This preliminary pricing supplement relates to an effective registration statement under the Securities Act of 1933, but is not complete and may be changed. This preliminary pricing supplement and the accompanying prospectus supplement and prospectus are not an offer to sell these securities and are not soliciting an offer to buy these securities in any state where such an offer or sale would not be permitted.

Subject to Completion, dated March 14, 2005

PRICING SUPPLEMENT

(To Prospectus Dated February 2, 2005 and
Prospectus Supplement Dated February 2, 2005)

The Bear Stearns Companies Inc.

$[•] Principal Protected Notes, Linked to the Appreciation, if any,
in the Value of a Basket of Asian Currencies Against the U.S. Dollar
Due March [•], 2007

·         The Notes are fully principal protected if held to maturity and are linked to the potential appreciation, against the United States dollar (the “U.S. dollar”), in the value of an equally weighted basket comprised of the following six Asian currencies: (1) the Japanese yen (“JPY”); (2) the Indian rupee (“INR”); (3) the Korean won (“KRW”); (4) the Chinese renminbi (yuan) (“CNY”); (5) the Singapore dollar (“SGD”); and (6) the New Taiwan dollar (“TWD”).  (JPY, INR, KRW, CNY, SGD and TWD are each a “Component” and collectively the “Basket”.)  When we refer to Notes in this pricing supplement, we mean Notes with a principal amount of $1,000.  On the Maturity Date you will receive the Cash Settlement Value, an amount in cash that depends on the relation of the Final Basket Level to the Initial Basket Level.

·         The Notes will allow you to participate in only [40.00 - 50.00]% of the potential appreciation in the Basket against the U.S. dollar.  You will not participate in the full amount of appreciation, if any, in the Basket.

·         Because the Notes are principal protected if held to maturity, the Cash Settlement Value will equal the principal amount of Notes, plus the greater of:

$0.00, and

$1,000 x [40.00-50.00]% x (Final Basket Level-1)

If, at maturity, the Final Basket Level is less than the Initial Basket Level (i.e., if the Basket depreciates against the U.S. dollar), the Cash Settlement Value will be $1,000.  Because the Notes are principal protected if held to maturity, in no event will the Cash Settlement Value be less than $1,000.

·         The CUSIP number for the Notes is 073928P98.

INVESTMENT IN THE NOTES INVOLVES CERTAIN RISKS.  THERE MAY NOT BE A SECONDARY MARKET IN THE NOTES, AND IF THERE WERE TO BE A SECONDARY MARKET, IT MAY NOT BE LIQUID.  YOU SHOULD REFER TO “RISK FACTORS” BEGINNING ON PAGE PS—11.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Notes or determined that this pricing supplement, or the accompanying prospectus supplement and prospectus, is truthful or complete.  Any representation to the contrary is a criminal offense.

‡      Any additional reissuances will be offered at a price to be determined at the time of pricing of each offering of Notes, which will be a function of the prevailing market conditions and Basket Level at the time of the relevant sale.

We may grant the agents a 30-day option from the date of the final pricing supplement, to purchase from us up to an additional $[•] of Notes at the public offering price, less the agent’s discount, to cover any over-allotments.

We expect that the Notes will be ready for delivery in book-entry form only through the book-entry facilities of The Depository Trust Company in New York, New York, on or about the Settlement Date, against payment in immediately available funds.  The distribution of the Notes will conform to the requirements set forth in Rule 2720 of the National Association of Securities Dealers, Inc. Conduct Rules.

Bear, Stearns & Co. Inc.
March [•], 2006

SUMMARY

This summary highlights selected information from the accompanying prospectus and prospectus supplement and this pricing supplement to help you understand the Notes linked to the appreciation, if any, in the value of the Basket against the U.S. dollar.  You should carefully read this entire pricing supplement and the accompanying prospectus supplement and prospectus to fully understand the terms of the Notes, as well as the principal tax and other considerations that are important to you in making a decision about whether to invest in the Notes.  You should carefully review the section “Risk Factors” in this pricing supplement and “Risk Factors” in the accompanying prospectus supplement, which highlight a number of significant risks, to determine whether an investment in the Notes is appropriate for you.  All of the information set forth below is qualified in its entirety by the more detailed explanation set forth elsewhere in this pricing supplement and the accompanying prospectus supplement and prospectus.  If information in this pricing supplement is inconsistent with the prospectus or prospectus supplement, this pricing supplement will supersede those documents.  In this pricing supplement, the terms “Company,” “we,” “us” and “our” refer only to The Bear Stearns Companies Inc., excluding its consolidated subsidiaries.

Selected Investment Considerations

·         Principal protection—Because the Notes are principal protected if held to maturity, in no event will you receive a Cash Settlement Value less than $1,000 per Note. If the Final Basket Level is less than the Initial Basket level, the Cash Settlement Value will be $1,000.

·         No current income—We will not pay any interest on the Notes.  The yield on the Notes may be less than the overall return you would earn if you purchased a conventional debt security at the same time and with the same maturity.

·         Diversification—The Basket represents the relationship between the Components and the U.S. dollar, and the Notes may appreciate if the Basket increases; i.e., if the value of the Basket appreciates against the U.S. dollar.  Therefore, the Notes may allow you to diversify an existing portfolio or investment.

·         Low minimum investment—The minimum purchase is $1,000, with increments of $1,000 thereafter.

Selected Risk Considerations

·         Limited participation in the appreciation of the Basket—The Notes may not be an attractive investment for investors who have a bullish view of the Basket in the short term (and want 100% exposure to the appreciation).  If held to maturity, the Notes allow you to participate in only [40.00 - 50.00]% of the potential appreciation in the Basket.

·         Possible loss of value in the secondary market—Your principal investment in the Notes is protected only if you hold your Notes to maturity.  If you sell your Notes prior to the Maturity Date, you may receive less, and possibly significantly less, than the amount you originally invested.

·         No interest, dividend or other payments—During the term of the Notes, you will not receive any periodic interest or other distributions and such payments will not be included in the calculation of the Cash Settlement Value you will receive at maturity.

·         The Notes will not be listed on any securities exchange—You should be aware that we cannot ensure that a secondary market in the Notes will develop; and, if such market does develop, it may not be liquid.  Our subsidiary, Bear, Stearns & Co. Inc. (“Bear Stearns”) has advised us that it intends, under ordinary market conditions, to indicate prices for the Notes on request.  However, we cannot guarantee that bids for outstanding Notes will be made in the future; nor can we predict the price at which any such bids will be made.  In any event, any such market-making activities will cease as of the close of business on the Maturity Date.

PS-2

·         The Components may not move in tandem—At a time when the value of one or more of the Components increases, the value of one or more of the other Components may decline. Therefore, in calculating the Basket Performance, increases in the value of one or more of the Components may be moderated, or wholly offset, by lesser increases or declines in the value of one or more of the other Components.

·         Taxes — The U.S. federal income tax consequences of an investment in Notes are uncertain.  We intend to treat the Notes as short-term debt obligations subject to the rules governing foreign currency gain or loss for U.S. federal income tax purposes.  See “Certain U.S. Federal Income Tax Considerations” below.

PS-3

KEY TERMS

PS-4

PS-5

PS-6

Offers and sales of the Notes are subject to restrictions in certain jurisdictions.  The distribution of this pricing supplement and the accompanying prospectus supplement and prospectus and the offer or sale of the Notes in certain other jurisdictions may be restricted by law.  Persons who come into possession of this pricing supplement, and the accompanying prospectus supplement and prospectus or any Notes must inform themselves about and observe any applicable restrictions on the distribution of this pricing supplement, the accompanying prospectus supplement and prospectus and the offer and sale of the Notes.  Notwithstanding the minimum denomination of $1,000, the minimum purchase for any purchaser domiciled in a Member State of the European Union shall be $100,000.

QUESTIONS AND ANSWERS

What are the Notes?

The Notes are a series of our senior debt securities, the value of which is linked to the performance of the Basket. The Notes will not bear interest, and no other payments will be made prior to maturity. See the section “Risk Factors.”

The Notes will mature on the Maturity Date. The Notes do not provide for earlier redemption.  When we refer to Notes in this pricing supplement, we mean Notes with a principal amount of $1,000.  You should refer to the section “Description of the Notes.”

Are the Notes equity or debt securities?

The Notes are our unsecured debt securities.  The Notes are principal protected if held to maturity.  However, the Notes differ from traditional debt securities in that the Notes may offer only [40.00 - 50.00]% of the positive performance of the Basket Level, if any, (i.e., of the potential appreciation in the value of the Basket against the U.S. dollar).

What will I receive at Maturity of the Notes?

