Epstein Secrets

led 02/27/09 Page 23 of 347 throughout the Class Period. During the Class Period, when the price of Bear Stearns' shares was artificially inflated, Schwartz sold 91,233 shares for a total realized value of $9,867,001. 25. Defendant Warren J. Spector ("Spector") was Co-President, Co-COO of the Company f

) of the Exchange Act (Against the Officer Defendants) 214 COUNT III For Violations of Section 20A of the Exchange Act (Against Defendants Cayne, Schwartz, Spector, Molinaro, Greenberg, and Farber) 215 vi EFTA00316720 Case 1:08-cv-02793-RWS Document 102 Filed 02/27/09 Page 8 of 347 PRAYER FOR REL

to applicable clients and firm professionals. The ARAs are included in the AICPA's annual Audit and Accounting Manual ("AAM"). 345. In particular, Farber, Bear Steams' Senior Vice President-Finance and Controller, had previously been a partner with Deloitte. Accordingly, Farber should have had familia

Defendants) 214 COUNT III For Violations of Section 20A of the Exchange Act (Against Defendants Cayne, Schwartz, Spector, Molinaro, Greenberg, and Farber) 215 vi EFTA00316720 Case 1:08-cv-02793-RWS Document 102 Filed 02/27/09 Page 8 of 347 PRAYER FOR RELIEF 116 DEMAND FOR JURY TRIAL 218 vii

e value of level three assets and the Company's VaR, as described in paragraphs 589 to 790 below. 466. Moreover, as alleged in 1 274 to 278 above, Schwartz offered false reassurances to the public while the Company's liquidity plummeted the week of March 10, 2008. On March 10, 2008, the Company's liqui

7. In connection with the Company's 2006 Form 10-K, Defendants Cayne and Molinaro executed the applicable Rule 302 certification. 358. Defendants Schwartz and Molinaro filed identical certifications with respect to the Company's 2007 Form 10-K. 359. As explained above and in the Company's regulatory

and 10-K. 124 EFTA00316852 Case 1:08-cv-02793-RWS Document 102 Filed 02/27/09 Page 140 of 347 501. The quarterly and annual reports signed by Farber repeatedly touted the Company's risk management, including its use of internally-developed models to derive the fair value of the Company's financi

mpliance Inspections and Examinations ("OCIE") 117 EFTA00316845 Case 1:08-cv-02793-RWS Document 102 Filed 02/27/09 Page 133 of 347 to Defendant Farber, who reported directly to Molinaro. The disclosure controls and procedures that Molinaro purportedly put in place should have informed him that the

overing any more Bear Stearns risk. 793. Furthermore, according to the 2008 OIG Report, the Company informed TM on March 12, 2008, the same day as Schwartz's statement, that "Bear Steams paid out $1.1 billion in disputes to numerous counterparties in order to squelch rumors that Bear Steams could not m

any's liquidity pool on March II, 2008, even adjusting for the customer protection rule, stood at $15.8 billion. 788. On March 12, 2008, Defendant Schwartz, Bear Steams' CEO, appeared on CNBC and said that the Company's liquidity position and balance sheet had not weakened at all. "We finished the year

rt to more accurately measure risk of loss." 726. In fact, the Company had undertaken no such review, and its Controller and Principal Accountant, Farber, had been repeatedly warned by government regulators that the Company's VaR models were inaccurate and out of date. According to the 2008 OIG Report

ed by, among others, 193 EFTA00316921 Case 1:08-cv-02793-RWS Document 102 Filed 02/27/09 Page 209 of 347 defendants Greenberg, Cayne, Schwartz, Farber and Molinaro. The Form 10-K made misrepresentations regarding the Company's financial results, risk management practices, exposure to market risk,