authorization, of
  excess customer funds from a Baron IPO, that it knew, or was
  reckless in not knowing, were misdirected to it by Baron from an
  escrow account.

     In addition to finding that Bear Stearns caused antifraud
violations, the Commission found that Bear Stearns willfully
aided and abetted Baron's violations of the net capital and
contingency offering requirements and directly violated the
credit extension and recordkeeping requirements.  In particular,
the Commission's Order finds that Bear Stearns assisted Baron in
staying in business when it knew that Baron lacked required
capital to operate and was engaging in an ongoing fraud.  By
charging to customers unauthorized trades that should have been
liabilities to Baron, Bear Stearns helped Baron hide its
continuing capital deficiency.  Even after the Commission brought
an emergency action to halt Baron's fraudulent activity, Bear
Stearns not only continued to clear for Baron but also provided
it with approximately $1.6 million in working capital.

     Bear Stearns is simultaneously settling today's charges by
consenting to the issuance of the Order without admitting or
denying its findings.  In addition to those findings, the Order
provides relief designed to substantially remedy the harm caused
by the charged conduct and prevent its recurrence.  In
conjunction with the resolution of an investigation by the New
York County District Attorney's Office, Bear Stearns will pay $30
million into a restitution fund, to be paid to investors who were
harmed by the fraud.  To deter and punish Bear Stearns for its
role in the Baron fraud, the Order imposes a $5 million penalty
on the firm.  To prevent any recurrence of the misconduct
described in the Order, the Order requires Bear Stearns to cease
and desist from committing the violations found by the Commission
and appoints an Independent Consultant, to be chosen by the
Commission, to conduct a review of various Bear Stearns'
supervisory and compliance procedures, and recommend improvements
to them.  Bear Stearns will be required to adopt all
recommendations approved by the Commission's staff.

     SEC Enforcement Director Richard H. Walker said, "The
Commission's Order finds that Bear Stearns took actions that
directly facilitated Baron's widespread fraudulent activity.  A
firm's status as a clearing broker does not immunize it from the
consequences of participating in a fraud.  To the contrary, a
clearing firm, or any other market participant, that engages in
conduct enabling a boiler room like Baron to defraud investors of
millions of dollars is fully responsible for its actions."

     Also today, the Commission's Division of Enforcement charged
Richard Harriton, who was the president of Bear Stearns during
the relevant time period, with fraud and aiding and abetting
Baron's fraud.  The Harriton Order alleges that Harriton, with
knowledge of Baron's fraudulent conduct, directed Bear Stearns to
take various actions to prop up Baron.  It further alleges that
Harriton entered into an agreement with Baron's principal, Andrew
Bressman, to profit personally from the clearing relationship by
having Bressman deposit stock in companies for which Baron was
planning to do initial public offerings into nominee accounts
maintained for Harriton and his close associate, Randolph Pace.
Baron's collapse prevented the scheme from coming to fruition.
Harriton is contesting the charges and the case will be heard by
an administrative law judge.   See Exchange Act Release No.
41708.

     The actions against Bear Stearns and Harriton follow the
Commission's October 1996 revocation of Baron's registration as a
broker-dealer.  The Commission found that Baron had engaged in a
massive fraud, including widespread sales practice violations
that occurred before and during Bear Stearns' clearing
relationship with Baron.  Baron and 13 of its officers and
registered representatives subsequently pleaded guilty to, or
were convicted of, criminal charges brought by the New York
County District Attorney's Office relating to the same conduct.

     The Division of Enforcement thanks the New York County
District Attorney's Office and the United States Attorney's
Office for the Southern District of New York for their assistance
in this matter.

     This enforcement action highlights the Commission's efforts
to address abuses in the offer and sale of microcap stocks.
Clearing firms provide vital services and lend legitimacy to many
introducing firms that specialize in such securities.  As
demonstrated by today's case, those clearing firms and
individuals that assist introducing firms in perpetrating
microcap fraud will be held accountable for their actions.

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For more information, please contact:

William R. Baker       Elizabeth P. Gray         Gerald W. Hodgkins
Associate Director     Assistant Director        Branch Chief
(202) 942-4570         (202) 942-4572            (202) 942-4572