We have designed the Notes for investors who want to protect a substantial portion of their investment by receiving at least 100% of the principal amount of their Notes at maturity, while also having an opportunity to participate in [40.00 - 50.00]% of the potential appreciation in the Basket. An investor in the Notes will not participate in the full appreciation, if any, in the Basket.  Upon maturity of the Notes, for each Note you own, you will receive a payment equal to the “Cash Settlement Value,” an amount in cash per Note, in U.S. dollars, that is based upon the Final Basket Level in relation to the Initial Basket Level.

Because the Notes are principal protected if held to maturity, the Cash Settlement Value will equal the principal amount of Notes, plus the greater of:

$0.00, and

$1,000 x [40.00-50.00]% x (Final Basket Level-1)

The Final Basket Level equals the percentage change in the Basket:

For more specific information about the Cash Settlement Value and for illustrative examples, you should refer to the section “Description of the Notes.”

Will there be additional offering of the Notes?

Under certain limited circumstances, and at our sole discretion, we may offer further issuances of the Notes.  These further issuances, if any, will be consolidated to form a single series with the Notes and will have the same

PS-7

CUSIP number and will trade interchangeably with the Notes immediately upon settlement.  Any additional issuance will increase the aggregate principal amount of the outstanding Notes of this series to include the aggregate principal amount of any Notes bearing the same CUSIP number that are issued pursuant to (i) any 30-day option we grant to Bear, Stearns & Co. Inc., and (ii) any future issuances of Notes bearing the same CUSIP number.  The price of any additional offerings will be determined at the time of pricing of each offering, which will be a function of the prevailing market conditions and level of the Basket at the time of the relevant sale.

We will treat any additional offerings of Notes as part of the same issue as the Notes for US federal income tax purposes. Accordingly, for purposes of the Treasury regulations governing original issue discount on debt instruments, we will treat any additional offerings of Notes as having the same issue date, the same issue price and, with respect to holders, the same adjusted issue price as the Notes.  Consequently, the “issue price” of any additional offering of Notes for U.S. federal income tax purposes will be the first price at which a substantial amount of the Notes were sold to the public (excluding sales to bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents, or wholesalers).  If we offer further issuances of the Notes, we will disclose the treatment of any relevant accrued interest.

What does “principal protected” mean?

“Principal protected” means that at maturity your principal investment in the Notes will not be at risk as a result of a decrease in the Basket.  At maturity, if the Final Basket Level is less than the Initial Basket Level, the Cash Settlement Value will be $1,000.  You may receive less than the principal amount of the Notes if you sell your Notes prior to maturity.

Will I receive interest on the Notes?

You will not receive any interest payments on the Notes.

How have the prices of the Components performed historically?

We have provided tables showing the price performance of the Components beginning in January 2001.  You can find these tables in the section “Description of the Components — Historical Data on the Components ” in this pricing supplement.  We have provided this historical information to help you evaluate the behavior of the prices of the Components in various economic environments; however, please note that this time period is relatively limited and past performance is not indicative of the manner in which the prices of the Components will perform in the future.  You should refer to the section “Risk Factors — The historical performance of the Components is not an indication of the future performance of the Components .”

Will the Notes be listed on a securities exchange?

The Notes will not be listed on any securities exchange; and we do not expect a secondary market to develop, which may affect the price that you receive for your Notes upon any sale prior to maturity.  Bear Stearns has advised us that they intend, under ordinary market conditions, to indicate prices for the Notes on request.  However, we cannot guarantee that bids for outstanding Notes will be made in the future; nor can we predict the price at which any such bids will be made.  In any event, any market-making transactions in the Notes will cease as of the close of business on the Maturity Date.  You should refer to the section “Risk Factors.”

What is the role of Bear Stearns?

Bear Stearns will be our agent for the offering and sale of the Notes.  After the initial offering, Bear Stearns intends, under ordinary market conditions, to buy and sell the Notes to create a secondary market for holders of the

PS-8

Notes and may stabilize or maintain the market price of the Notes during the initial distribution of the Notes.  However, Bear Stearns will not be obligated to engage in any of these market activities or to continue them once they are begun.

Who will act as Calculation Agent?

Bear Stearns Forex Inc. will be our Calculation Agent for purposes of calculating the Cash Settlement Value.  Under certain circumstances, these duties could result in a conflict of interest between Bear Stearns Forex Inc.’s status as our subsidiary and its responsibilities as Calculation Agent.  You should refer to “Risk Factors—The Calculation Agent is our affiliate which could result in a conflict of interest.”

Can you tell me more about The Bear Stearns Companies Inc.?

We are a holding company that, through our broker-dealer and international bank subsidiaries, principally Bear Stearns, Bear, Stearns Securities Corp., Bear, Stearns International Limited (“BSIL”) and Bear Stearns Bank plc, is a leading investment banking, securities and derivatives trading, clearance and brokerage firm serving corporations, governments, institutional and individual investors worldwide.  For more information about us, please refer to the section “The Bear Stearns Companies Inc.” in the accompanying prospectus.  You should also read the other documents we have filed with the Securities and Exchange Commission, which you can find by referring to the section “Where You Can Find More Information” in the accompanying prospectus.

Who should consider purchasing the Notes?

Because the Notes are tied to the increase, if any, in the value of the Basket against the U.S. dollar, they may be appropriate for investors with specific investment horizons who seek to participate in the potential increase of the Basket against the U.S. dollar.  In particular, the Notes may be an attractive investment for investors who:

·         want exposure to the potential increase in the Basket against the U.S. dollar;

·         believe that the level of the Basket will increase over the term of the Notes (i.e., that the value of the Basket will increase against the U.S. dollar);

·         do not want to place their principal at risk and are willing to hold the Notes until maturity;

·         are willing to forgo interest payments or any other payments in return for full principal protection if held to maturity and participation of [40.00 - 50.00]% in any appreciation in the level of the Basket; and

·         understands that the values of the Components may not move in tandem and that increases in one or more Components may be offset by decreases in one or more other Components.

The Notes may not be a suitable investment for you if you:

·         wish to participate in 100% of any appreciation in the Basket;

·         seek current income or dividend payments from your investment;

·         seek an investment with an active secondary market;

·         are unable or unwilling to hold the Notes until maturity; or

·         have a bearish view of the value of the Basket against the U.S. dollar over the term of the Notes.

What are the U.S. federal income tax consequences of investing in the Notes?

The U.S. federal income tax consequences of an investment in Notes are uncertain.  We intend to treat the Notes as short-term debt obligations subject to the rules governing foreign currency gain or loss for U.S. federal income tax purposes.  See “Certain U.S. Federal Income Tax Considerations” below.

PS-9

Does ERISA impose any limitations on purchases of the Notes?

An employee benefit plan subject to the fiduciary responsibility provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”) or a plan that is subject to Section 4975 of the Internal Revenue Code, including individual retirement accounts, individual retirement annuities or Keogh plans, or any entity the assets of which are deemed to be “plan assets” under ERISA regulations, will be permitted to purchase, hold and dispose of the Notes only on the condition that such plan or entity makes the deemed representation that its purchase, holding and disposition of the Notes will not constitute a prohibited transaction under ERISA or Section 4975 of the Internal Revenue Code for which an exemption is not available.  Government plans subject to any substantially similar law will also be subject to this condition.

Are there any risks associated with my investment?

Yes.  The Notes are subject to a number of risks.  You should refer to the section “Risk Factors” in this pricing supplement and “Risk Factors” in the accompanying prospectus supplement.

PS-10

RISK FACTORS

The Notes are principal protected if held to maturity.  You will be subject to risks not associated with conventional fixed-rate or floating-rate debt securities.  Prospective purchasers of the Notes should understand the risks of investing in the Notes and should reach an investment decision only after careful consideration, with their advisers, of the suitability of the Notes in light of their particular financial circumstances, the following risk factors and the other information set forth in this pricing supplement and the accompanying prospectus supplement and prospectus.  These risks include the possibility that the Basket Level will fluctuate, and the possibility that you will receive a lower amount of principal if the Notes are sold prior to maturity.  We have no control over a number of matters, including economic, financial, regulatory, geographic, judicial and political events, that are important in determining the existence, magnitude, and longevity of these risks and their impact on the value of, or the payment made on, the Notes.

At maturity, the Notes may not pay more than the principal amount.

The Cash Settlement Value will be greater than your initial principal investment only if the Final Basket Level is greater than the Initial Basket Level; i.e., if the Final Basket Level is greater than 100.  The Cash Settlement Value will equal at least the principal amount of your Notes only if you hold your Notes to maturity.  If you sell your Notes in the secondary market prior to maturity, you will not be entitled to principal protection and you may receive less, and possibly significantly less, than the initial public offering price of $1,000 per Note.  You therefore should be able and willing to hold your Notes until maturity.

