SEC Division of Corporation Finance no-action letter: Bear, Stearns & Co., Inc.

DtvtStoN oF
CORPOFIATION FINANCE
U N ITED STATES
SECU RITIES AND EXCHANGE COMMISSION
^/ASHINGTON, D,C.2O549
Very truly yours,
6)r/9 X+,b
Qdrald J. Laporre v
December 15. 2006
William R. Baker, III, Esq.
Latham & Watkins LLP
555 Eleventh Street, N.W., Suite 1000
Washington, D.C. 20004-1304
Re: In the Matter of Bear, Stearns & co., Inc., Administrative proceeding Fite No. 3-124g4- Waiver Request under Regulation A and Rule 505 of Regulation D Dear Mr. Baker:
-
This is in response to your letter dated December 15,2006, rvritten on behalfofBear, Steams, & Co , lnc. ("Bear Steams') and constituting an application for reliefunder Rule 262 ofRegulation A and Rule 505(bx2)(iit(C) ofRegulation D under the Securities Acr of 1933 ("securities Act"). you requested relief from disquali fications ftom exemptions available under Regulation A and Rule 505 ol Regulation D that may have arisen by virnre ofthe order entered Novemb "t Zt,ZOOS bv the Securities and Exchange commission, pursuant to Section l5(b) of the Securities Exchanee Act of 1934 ("Exchange Act") in In the Matter of Bear. steams & co. lnc., Release No. 54t06 (rhe',order"). The Order was also issued pursuant to Section 8A ofthe Exchange Act. It censured Bear Steams, ordered Bear Steams to cease and desist fiom committing or causing any violations and any fufure violations ofSection 5(b) ofthe Securities Ac1, and ordered Bear Stearns to comply with certain undertakings. For purposes ofthis letter, we have assumed as facts the representations set forth in your letter and the findings supporting entry of the Order. We also have assumed that Bear Stearns will comolv with the Order. on the basis ofyour letter, I have determined that you have made showings ofgood cause under Rlle 262 and Rule 505(bX2XiiD(C) that it is not necessary under rhe cir".,irst-"ce. to deny the exemptions available under Regulation A and Rule 505 ofRegulation D by reason of entry ofthe Order. Accordingly, pursuant to delegated authority, and without necessarily agreeing that such disqualifications arose by virtue ofentry ofthe order, Bear steams is grantei rJlief fr-om any disqualifications from exemptions otherwise available under Regulation A and Rule 505 of iegulation D that may have arisen as a result ofentry of the Order. Chiel Office of Small Business policy

wllllaft R- Baftrr lll oir€ct dit: {2o2} 637-1007 E-rnat wn[ad].bik€r@liv com LATHAMaWATKINSo' 5"55 Elsv€nth Steet, N-W., Sdb 10OO Wa3hington, D-C. 20001-1304 7* tm2t837-2?3o Fax-. (m2ra37-2m1 FIRM / AFFILIAIE OFFICES Sruss€ls N€iN York Chi:ugo Nodh€m V'rghja Frankltrd Ordng€County Parb BtlEKong San Cx€go Loidon S€n Frdncis(D rarAr€el$ Shanghd Mlan Slicon Veloy Decernber 15, 2@6 BY MESSENGER Gerald J. Laporte, Esq., Chie4 Office of Small Business PolicS Division of Corporation Finance, Securities and Exchange Commission, 100 F Street, N-8., Washington, D.C. 20549 iloscor Skr€EporB Muni.rr Tokro NewJe.sey Waslin€loo,D.C. Re: In the Matter of Cenain Bear Stearns Managed Public Ofenngs (HO￾9829) In the Matter of Bear Stearts & Co.,.Izc., Release No. 33-8756 (November 21, 2006) Dear Mr- Laporte:
We are writing on behalf ofour client Bear, Stearns & Co., Inc. {"Bear Stearns" or "firm"), in connection with the firm's settlenent ofthe above-captioned investigation by the Securities and Exchange Commission (the "Commission'). The settlement rcsulted in the issuance of an Order by the Commission captioned ltr the Maxer of Bear Stearns & Co., Inc., Release No. 33-8756 (November 21,20M), that is described below (the "Ordet'')- Bear Stearns hereby requests, puNuant to Rule 262 ofRegulation A and Rule 505 ofRegulation D under the Securities Act of 1933 (the "Securities Act'), that the Comnission grant a waiver ofany disqualification from the exemptions provided by Regulation A and Rule 505 that may otherwise apply to Bear Stearns, any of its alfiliates or any issuer, offering panicipaat or other persons as a result of the Order entered by the Commission in the above-capt Order. We understand that only the Commission or an individual Commission employee to whom appropriate authority has been delegated in accordance with 17 C.F.R.$ 200-3Gl may grant this waiver request. It is our understanding that the Division ofEnforceinent do€s not object to the grant ofthe requested waiver.

