FINRA DISPUTE RESOLUTION, INC. In the Matter of the Arbitration Between: FINANCIAL TRUST COMPANY, INC., and THE C.O.U.Q. FOUNDATION, INC., Claimants, v. THE BEAR STEARNS COMPANIES, INC., BEAR, STEARNS & CO. INC., BEAR STEARNS ASSET MANAGEMENT INC., and WARREN SPECTOR, Respondents. FINRA No. 09-00979 STATEMENT OF ANSWER Pursuant to Rule 12303 of the NASD Code of Arbitration Procedure for Customer Disputes, Respondents The Bear Stearns Companies, Inc. ("BSC), Bear, Stearns & Co. Inc. (Bq&Co.), and Bear Stearns Asset Management Inc. ("BSAM") (collectively, the "Bear Stearns Respondents"), by their attorneys, Kramer Levin Naftalis & Frankel LLP, respectfully submit this Statement of Answer. PRELIMINARY STATEMENT In this proceeding, highly sophisticated investors sock to recover losses they suffered as a result of their own speculation. Claimants Financial Trust Company, Inc. ("FTC") and The C.O.U.Q. Foundation, Inc. ("COUQ") are entities that billionaire investor Jeffrey Epstein operates from a 75-acre private island he owns in the U.S. Virgin Islands, and from offices in New York. As of June 2008, when Epstein pleaded guilty to two felonies and was sentenced to 18 months' imprisonment, he had over 25 years of Ttperience as an investment adviser. FTC, the entity through which Epstein ran his advised, busess, had a clientele limited to individuals ICU 2747929.5 EFTA00294815