You will not receive any interest payments on the Notes.

You will not receive any periodic payments of interest or any other periodic payments on the Notes.  On the Maturity Date, you will receive a payment per Note equal to the Cash Settlement Value.  Thus, the overall return you earn on your Notes may be less than that you would have earned by investing in a non-currency-related debt security of comparable maturity that bears interest at a prevailing market rate.  For more specific information about the Cash Settlement Value and for illustrative examples, you should refer to the section “Description of the Notes.”

Your yield, if any, may be below market interest rates on the Calculation Date.

You may receive a Cash Settlement Value that is below what we would pay as of the issuance date if we had issued non-callable senior debt securities with a maturity similar to that of the Notes.

The Notes are subject to foreign exchange risk.

The relationship between the U.S. dollar and the Components comprising the Basket varies based on a number of interrelated factors, including economic, financial and political events or actions that we cannot control.  There can be no assurance that the Basket Level will appreciate against the U.S. dollar over the term of the Notes.

The Components are volatile and are affected by numerous factors specific to each international country.

The value of each Component, which is primarily affected by the supply and demand for the Component and the U.S. dollar, may be affected by political, economic, financial, legal, accounting and tax matters specific to the country in which the Component is the official currency. Relevant factors include the possibility that exchange controls with respect to the Component and U.S. dollar could be imposed or modified, the possible imposition of regulatory controls or taxes, the overall growth and performance of the economies of the U.S. and Component country, the trade and current account balance between the U.S. and the Component country, market interventions by the Federal Reserve Board or the central bank of the Component country, inflation, interest rate levels, the performance of the stock markets in the U.S. and the Component country, the stability of the governments and banking systems of the U.S. and Component country, wars in which the U.S. and the Component country are directly or indirectly involved or that occur anywhere in the world, major natural disasters in the U.S. or the Component country, and other foreseeable and unforeseeable events.  Factors that may affect the likelihood of the Component country imposing exchange control

PS-11

restrictions include the extent of the country’s foreign currency reserves, the balance of payments, the extent of governmental surpluses and deficits, the size of the country’s debt service burden relative to the economy as a whole, regional hostilities, terrorist attacks or social unrest, and political constraints to which the country may be subject.  The Component country's government may choose to affect the exchange rate of its currency by central bank intervention, imposition of regulatory controls, taxes, revaluation or devaluation of the currency, the issuance of a replacement currency or by other available means.  The value of the Component may also be affected by the operation of, and the identity of persons and entities trading on, interbank and interdealer foreign exchange markets in the U.S. and elsewhere.

Investments linked to foreign currencies involve risks associated with the currency markets of those countries, including risks of volatility and governmental intervention in those markets. There is also generally less publicly available information about foreign currencies and foreign fiscal and economic policies than there is concerning the U.S. dollar and U.S. fiscal and economic policies.

Japan.  The Japanese yen is permitted to fluctuate in value relative to the U.S. dollar. However, the government may choose to affect the exchange rate of its currency by central bank intervention, imposition of regulatory controls, taxes, revaluation or devaluation of the currency, the issuance of a replacement currency or by other available means.

Republic of India.  During the past decade, the Indian government has pursued policies of economic liberalization and deregulation, but the government’s role in the economy has remained significant. The Indian government allows the exchange rate to float freely, without a fixed target or band, but will intervene when it deems necessary to preserve stability. It also has the ability to restrict the conversion of rupees into foreign currencies, and under certain circumstances investors that seek to convert rupees into foreign currency must obtain the approval of the Reserve Bank of India.

The Republic of Korea.  Prior to 1997, the Korean government permitted currency exchange rates to float within a daily range of 2.25%. In response to economic difficulties in 1997, the government expanded the range of permitted currency exchange rate fluctuations to 10%. In December 1997, the government eliminated the daily currency exchange rate band and the Korean won now floats according to market forces. However, any existing or future restrictions on currency exchange in the Republic of Korea could affect the exchange rate between the Korean won and the U.S. dollar.

The People’s Republic of China.  Since the beginning of 1994, the Chinese government has used a managed floating exchange rate system, under which the People’s Bank of China allows the renminbi to float within a specified band around the central exchange rate that is published daily by the People’s Bank. In July 2005, the Bank revalued the renminbi by 2% and announced that in the future it would set the value of the renminbi with reference to a basket of currencies rather than solely with reference to the U.S. dollar. In addition, the Bank recently announced that the reference basket of currencies used to set the value of the renminbi will be based on a daily poll of market dealers and other undisclosed factors. To the extent that management of the renminbi results in trading levels that do not fully reflect market forces, any further changes in the government’s management of its currency could result in significant movement in the exchange rate between the Chinese renminbi and the U.S. dollar.

Singapore.  The Singapore dollar is permitted to fluctuate in value relative to the U.S. dollar. However, the government may choose to affect the exchange rate of its currency by central bank intervention, imposition of regulatory controls, taxes, revaluation or devaluation of the currency, the issuance of a replacement currency or by other available means.

Taiwan.  The Taiwan dollar is allowed to float according to market forces, but the government has from time to time intervened to minimize fluctuation of the exchange rate and to prevent significant declines in the Taiwan dollar with respect to the U.S. dollar. In addition, the exchange rate may be affected by developments in relations between Taiwan and the People’s Republic of China, which has threatened to use military force to gain control over Taiwan in limited circumstances, such as a declaration of independence by Taiwan.

The Basket is geographically limited.

The Basket is comprised of six Asian currencies. Therefore, the foreign currency exposure achieved by the Basket is limited geographically. Because the Basket is limited to six Asian currencies, events occurring in Asia which affect that region could have a negative impact on more than one, or all, of the Components at the

PS-12

same time, which could have an adverse effect on the value of the Notes. For example, a financial crisis could erupt in Asia and lead to sharp declines in the currencies, stock markets and other asset prices of a number of Asian countries, threatening their financial systems, disrupting their real economies and causing political upheaval. A financial crisis or other event in any of the Component countries could have a negative impact on some or all of the Components and, consequently, the value of the Notes may be adversely affected.

The Components may not move in tandem; and gains in one Component may be offset by declines in another Component.

Price movements in the Components comprising the Basket may not move in tandem.  At a time when the value of one or more of the Components increases, the value of one or more of the other Components may decline.  Therefore, in calculating the Basket Performance, increases in the value of one or more of the Components may be moderated, or wholly offset, by lesser increases or declines in the value of one or more of the other Components.

Changes in correlation among the prices of the Components may adversely affect the value of the Notes.

Correlation is the extent to which the levels among the Components increase or decrease to the same degree at the same time. To the extent that correlation among the Components changes, the value of the Notes may be adversely affected.  For example, if the price of one Component increases sharply and the others depreciate slightly or remain unchanged, the Basket Level may depreciate, which may cause the value of the Notes to decline. Moreover, a sharp decrease in the price of one or more of the Components relative to the others may cause the Basket Level, during the term of the Notes, or Final Basket Level to decline below the Initial Basket Level and, therefore, limit the Cash Settlement Value to the principal of your Notes.

You must rely on your own evaluation of the merits of an investment in the Notes.

In connection with your purchase of the Notes, we urge you to consult your own financial, tax and legal advisors as to the risks entailed by an investment in Notes and to investigate the Components and the Basket and not rely on our views in any respect.  You should make such investigation as you deem appropriate as to the merits of an investment in the Notes.  In the ordinary course of our business, we may from time to time express views on expected movements in the foreign currency markets in general and in the Components in particular.  These views may vary over differing time horizons and are subject to change without notice.  Moreover, other professionals who deal in the currency markets may at any time have views that differ significantly from ours.

The liquidity, trading value and Cash Settlement Value under the Notes could be affected by the actions of the governments of the United States and the countries in which the Basket currencies are the official currency.

Governments, from time to time, may not allow their currencies to float freely in response to economic forces or, as is currently the case with China, may use a managed floating system.  Moreover, governments, including those of the United States and the countries in which the Basket currencies are the official currencies, use a variety of techniques, such as intervention by their central banks or imposition of regulatory controls or taxes, to affect the exchange rates of their respective currencies.  Governments may also issue a new currency to replace an existing currency or alter the exchange rate or relative exchange characteristics by devaluation or revaluation of a currency.  Thus, a special risk in purchasing the Notes is that their liquidity, trading value and Cash Settlement Value could be affected by the actions of sovereign governments which could change or interfere with currency valuation and the movement of currencies across borders.  There will be no adjustment or change in the terms of the Notes in the event that exchange rates should become fixed, or in the event of any devaluation or revaluation or imposition of exchange or other regulatory controls or taxes, or in the event of the issuance of a replacement currency or in the event of any other development affecting the Basket or the U.S. dollar.

