NOTE: Stipulations of Fact and Consent to Penalty (SFC); Offers of Settlement (OS); and Letters of Acceptance Waiver, and Consent (AWC) are entered into by Respondents without admitting or denying the allegations, but consent is given to the described sanctions & to the entry of findings. Additionally, for AWCs, if FINRA has reason to believe a violation has occurred and the member or associated person does not dispute the violation, FINRA may prepare and request that the member or associated person execute a letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member's or associated person's right to a hearing before a hearing panel, and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or to otherwise challenge the validity of the letter, if the letter is accepted. The letter shall describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed.

Bear Stearns & Co., Inc., nka J.P. Morgan Securities, Inc.
AWC/2007011145701

The Firm failed to

• establish and maintain adequate supervisory systems within its retail brokerage operation to supervise registered representatives’ sales of a hedge fund of funds to retail customers. 
• adequately supervise, approve and record private securities transactions a registered investment advisor engaged in on the firm’s behalf on its books and records.

The Firm's registered representatives used marketing materials that 

• contained hypothetical returns, 
• failed to make adequate disclosure of the risks involved,
• failed to provide a sound basis for investing in a hedge fund of funds, and 
• made exaggerated or unwarranted claims in its marketing materials.

Bear Stearns & Co., Inc., nka J.P. Morgan Securities, Inc.: Censured; Fined $500,000