Bear, Stearns & Co. has agreed to pay $38.5 million to settle charges by the Securities and Exchange Commission and the Manhattan district attorney that it committed fraud.

Bear Stearns did not admit or deny the charges that it committed fraud in its role as clearing broker for A.R. Baron & Co., a now-bankrupt brokerage. The SEC also brought fraud charges against Richard Harriton, who was president of Bear Stearns' clearing arm. District Attorney Robert Morgenthau also is investigating Mr. Harriton.

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