PS-13

The Interdealer market in foreign currencies is an around-the-clock market; however, if a secondary market develops, the Notes may trade only during regular trading hours in the United States.

The interdealer market for foreign currencies is a global, around-the-clock market.  Therefore, the hours of trading for the Notes may not conform to the hours during which the Components and the U.S. dollar are traded.  To the extent that U.S. markets are closed while international markets remain open, significant movements may take place in the underlying foreign exchange markets that will not be reflected immediately in the price of the Notes.  There is no systematic reporting of last-sale information for foreign currencies.  Reasonable current bid and offer information is available in certain brokers’ offices and to others who wish to subscribe for this information, but this information may not necessarily reflect the spot rate relevant for determining the value of the Notes.  The absence of last-sale information and the limited availability of quotations to individual investors would make it difficult for many investors to obtain timely, accurate data about the state of the underlying foreign exchange markets.

Tax consequences.

The U.S. federal income tax consequences of an investment in Notes are uncertain.  We intend to treat the Notes as short-term debt obligations subject to the rules governing foreign currency gain or loss for U.S. federal income tax purposes.  See “Certain U.S. Federal Income Tax Considerations” below.

The historical performance of the Components is not an indication of the future performance of the Components.

The historical performance of the Components, which is included in this pricing supplement, should not be taken as an indication of the future performance of the Components.  It is impossible to predict whether the value of the Components will fall or rise.  The Components will be influenced by the complex and interrelated economic, financial, regulatory, geographical, judicial, political and other factors that can affect the capital markets generally and the currency trading markets in particular, and by various circumstances that can affect the value of a particular currency in relation to another currency.

The price at which you will be able to sell your Notes prior to maturity will depend on a number of factors and may be substantially less than you had originally invested.

If you wish to liquidate your investment in the Notes prior to maturity, your only alternative would be to sell them.  At that time, there may be an illiquid market for Notes or no market at all.  Even if you were able to sell your Notes, there are many factors outside of our control that may affect their trading value.  We believe that the value of your Notes will be affected by the value and volatility of the Components, whether or not the Basket Level is greater than or equal to the Initial Basket Level, changes in interest rates in the international markets, the supply of and demand for the Notes and a number of other factors.  Some of these factors are interrelated in complex ways; as a result, the effect of any one factor may be offset or magnified by the effect of another factor.  The price, if any, at which you will be able to sell your Notes prior to maturity may be substantially less than the amount you originally invested if, at such time, the value of the Basket is less than, equal to or not sufficiently above the value of the Basket on the date you purchased the Notes.  The following paragraphs describe the manner in which we expect the trading value of the Notes will be affected in the event of a change in a specific factor, assuming all other conditions remain constant.

·         Value of the Basket.  We expect that the trading value of the Notes will depend substantially on the amount, if any, by which the Basket Level at any given time is greater than the Initial Basket Level (i.e., by the amount, if any, of appreciation in the Basket Level against the U.S. dollar).  If you decide to sell your Notes when the Basket Level is greater than the Initial Basket Level, you may nonetheless receive substantially less than the amount that would be payable at maturity based on that Basket Level because of expectations that the Basket Level will continue to fluctuate until the Final Basket Level is determined.  Economic, financial and other developments that affect the Components may also affect the value of the Notes.

·         Volatility of theComponents.  Volatility is the term used to describe the size and frequency of market fluctuations.  Generally, if the volatility of the Components decreases, the trading value of the Notes will

PS-14

decrease; and, if the volatility of the Components increases, the trading value of the Notes will increase.  The effect of the volatility of the Components on the trading value of the Notes may not necessarily decrease over time during the term of the Notes.

·         Interest rates.  We expect that the trading value of the Notes will be affected by changes in interest rates in the international markets.  In general, if U.S. interest rates increase, the value of outstanding debt securities tends to decrease; conversely, if U.S. interest rates decrease, the value of outstanding debt securities tends to increase.  Interest rates also may affect the U.S. and international economies and, in turn, the Components and the value of the Basket, which would affect the value of the Notes.

·         Our credit ratings, financial condition and results of operations.  Actual or anticipated changes in our current credit ratings (A1 by Moody’s Investor Service, Inc. and A by Standard & Poor’s Rating Services), as well as our financial condition or results of operations may significantly affect the trading value of the Notes.  However, because the return on the Notes is dependent upon factors in addition to our ability to pay our obligations under the Notes, such as the Basket Level, an improvement in our credit ratings, financial condition or results of operations is not expected to have a positive effect on the trading value of the Notes.

·         Time remaining to maturity.  A “time premium” results from expectations concerning the value of the Basket during the period prior to the maturity of the Notes.  As the time remaining to the maturity of the Notes decreases, this time premium will likely decrease, potentially adversely affecting the trading value of the Notes.

·         Events involving the relevant currencies.  General economic, political, legal and other political conditions affecting the Components, and real or anticipated changes in those conditions or results, may affect the trading value of the Notes.

·         Size and liquidity of the secondary market.  The Notes will not be listed on any securities exchange; and there may not be a secondary market in the Notes, which may affect the price that you receive for your Notes upon any sale prior to maturity.  If a secondary market does develop, there can be no assurance that there will be liquidity in the secondary market.  If the secondary market for the Notes is limited, there may be a limited number of buyers for your Notes if you do not wish to hold your investment until maturity.  This may affect the price you receive upon any sale of the Notes prior to maturity.  Bear Stearns has advised us that they intend, under ordinary market conditions, to indicate prices for the Notes on request.  However, we cannot guarantee that bids for outstanding Notes will be made in the future; nor can we predict the price at which any such bids will be made.

We want you to understand that the effect of one of the factors specified above, such as an increase in interest rates, may offset some or all of any change in the value of the Notes attributable to another factor, such as an increase in the Basket Level.

You have no rights to receive any Component.

Investing in the Notes will not make you a holder of any Component.  The Notes will be paid in U.S. dollars, and you will have no right to receive delivery of a Component.

PS-15

The Calculation Agent is our affiliate which could result in a conflict of interest.

Bear Stearns Forex Inc. will act as the Calculation Agent.  The Calculation Agent will make certain determinations and judgments in connection with calculating the Basket Level, the Final Basket Level, or deciding whether a Market Disruption Event has occurred.  You should refer to “Description of the Notes — Discontinuance of the Components,” “— Adjustments to the Components” and “— Market Disruption Events.”  Because Bear Stearns Forex Inc. is our affiliate, conflicts of interest may arise in connection with our affiliate performing its role as Calculation Agent.

Bear Stearns Forex Inc. and its affiliates may, at various times, engage in transactions involving the currencies to which the Basket relates for their proprietary accounts, and for other accounts under their management.  These transactions, if effected in substantial size, may influence the value of such currencies, and therefore the value of the Basket.  BSIL, an affiliate of Bear Stearns, will also be the counterparty to the hedge of our obligations under the Notes.  You should refer to “Use of Proceeds and Hedging.”  Accordingly, under certain circumstances, conflicts of interest may arise between Bear Stearns Forex Inc.’s responsibilities as Calculation Agent with respect to the Notes and BSIL’s obligations under our hedge.

Trading and other transactions by us or our affiliates could affect the prices of the Components, the level of the Basket, the trading value of the Notes or the amount you may receive at maturity.

We and our affiliates may from time to time buy or sell the Components or derivative instruments related to the Components for our own accounts in connection with our normal business practices or in connection with hedging our obligations under the Notes.  These trading activities may present a conflict of interest between your interest in the Notes and the interests we and our affiliates may have in our proprietary accounts, in facilitating transactions, including block trades, for our other customers and in accounts under our management.  The transactions, if effected in substantial size, could affect the prices of those Components or the level of the Basket in a manner that would be adverse to your investment in the Notes.  See the section “Use of Proceeds and Hedging.”

Hedging activities we or our affiliates may engage in may affect the prices of the Components and, accordingly, increase or decrease the trading value of the Notes prior to maturity and the Cash Settlement Value you would receive at maturity.  To the extent that we or any of our affiliates has a hedge position in either of the Components, or derivative or synthetic instruments related to the Components, we or any of our affiliates may liquidate a portion of such holdings at or about the time of the maturity of the Notes.  Depending on, among other things, future market conditions, the aggregate amount and the composition of such hedge positions are likely to vary over time.  Profits or losses from any of those positions cannot be ascertained until the position is closed out and any offsetting position or positions are taken into account.  Although we have no reason to believe that any of those activities will have a material effect on the prices of the Components, we cannot assure you that these activities will not affect such prices and the trading value of the Notes prior to maturity or the Cash Settlement Value payable at maturity.