Dec6mbor 15,2008
LATHAM&WATKINSTLP
BACKGROUND
In connection with the above-captioned investigation, Bear Stearnsubmitted ar Offer of Settlement that the Commission accepted and which resulted in the Order. The Order was entered pursuant to Section 8A of the Securities Act and Section 15(b) ofthe Securities Exchange Act of 1934 (the "Exchange Act"). Pursuant to its Offer, Bear Steams consented to the enffy of the Order without admitting or denying the matters set forlh therein (other than those relating to the jurisdiction ofthe Commission and the subject matter of the proceeding). The Order makes findings, (without admission or denial by Bear Stearns) that Bear Steams willfully vioiated Section 5 ofthe Securities Act and failed to reasonably supervise certain employees, as required by Section 15(bX4XE) of the Exchange Act. Based on these findings, the Order requires that Bear Steams cease and desist from committing or causing any current or future violations of Section 5 ofthe Securities Act and censures the firm. DISCUSSION Regulation A and Rule 505 ofRegulation D provide exemptions from regrstrauon under the Securities Act for certain offerings of limited size. Rule 262 of Regulation A and Rule 505 provide for disqualification from these exemptions if"any underwriter ofthe securities to be offered...[i]ssubjecttoanorderoftheCommissionenteredpursua.nttoSection15(b)"ofthe Exchange Act. ,!ee 17 C.F.R. g$262(bX3) and 505(b)(2)(iii). These Rutes, however, also provide that these disqualifications shall not apply if the Commission determines, upon a showing ofgood cause, that it is not necessary under the circumstances that the exemptions be denied. ,See 17 C.F.R. $$262 and 50s(bX2Xii0(C). Bear Steams understands that the Order could disqualify it from participating in offerings in reliance upon the exemptions from registration under the Securities Act provided by Regulation A and Rule 505, insofar as the Bear Steams would thereby be subjecto an order of the Commission entered pursuant to Section 15(b) of the Exchange Act. Pwsuanto these Rules, the disqualihcations oould also apply to any issuer, underwriter or other person participating in such an offering with the Bear stearns. As noted above, however, the commission has the authority to waive the Regulation A and Rule 505 exemption disqualifications. Bear Steams requests that the Commission waive any disqualiflng effects that the Order may have under Regulation A and Rule 505 of Regulation D with respect to Bear Steams, its affiliates or any other persons, whether acting as issuer, tinderwriter or otherwise, for the foliowing reasons:
1_ The disqualification ofBear Steams from the exemptions under Regulation A and Rule 505 would be unduly and disproportionately severe given the nature of the violations found in the Order. The conduct addressed inthe Order does not Dertain to securities offerings under Regulation A or Rule 505, but was confined to certain practices in 2002 and 2003 related to improper wntten communications during registered offerings in violation of Section 5(b). Moreover, as the Order finds, Bear Stearns has engaged in remedial efforts designed to prevent future violations.

