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CNBC EXCLUSIVE: CNBC TRANSCRIPT: CNBC'S SCOTT COHN WITH EXCLUSIVE REPORT ON SEC HANDLING OF BEAR STEARNS ON "WALL STREET CRISIS TODAY: IS YOUR MONEY SAFE?"

CNBC EXCLUSIVE: CNBC TRANSCRIPT: CNBC'S SCOTT COHN WITH EXCLUSIVE REPORT ON SEC'S HANDLING OF BEAR STEARNS ON CNBC'S "WALL STREET CRISIS TODAY: IS YOUR MONEY SAFE?" TODAY

WHEN: Today, Friday, October 10th at 8:10PM ET

WHERE: CNBC's "WALL STREET CRISIS: IS YOUR MONEY SAFE?"

Following is the unofficial transcript of an exclusive report by CNBC Sr. Correspondent Scott Cohn, on CNBC's "WALL STREET CRISIS: IS YOUR MONEY SAFE?"

All references must be sourced to CNBC.

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SCOTT COHN: AS WE'VE BEEN REPORTING THE SEC'S INSPECTOR GENERAL HAS BEEN HARSHLY CRITICAL OF THE AGENCY'S HANDLING OF BEAR STEARNS, OF COURSE THE FIRST BIG INVESTMENT BANK TO FALL VICTIM OF THE CREDIT CRUNCH. THIS LATEST REPORT - HERE IT IS - OBTAINED TONIGHT BY CNBC SUGGESTS THE AGENCY LET BEAR STEARNS SLIDE IN AN INVESTIGATION OF DEBT SECURITIES THAT GOES BACK TO 1999.

IT SAYS AN SEC REGIONAL DIRECTOR TOLD A BEAR STEARNS ATTORNEY, WHO ALSO HAPPENED TO BE A LONG-TIME FRIEND, THAT "CHRISTMAS IS COMING EARLY" AS HE DROPPED THE CASE LATE LAST YEAR. THE REPORT SAYS OTHER STAFFERS WERE STUNNED BY THE DECISION SINCE THE COMMISSION HAD ALREADY INFORMED BEAR STEARNS IT PLANNED TO FILE CHARGES AND BEAR STEARNS HAD ALREADY OFFERED TO SETTLE.

WHAT'S MORE, ACCORDING TO THE REPORT, THE U.S ATTORNEY IN MANHATTAN WAS PURSUING A BROADER INVESTIGATION AND DROPPING THIS CASE BLEW WHAT THE INSPECTOR GENERAL CALLS A SIGNIFICANT OPPORTUNITY TO UNCOVER SYSTEMIC PROBLEMS AT BEAR STEARNS, AGAIN, LAST YEAR. TONIGHT THE SEC IS DEFENDING ITS DECISION TO DROP THE CASE. A WRITTEN RESPONSE FROM THE ENFORCEMENT DIVISION CALLS THE INSPECTOR GENERAL'S REPORT MISLEADING AND FULL OF SPECULATION AND INUENDO. THE INSPECTOR GENERAL THOUGH, IS CALLING FOR DISCIPLINARY ACTION AGAINST THAT SEC DIRECTOR DAVID NELSON OUT OF MIAMI. THE SEC SAYS IT WILL NOT COMMENT ON PERSONNEL MATTERS.

AND JUST LAST MONTH WE REPORTED EXCLUSIVELY THAT THE INSPECTOR GENERAL FOUND SIGNIFICANT PROBLEMS WITH THE AGENCY'S SELF-REGULATORY PROBLEM, PROGRAM, THAT IS, FOR INVESTMENT BANKS. THE SEC SUBSEQUENTLY SCRAPPED THAT PROGRAM EVEN THOUGH THERE ARE NO BIG INVESTMENT BANKS LEFT TO REGULATE ANY MORE.


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