In addition, we or any of our affiliates may purchase or otherwise acquire a long or short position in the Notes.  We or any of our affiliates may hold or resell the Notes.

We or any of our affiliates may also issue, underwrite or assist unaffiliated entities in the issuance or underwriting of other securities or financial instruments with returns indexed to the Components.  By introducing competing products into the marketplace in this manner, we or our affiliates could adversely affect the value of the Notes.

One or more of our affiliates have published, and may in the future publish, research reports regarding the currencies to which the Basket relates.  This research may be modified from time to time without notice and may express opinions or provide recommendations that are inconsistent with purchasing, holding or selling the Notes.  Any of these activities may affect the trading value of the Notes.  Similarly, we may in the past or may in the future issue Notes that permit a purchaser to take a different view with respect to the movements of the Components that do the notes (e.g., to take a bearish rather than a bullish view).

PS-16

The Cash Settlement Value you receive on the Notes may be delayed or reduced upon the occurrence of a Market Disruption Event, or an Event of Default.

If the Calculation Agent determines that, on the Calculation Date, a Market Disruption Event has occurred or is continuing, the determination of the value of one or more Components by the Calculation Agent may be deferred.  You should refer to the section “Description of the Notes — Market Disruption Events.”

If the Calculation Agent determines that an Event of Default (as defined below) has occurred, a holder of the Notes will only receive an amount equal to the trading value of the Notes on the date of such Event of Default, adjusted by an amount equal to any losses, expenses and costs to us of unwinding any underlying hedging or funding arrangements, all as determined by the Calculation Agent in its sole and absolute discretion.  You should refer to the section “Description of the Notes—Event of Default and Acceleration.”

You should decide to purchase the Notes only after carefully considering the suitability of the Notes in light of your particular financial circumstances.  You should also carefully consider the tax consequences of investing in the Notes.  You should refer to the section “Certain U.S. Federal Income Tax Considerations” and discuss the tax implications with your own tax advisor.

DESCRIPTION OF THE NOTES

The following description of the Notes (referred to in the accompanying prospectus supplement as the “Currency Indexed Notes”) supplements the description of the Notes in the accompanying prospectus supplement and prospectus.  This is a summary and is not complete.  You should read the indenture, dated as of May 31, 1991, as amended (the “Indenture”), between us and JPMorgan Chase Bank, N.A. (formerly, The Chase Manhattan Bank), as trustee (the “Trustee”).  A copy of the Indenture is available as set forth under the section of the prospectus entitled “Where You Can Find More Information.”

General

The Notes are part of a single series of debt securities under the Indenture described in the accompanying prospectus supplement and prospectus designated as Medium-Term Notes, Series B. The Notes are unsecured and will rank equally with all of our unsecured and unsubordinated debt, including the other debt securities issued under the Indenture. Because we are a holding company, the Notes will be effectively subordinated to the claims of creditors of our subsidiaries.

The aggregate principal amount of the Notes is specified on the cover.  The Notes will mature on the Maturity Date and do not provide for earlier redemption. The Notes will be issued only in fully registered form, and in minimum denominations of $1,000; provided, however, that the minimum purchase for any purchaser domiciled in a member state of the European Union shall be $100,000. Initially, the Notes will be issued in the form of one or more global securities registered in the name of DTC or its nominee, as described in the accompanying prospectus supplement and prospectus.  When we refer to Note or Notes in this pricing supplement, we mean $1,000 principal amount of Notes.  The Notes will not be listed on any securities exchange.

You should refer to the section “Certain U.S. Federal Income Tax Considerations,” for a discussion of certain federal income tax considerations to you as a holder of the Notes.

Future Issuances

Under certain limited circumstances, and at our sole discretion, we may offer further issuances of the Notes. These further issuances, if any, will be consolidated to form a single series with the Notes and will have the same CUSIP number and will trade interchangeably with the Notes immediately upon settlement. Any additional issuance will increase the aggregate principal amount of the outstanding Notes of this series, plus the aggregate principal amount of any Notes bearing the same CUSIP number that are issued pursuant to (i) any 30-day option we grant to Bear, Stearns & Co. Inc., and (ii) any future issuances of Notes bearing the same CUSIP number. The price of any additional offerings will be determined at the time of pricing of each offering, which will be a function of the prevailing market conditions and level of the Basket at the time of the relevant sale.

PS-17

Interest

We will not make any periodic payments of interest on the Notes.

Payment at Maturity

We have designed the Notes for investors who want to protect their investment by receiving at least 100% of the principal amount of their Notes at maturity, while also having an opportunity to participate in [40.00 - 50.00]% of the potential increase in the value of the Basket against the U.S. dollar if the Final Basket Level is greater than the Initial Basket Level (i.e., if the value of the Basket appreciates against the U.S. dollar).  At maturity, we will pay you the Cash Settlement Value, an amount in cash per Note, in U.S. dollars, that is based upon the Final Basket Level in relation to the Initial Basket Level.  The Notes will allow you to participate in only [40.00 - 50.00]% of the potential appreciation in the Basket. The Notes will not allow you to participate in the full amount of any such appreciation. Because the Notes are principal protected if held to maturity, the Cash Settlement Value will equal the principal amount of Notes, plus the greater of

$0.00, and

$1,000 x [40.00-50.00]% x (Final Basket Level-1).

The “Final Basket Level” will be determined by the Calculation Agent and will equal the percentage change in the Basket on the Calculation Date, determined as follows:

“JPY Initial” is equal to the JPY exchange rate at approximately 10:00 am New York time on the Pricing Date divided by 100, expressed as number of U.S. dollars per 100 Japanese Yen (Bloomberg: JPYUSD <Curncy>), as determined by the Calculation Agent.

“JPY Final” is equal to the JPY exchange rate at approximately 10:00 am New York time on the Calculation Date divided by 100, expressed as number of U.S. dollars per 100 Japanese Yen (Bloomberg: JPYUSD <Curncy>), as determined by the Calculation Agent.

“INR Initial” is equal to the INR exchange rate at approximately 10:00 am New York time on the Pricing Date, expressed as number of U.S. dollars per one Indian Rupee (Bloomberg: INRUSD <Curncy>), as determined by the Calculation Agent.

“INR Final” is equal to the INR exchange rate at approximately 10:00 am New York time on the Calculation Date, expressed as number of U.S. dollars per one Indian Rupee (Bloomberg: INRUSD <Curncy>), as determined by the Calculation Agent.

“KRW Initial” is equal to the KRW exchange rate at approximately 10:00 am New York time on the Pricing Date divided by 100, expressed as number of U.S. dollars per 100 Korean Won (Bloomberg: KRWUSD <Curncy>), as determined by the Calculation Agent.

“KRW Final” is equal to the KRW exchange rate at approximately 10:00 am New York time on the Calculation Date divided by 100, expressed as number of U.S. dollars per 100 Korean Won (Bloomberg: KRWUSD <Curncy>), as determined by the Calculation Agent.

PS-18

“CNY Initial” is equal to the CNY exchange rate at approximately 10:00 am New York time on the Pricing Date, expressed as number of U.S. dollars per one Chinese Yuan (Bloomberg: CNYUSD <Curncy>), as determined by the Calculation Agent.

“CNY Final” is equal to the CNY exchange rate at approximately 10:00 am New York time on the Calculation Date, expressed as number of U.S. dollars per one Chinese Yuan (Bloomberg: CNYUSD <Curncy>), as determined by the Calculation Agent.

“SGD Initial” is equal to the SGD exchange rate at approximately 10:00 am New York time on the Pricing Date, expressed as number of U.S. dollars per one Singapore Dollar (Bloomberg: SGDUSD <Curncy>), as determined by the Calculation Agent.

“SGD Final” is equal to the SGD exchange rate at approximately 10:00 am New York time on the Calculation Date, expressed as number of U.S. dollars per one Singapore Dollar (Bloomberg: SGDUSD <Curncy>), as determined by the Calculation Agent.

“TWD Initial” is equal to the TWD exchange rate at approximately 10:00 am New York time on the Pricing Date, expressed as number of U.S. dollars per one New Taiwan Dollar (Bloomberg: TWDUSD <Curncy>), as determined by the Calculation Agent.

“TWD Final” is equal to the TWD exchange rate at approximately 10:00 am New York time on the Calculation Date, expressed as number of U.S. dollars per one New Taiwan Dollar (Bloomberg: TWDUSD <Curncy>), as determined by the Calculation Agent.