0ec6mber 15, 2006
LATHAM&WATKINS""
2. In the future, issuers may wish to retain Bear Steams to participate in an
offering of securities conducted in reliance on the exemption provided by Regulation A or Rule
505. consequently, the disqualification ofBear steams could adversely affect its business
operations with regard to securities distribution and could adversely affect third parties that may wish, but because ofthe disqualification would be unable, to retain Bear Steams or parlicipate with it in connection with an offering conducted pursuant to these exemptions.
3. Finally, the disqualification of Bear Steams would be unduly and
disproportionately severe because the firm is required under the Order to cease and desist from committing or causing any current or future violations of Section 5 of the Securities Act and is censured under the order. The disqualification would result in an additional sanction beyond what the Order requires. In light of the grounds for reliefdescribed above, we believe that disctualification is not necessary, as either in the public interest or for the protection of investors, and that Bear steams has shown good cause that relief should be granted. Accordingly, we respectfully request that the Commission waive the disqualification provisions in Regulation A and Rule 505 of Regulation D to the extent that they may otherwise apply to the Bear Steams, any of its affiliates or any issuer, offering participant or other persons as a result of the entry of the Order., Ifyou have any questions regarding this request, please contacthe undersigned at (202\ 637 -t007 . William R. Baker III of LATHAM & WATKINS LLP Yuri B. Zelinsky @ivision of Enforcement) 1 we note that the commission has granted relief under Regulation A and Rule 505 of Regulation D for similar reasons in other instances. ,See, e.g., Goldman, Sachs & Co., SEC No_ Action Letter fuub. avail. oct. 31,2003); Merrill Lynch & co., Inc., SEC No-Action Letter (pub. avail. March I7,2003); Credit Suisse First Boston Corp., S.E.C. No-Action Letter (pub. avarl. Ian.29,2002); Dain Rauscher,lnc., S.E.C. No-Action Letter grub. avai1. Sept. 27, iOOt); and Legg Mason ll'ood Walker, Inc.,S.E.C. No-Action Letter (pub. avail. June 11. 2001). y yours,

12/20 t2009 04:20 FAX 2021125203 @ 001
*** TX REP0RT x** ix rr*
TBANSUISS]ON OK
T!/R)( N0 0085
FECIPIEI'1T AI]DFESS 12028372201
I]ESTIHATION ID
ST. TIl,iE 12/20 04: 1S
TIUE USE OO'55
PAOESENT 2
BESULT |]K plYtston oP cotFoE^Yrox Frx^nqE
U N ITED STATES
SECURITIES AND EXCHANGE COMMISSION wAsHtNcYoN, o,c. 20549 IJNTTED STAIES SECT]RITIES AND EXCIIANGE COMMISSION 45O Fnn 9tr6ot N,W, Washington, D,C, 2054{f FAXTRANSMIfiAL PLEASE DELIVER THE FOLLOWING PAGES TO:
(via faosimile)
Name: Wiliam R, Baker, lll, Esq,
Organization: Latham & Watkins LLP
Telecopier Number: Q02) 637-2201
Total Number oi Pages, Including Cover Sheet 2 Date: December 20,2006 Note; An original will be sent via mail within 5 business days, FROM:
Corey A. Jennings

DIVIAION OF
CORPORATION FIXANCE
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHtNGTON, D,C. 20549
UIIITED STATES
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street N.W.
Washington, D.C. 20e49
FAXTRANSMITTAL
PLEASE DELIVER THE FOLLOWING PAGES TO:
(via facsimile)
Name: Wiliam R. Baker, lll, Esq.
Organization: Latham & Watkins LLP
Telecopier Number: Q02\ 637-2201
Total Number of Pages, Including Cover Sheet: 2 Date:
Note:
December 20, 2006
An original will be sent via mail within 5 business days.
FROM:
Corey A. Jennings
Telephone Number: (202) 551-3258
Tefecopier Number: (202) - lf you do not receive all pages, please telephone the above number for assistance. NOTE: THIS DOCUMENT ltlAY CONTAIN PRIVILEGED AND NONPUBLIC INFORMATION. lT lS INTENDED ONLY FOR THE USE OF THE INDIVIOUAL OR ENTITY NAlilED ABOVE, AND OTHERS WHO SPECIFICALLY HAVE BEEN AUTHORIZED TO RECEIVE lT, lf you are not the intended recipient of thls faosimile, or l]|e ag€nt reaponsible for delivering it to the intended recipient, you hereby are notified that any review, diss€mination, distributbn, or copying of this communication strictly is prohibited. lf trou have received this communication in €rror, please notiry us immediately by telephone and retum the original to the above address by regular postal service without making a copy. Thank you for your cooperation.