The “Basket” is comprised of six Asian currencies: (1) the Japanese yen (“JPY”); (2) the Indian rupee (“INR”); (3) the Korean won (“KRW”); (4) the Chinese renminbi (yuan) (“CNY”); (5) the Singapore dollar (“SGD”); and (6) the New Taiwan dollar (“TWD”).  (JPY, INR, KRW, CNY, SGD and TWD are each a “Component” and collectively the “Basket”.)  The weighting of each Component is fixed at 1/6  or approximately 16.67% and will not change, unless any Component is modified during the term of the Notes.

The “Basket Level” equals:

where, n is equal to the respective currency exchange rate at approximately 10:00 am New York time on the applicable Currency Business Day, as determined by reference to the applicable Bloomber screen described in Final Basket Level above.

The “Initial Basket Level” equals 100.

The “Pricing Date” of the Notes is March [•], 2006.

The “Settlement Date” of the Notes is March [•], 2006.

The “Calculation Date” of the Notes is March [•], 2007, or, if that day is not a Currency Business Day, the next Currency Business Day shall be the Calculation Date.  If there is a Currency Disruption Event or a discontinuance of one or more Components or the Calculation Agent is unable to determine the Final Basket Level or a Successor Component for two consecutive Currency Business Days, the Final Basket Level shall be determined as described in “Description of the Notes.”

PS-19

The “Maturity Date” of the Notes is March [•], 2007.

A “Currency Business Day” will be a day, as determined by the Calculation Agent in its sole discretion, other than a Saturday or Sunday in the U.S., on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in the principal financial centers in each of the countries in which the currencies are the official currencies.

Illustrative Examples:

The following table demonstrating the hypothetical Cash Settlement Value of a Note is based on the assumptions outlined below.  The table does not purport to be representative of every possible scenario concerning increases or decreases in the Basket. You should not construe this table as an indication or assurance of the expected performance of the Notes. Actual returns may be different. This table demonstrating the hypothetical Cash Settlement Value of a Note is based on the following assumptions:

·         Investor purchases $1,000 aggregate principal amount of Notes at the initial public offering price of $1,000.

·         Investor holds the Notes to maturity.

·         The Initial Basket Level is equal to 100.00.

·         The Notes allow you to participate in [45.00]% of the potential increase in the Basket Level against the U.S. dollar.

·         All returns are based on a 18-month term; pre-tax basis.

No Market Disruption Events or Events of Default occur during the term of the Notes.

Discontinuance of a Component

If the Calculation Agent, in its sole discretion, determines that a Component has been removed from circulation or otherwise discontinued and banks dealing in foreign exchange and foreign currency deposits in the Component have commenced trading a successor or substitute currency substantially similar to the Component that the Calculation Agent determines, in its sole discretion, to be comparable to the Component (the “Successor Currency”) (the number of U.S. dollars which can be exchanged for one unit of such Successor Currency on the relevant Calculation Date being referred to herein as the “Successor Component”), then the Final Basket Level will be determined by

PS-20

reference to the Successor Component at the time determined by the Calculation Agent on the markets for the Successor Currency on the Calculation Date.

If the Calculation Agent determines that any Successor Component shall be utilized for purposes of calculating the Final Basket Level, the Calculation Agent will make such calculations and adjustments as, in the good faith judgment of the Calculation Agent, may be necessary in order to arrive at the Final Basket Level.

Upon any selection by the Calculation Agent of a Successor Component, the Calculation Agent will notify us and the Trustee, who will provide notice to you.  If a Successor Component is selected by the Calculation Agent, the Successor Component will be used as a substitute for the Component for all purposes, including for purposes of calculating the Cash Settlement Value and determining whether a Market Disruption Event exists.

If the Calculation Agent, in its sole discretion, determines that (i) it is unable to determine the Final Basket Level or Successor Component for two consecutive Currency Business Days, or (ii) that a Component has been removed from circulation or otherwise discontinued and that no Successor Component is available at such time, the Calculation Agent will determine, in its sole discretion, the value of the Component to be used for the Final Basket Level.  Notwithstanding the foregoing, if a Component has been removed from circulation or otherwise discontinued, and the Calculation Agent determines that no Successor Component is available at such time and no Successor Component is likely to become available, the Calculation Agent may, in its sole discretion, (i) at maturity, calculate the Final Basket Level without regard to that Component, or (ii) accelerate the Maturity Date for the Notes, calculate the Final Basket Level as specified above and calculate the Cash Settlement Value based upon such Final Basket Level.

Market Disruption Events

If there is a Market Disruption Event with respect to a Component on the date on which the Final Basket Level is to be determined, that Component will be determined on the basis of the first succeeding Currency Business Day on which there is no Market Disruption Event.  In no event, however, will the date with respect to which that Component is determined be a date that is more than two Currency Business Days following the original date that, but for the Market Disruption Event, would have been utilized to determine the Final Basket Level.  In that case, the second Currency Business Day will be deemed to be the Calculation Date, notwithstanding the Market Disruption Event, and the Calculation Agent will determine the Final Basket Level on that second Currency Business Day in accordance with the method of calculating the Final Basket Level in effect prior to the Market Disruption Event (that would have prevailed but for such suspension or limitation) as of that second Currency Business Day.

A “Market Disruption Event” means any of the following events, as determined by the Calculation Agent, in its sole discretion:

(a) the occurrence or existence of any condition or event (other than an event described in (b) below) which the Calculation Agent determines is material that, at any time, disrupts or impairs (as determined by the Calculation Agent in its sole discretion) the ability of market participants in general through legal channels to (A) convert a Component or any Successor Currency into U.S. dollars, (B) deliver U.S. dollars from accounts within the local jurisdiction for the Component or any Successor Currency, to accounts outside such jurisdiction, or (C) to deliver a Component or any Successor Currency between accounts within the local jurisdiction to a person that is a non-resident of such jurisdiction; or

(b) any other event, the Calculation Agent determines in its sole discretion, that materially interferes with our ability or our affiliates’ ability to unwind all or a material portion of a hedge with respect to the Notes that we or our affiliates have effected or may effect.

Redemption; Defeasance

The Notes are not subject to redemption before maturity, and are not subject to the defeasance provisions described in the section “Description of Debt Securities — Defeasance” in the accompanying prospectus.

PS-21

Events of Default and Acceleration

If an Event of Default (as defined in the accompanying prospectus) with respect to any Notes has occurred and is continuing, then the amount payable to you, as a beneficial owner of a Note, upon any acceleration permitted by the Notes will be equal to the Cash Settlement Value as though the date of early repayment were the Maturity Date of the Notes, adjusted by an amount equal to any losses, expenses and costs to us of unwinding any underlying or related hedging or funding arrangements, all as determined by the Calculation Agent in its sole and absolute discretion.  If a bankruptcy proceeding is commenced in respect of us, the claims of the holder of a Note may be limited under Title 11 of the United States Code.

Same-Day Settlement and Payment

Settlement for the Notes by Bear Stearns will be made in immediately available funds.  Payments of the Cash Settlement Value will be made by us in immediately available funds, so long as the Notes are maintained in book-entry form.

Calculation Agent

Bear Stearns Forex Inc. will be the Calculation Agent for the Notes.  All determinations made by Bear Stearns Forex Inc. as Calculation Agent will be at its sole discretion and will, in the absence of manifest error, be conclusive for all purposes and binding on you and us.  Because we are the issuer of the Notes and our subsidiary is the Calculation Agent, potential conflicts of interest may exist between you and us, including with respect to certain determinations and judgments that Bear Stearns Forex Inc. must make in determining the Cash Settlement Value.  Bear Stearns Forex Inc. is obligated to carry out its duties and functions as Calculation Agent in good faith and using its reasonable judgment.

DESCRIPTION OF THE BASKET

General

We obtained all information regarding the Components contained in this pricing supplement from publicly available information without independent verification.  The consequences of a discontinuation of the Components are described below.  We do not assume any responsibility for the accuracy or completeness of any information relating to the Components.

The currencies that will comprise the Basket are the Japanese yen (JPY), the Indian rupee (INR), the Korean won (KRW), the Chinese renminbi (yuan) (CNY), the Singapore dollar (SGD) and the New Taiwan dollar (TWD).  The exchange rates used to determine the Initial Basket Level and Final Basket Level are foreign exchange spot prices that measure the relative values of the Components against the U.S. dollar expressed as the number of U.S. dollars which can be exchanged for one unit of the applicable Component.  If the applicable Component depreciates against the U.S. dollar, the Exchange Rate decreases, because it takes fewer U.S. dollars to purchase one unit of the Component.  If the value of the Component appreciates against the U.S. dollar, the price of the Component increases, because it takes more U.S. dollars to purchase one unit of the Component.

The weighting of each Component is fixed at 1/6 or approximately 16.67% and will not change, unless any Component is modified during the term of the Notes.

Historical Data on the Components

The tables below were constructed using historical data regarding the prices of the Components.  The historical data is for illustrative purposes and is not indicative of the future performance of the Components or the future value of the Notes.  While the prices of the Components will determine the value of the Basket, it is impossible to predict whether the value of the Basket will rise or fall during the term of the Notes.  Trading prices of the Components will be influenced by both the complex and interrelated political, economic, financial and other factors that can affect the currency markets generally and the markets for the Components in particular.  Any historical upward or downward trend in the value of the Components during any period set forth below is not an indication that the Components are

PS-22

more or less likely to increase or decrease at any time during the term of the Notes.  All information in the tables that follow was obtained from Bloomberg, without independent verification.

The tables below set forth the highest and lowest daily levels during the applicable quarter, as well as the end-of-quarter closing levels of the Components for each quarter beginning with January 1, 2001 (expressed as the number of U.S. dollars which can be exchanged for one unit of the respective Component).

Japanese yen. 

Indian rupee. 

PS-23

Korean won. 

PS-24

Chinese renminbi (yuan). 

Singapore dollar. 

PS-25

New Taiwan dollar. 

Foreign Exchange Market

The foreign exchange market is the largest and most liquid financial market in the world.  The foreign exchange market is predominantly an over-the-counter market, with no fixed location and it operates 24 hours a day, seven days a week. London, New York City and Tokyo are the principal geographic centers of the world-wide foreign exchange market. Other, smaller markets include Singapore, Zurich and Frankfurt.

There are three major kinds of transactions in the traditional foreign exchange markets: spot transactions, outright forwards and foreign exchange swaps.  “Spot” trades are foreign exchange transactions that settle typically within two business days with the counterparty to the trade.  “Forward” trades are transactions that settle on a date beyond spot, and “swap” transactions are transactions in which two parties exchange two currencies on one or more specified dates over an agreed period and exchange them again when the period ends.  There also are transactions in currency options, which trade both over-the-counter and, in the U.S., on the Philadelphia Stock Exchange. Currency futures are transactions in which an institution buys or sells a standardized amount of foreign currency on an

PS-26

organized exchange for delivery on one of several specified dates, but typically closes out the contract prior to making or taking delivery.  Currency futures are traded in a number of regulated markets, including the International Monetary Market division of the Chicago Mercantile Exchange, the Singapore Exchange Derivatives Trading Limited (formerly the Singapore International Monetary Exchange) and the London International Financial Futures Exchange

Participants in the foreign exchange market have various reasons for participating. Multinational corporations and importers need foreign currency to acquire materials or goods from abroad. Banks and multinational corporations sometimes require specific wholesale funding for their commercial loan or other foreign investment portfolios. Some participants hedge open currency exposure through off-balance-sheet products.

The primary market participants in foreign exchange are banks (including government-controlled central banks), investment banks, money managers, multinational corporations and institutional investors. The most significant participants are the major international commercial banks that act both as brokers and as dealers. In their dealer role, these banks maintain long or short positions in a currency and seek to profit from changes in exchange rates. In their broker role, the banks handle buy and sell orders from commercial customers, such as multinational corporations. The banks earn commissions when acting as agent. They profit from the spread between the rates at which they buy and sell currency for customers when they act as principal.

CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS

In the opinion of Cadwalader, Wickersham & Taft LLP, special U.S. tax counsel to us, the following discussion summarizes certain U.S. federal income tax consequences of the purchase, beneficial ownership and disposition of Notes.  For purposes of this summary, a “U.S. holder” is a beneficial owner of a Note that is:

·            an individual who is a citizen or a resident of the United States for U.S. federal income tax purposes;

·            a corporation (or other entity that is treated as a corporation for U.S. federal tax purposes) that is created or organized in or under the laws of the United States or any State thereof (including the District of Columbia);

·            an estate whose income is subject to U.S. federal income taxation regardless of its source; or

·            a trust if a court within the United States is able to exercise primary supervision over its administration, and one or more United States persons, as defined for U.S. federal income tax purposes, have the authority to control all of its substantial decisions.

For purposes of this summary, a “Non-U.S. holder” is a beneficial owner of a Note that is:

·            a nonresident alien individual for U.S. federal income tax purposes;

·            a foreign corporation for U.S. federal income tax purposes;

·            an estate whose income is not subject to U.S. federal income tax on a net income basis; or

·            a trust if no court within the United States is able to exercise primary jurisdiction over its administration or if no United States persons, as defined for U.S. federal income tax purposes, have the authority to control all of its substantial decisions.

An individual may, subject to certain exceptions, be deemed to be a resident of the United States by reason of being present in the United States for at least 31 days in the calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year (counting for such purposes all of the days present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year).

PS-27

This summary is based on interpretations of the Internal Revenue Code of 1986, as amended (the “Code”), regulations issued thereunder, and rulings and decisions currently in effect (or in some cases proposed), all of which are subject to change.  Any such change may be applied retroactively and may adversely affect the U.S. federal income tax consequences described herein.  This summary addresses only U.S. holders that purchase Notes at initial issuance and beneficially own such Notes as capital assets and not as part of a “straddle,” “hedge,” “synthetic security” or a “conversion transaction” for U.S. federal income tax purposes, or as part of some other integrated investment.  This summary does not discuss all of the tax consequences that may be relevant to particular investors or to investors subject to special treatment under the U.S. federal income tax laws (such as banks, thrifts, or other financial institutions; insurance companies; securities dealers or brokers, or traders in securities electing mark-to-market treatment; mutual funds or real estate investment trusts; small business investment companies; S corporations; investors that hold their Notes through a partnership or other entity treated as a partnership for U.S. federal tax purposes; investors whose functional currency is not the U.S. dollar; certain former citizens or residents of the United States; persons subject to the alternative minimum tax; retirement plans or other tax-exempt entities, or persons holding the Notes in tax-deferred or tax-advantaged accounts; or “controlled foreign corporations” or a “passive foreign investment companies” for U.S. federal income tax purposes).  This summary also does not address the tax consequences to shareholders, or other equity holders in, or beneficiaries of, a holder of Notes, or any state, local or foreign tax consequences of the purchase, ownership or disposition of the Notes.

PROSPECTIVE PURCHASERS OF NOTES SHOULD CONSULT THEIR TAX ADVISORS AS TO THE U.S. FEDERAL, STATE, LOCAL, AND OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION TO WHICH THEY MAY BE SUBJECT.

In General

There are no regulations, published rulings or judicial decisions addressing the characterization for U.S. federal income tax purposes of securities with terms that are substantially the same terms as those of the Notes and, therefore, the U.S. federal income tax treatment of a Note is not free from doubt.  We intend to treat the Notes as short-term debt obligations for U.S. federal income tax purposes that are subject to the rules set forth in section 988 of the Code regarding foreign currency gain or loss, generally as described below.  Each holder agrees, by purchasing a Note, to treat it consistently with this approach, and this discussion generally assumes that the Notes will be so treated.  However, because the U.S. federal income tax treatment of the Notes is not free from doubt, the Notes may be subject to different treatment, in which case the U.S. federal income tax treatment of owning and disposing of the Notes could differ from the treatment discussed below.  Prospective investors of Notes should consult their tax advisors as to the tax consequences to them of the purchase, ownership, and disposition of the Notes, including possible alternative treatments.

Tax Treatment of U.S. Holders

Interest on the Notes

Cash method U.S. holders that do not elect to accrue interest on the Notes currently should not be required to report interest income on the Notes until receipt at maturity.  However, a cash method U.S. holder that does not elect to accrue interest on the Notes currently will be required to defer deductions for any interest paid on indebtedness incurred to purchase or carry the Notes in an amount not in excess of the accrued interest (generally determined as described in the subsequent paragraph) until maturity of the Notes.  If a cash method U.S. holder elects to accrue interest on the Notes currently, the election will apply for all short-term obligations acquired by the U.S. holder during the year for which the election is made and thereafter until the Internal Revenue Service (the “IRS”) consents to revocation of the election.

Accrual method U.S. holders, and cash method U.S. holders that elect to accrue interest on the Notes currently, should include the interest on the Notes in income as discount as it accrues on a straight-line basis or, if the U.S. holder elects, on a constant-yield method based on daily compounding.  However, because the amount of interest payable on the Notes is not determinable until their maturity, it is uncertain how a U.S. holder would accrue the interest.  Under one approach, a U.S. holder would wait until the maturity of a Note to determine the amount of the interest that should be accrued over the term of the Note, even if the Note matures after the close of the taxable year of purchase. Under another approach, the U.S. holder would accrue income in the taxable year of purchase based on

PS-28

the interest that the holder would receive if the Note matured on the last day of the U.S. holder’s taxable year.  Under a third approach, the U.S. holder would accrue interest in the taxable year of purchase at the yield at which we would issue a fixed-rate noncontingent debt instrument with terms and conditions similar to those of the Notes (the “comparable yield” of the Notes).  If the interest actually received under either of these last two approaches is less than the accrued amount then, in the taxable year of maturity, the U.S. holder would first reduce its interest accrual by the difference (but not below zero) and then would claim an ordinary loss for the excess.  Prospective purchasers can obtain the comparable yield of the Notes by contacting The Bear Stearns Companies Inc. Bill Bamber: (212) 272-6635.  Other approaches may be possible.  Prospective investors should consult with their tax advisors regarding the appropriate method of accruing interest on the Notes.

Sale, Exchange, Disposition or Redemption of the Notes

The treatment upon a taxable sale, exchange, disposition, or redemption for cash method U.S. holders that do not accrue interest on the Notes currently is unclear.  Under one approach, any gain realized would be ordinary income to the extent of the greater of the interest that had accrued on the Note at the time of its taxable sale, exchange, disposition, or redemption (under one of the methods described in the succeeding paragraph) and the gain attributable to changes in the value of the Basket, and the balance would be treated as short-term capital gain.  However, it is possible that all gain would be treated as ordinary income.  Under one approach, any loss would be foreign currency loss (treated as an ordinary loss) to the extent attributable to changes in the value of the Basket, and the balance would be treated as short-term capital loss.  However, it is possible that no loss would be treated as ordinary loss (and any loss would be treated as a short-term capital loss).

Accrual method U.S. holders, and cash method U.S. holders that elect to accrue interest on their Notes currently, will recognize gain or loss on the taxable sale, exchange, disposition, or redemption of a Note in an amount equal to the difference between the amount realized and the U.S. holder’s adjusted tax basis in the Note, which will generally be the purchase price of the Note increased by the amount of accrued interest.  The treatment of the gain or loss is unclear.  Under one approach, any gain would be foreign currency gain taxable as ordinary income to the extent attributable to changes in the value of the Basket, and thereafter would be treated as short-term capital gain.  However, it is possible that all gain would be treated as ordinary income.  Under one approach, any loss would be foreign currency loss (treated as an ordinary loss) to the extent attributable to changes in the value of the Basket, and thereafter would be treated as short-term capital loss.  Under a second approach, the loss would first reduce the interest accrued for the year, then would be treated as ordinary loss (but not foreign currency loss) to the extent of interest income accrued in the taxable year of purchase, and any excess would be treated as short-term capital loss.  Finally, it is possible that no loss would be treated as ordinary loss (and any loss would be treated as short-term capital loss).

Tax Treatment of Non-U.S. Holders

Taxation of Interest and Disposition of the Notes

Payments on the Notes to Non-U.S. holders will not be subject to U.S. federal income or withholding tax if the following conditions are satisfied:

·         the Non-U.S. holder does not actually or constructively own 10% or more of the total combined voting power of all classes of our stock entitled to vote,

·         the Non-U.S. holder is not a controlled foreign corporation for U.S. federal income tax purposes that is related to us through actual or constructive ownership,

·         the Non-U.S. holder is not a bank receiving interest on a loan made in the ordinary course of its trade or business,

·         each Component of the Basket is actively traded within the meaning of section 871(h)(4)(C)(v) of the Code, and

·         the payments are not effectively connected with a trade or business conducted by the Non-U.S. holder in the United States and either (a) the Non-U.S. holder provides a correct, complete and executed IRS Form W-8BEN, Form W-8EXP or Form W-8IMY (or successor form) with all of the attachments required by the IRS, or (b) the Non-U.S. holder holds its Note through a qualified intermediary (generally a foreign financial institution or clearing organization or a non-U.S. branch or office of a U.S. financial institution or clearing organization that is a party to a withholding agreement with the IRS) which has provided to us an

PS-29

IRS Form W-8IMY stating that it is a qualified intermediary and has received documentation upon which it can rely to treat the payment as made to a foreign person.

We believe that each Component of the Basket is currently actively traded within the meaning of section 871(h)(4)(C)(v).  If any of the above conditions are not satisfied, interest on the Notes will be subject to a 30% withholding tax when paid, unless an income tax treaty reduces or eliminates the tax or the interest is effectively connected with the conduct of a U.S. trade or business and the Non-U.S. holder provides a correct, complete and executed IRS Form W-8ECI.  In the latter case, such Non-U.S. holder will be subject to United States federal income tax with respect to all income from the Notes at regular rates applicable to U.S. taxpayers.

In general, gain realized on the sale, exchange or retirement of the Notes by a Non-U.S. holder will not be subject to U.S. federal income tax, unless:

·         the gain with respect to the Notes is effectively connected with a trade or business conducted by the Non U.S. holder in the United States, or

·         the Non-U.S. holder is a nonresident alien individual who holds the Notes as a capital asset and is present in the United States for more than 182 days in the taxable year of the sale and certain other conditions are satisfied.

A Note held by an individual who at death is a Non-U.S. holder will not be includible in the Non-U.S. holder’s gross estate for U.S. federal estate tax purposes if payments on the Notes to the Non-U.S. holder would not have been subject to U.S. federal income or withholding tax at the time of death under the tests described above.

Information Reporting and Backup Withholding

Distributions made on the Notes and proceeds from the sale of Notes to or through certain brokers may be subject to a “backup” withholding tax on “reportable payments” unless, in general, the Noteholder complies with certain procedures or notifies us that it is an exempt recipient.  Any amounts so withheld from distributions on the Notes generally would be refunded by the IRS or allowed as a credit against the Noteholder’s U.S. federal income tax, provided the Noteholder makes a timely filing of an appropriate tax return or refund claim.

Reports will be made to the IRS and to Noteholders that are not excepted from the reporting requirements.

CERTAIN ERISA CONSIDERATIONS

Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), prohibits the borrowing of money, the sale of property and certain other transactions involving the assets of plans that are qualified under the Code (“Qualified Plans”) or individual retirement accounts (“IRAs”) and persons who have certain specified relationships to them.  Section 406 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), prohibits similar transactions involving employee benefit plans that are subject to ERISA (“ERISA Plans”).  Qualified Plans, IRAs and ERISA Plans are referred to as “Plans.”

Persons who have such specified relationships are referred to as “parties in interest” under ERISA and as “disqualified persons” under the Code.  “Parties in interest” and “disqualified persons” encompass a wide range of persons, including any fiduciary (for example, investment manager, trustee or custodian), any person providing services (for example, a broker), the Plan sponsor, an employee organization any of whose members are covered by the Plan, and certain persons related to or affiliated with any of the foregoing.

The purchase and/or holding of the Notes by a Plan with respect to which the Company and/or Bear Stearns is a fiduciary and/or a service provider (or otherwise is a “party in interest” or “disqualified person”) would constitute or result in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code, unless such Notes are acquired or held pursuant to and in accordance with an applicable statutory or administrative exemption.  The Company and several of its subsidiaries, such as Bear Stearns, are each considered a “disqualified person” under the Code or “party in interest” under ERISA with respect to many Plans, although the Company is not a “disqualified person” with respect to an IRA simply because the IRA is established with Bear Stearns or because Bear Stearns provides brokerage to the IRA, and neither the Company nor Bear Stearns can be a “party in interest” to any IRA other than certain employer-sponsored IRAs as only employer-sponsored IRAs are covered by ERISA.

PS-30

Applicable exemptions may include certain prohibited transaction class exemptions (for example, Prohibited Transaction Class Exemption (“PTCE”) 84-14 relating to qualified professional asset managers, PTCE 96-23 relating to certain in-house asset managers, PTCE 91-38 relating to bank collective investment funds, PTCE 90-1 relating to insurance company separate accounts and PTCE 95-60 relating to insurance company general accounts.  A fiduciary of a Plan purchasing the Notes, or in the case of certain IRAs, the grantor or other person directing the purchase of the Notes for the IRA, shall be deemed to represent that its purchase, holding, and disposition of the Notes will not constitute a prohibited transaction under ERISA or Section 4975 of the Code for which an exemption is not available.

A fiduciary who causes an ERISA Plan to engage in a non-exempt prohibited transaction may be subject to a penalty under ERISA.  Code Section 4975 generally imposes an excise tax on disqualified persons who engage, directly or indirectly, in similar types of transactions with the assets of Plans subject to such Section.

In accordance with ERISA’s general fiduciary requirement, a fiduciary with respect to any ERISA Plan who is considering the purchase of the Notes on behalf of such plan should determine whether such purchase is permitted under the governing plan document and is prudent and appropriate for the ERISA Plan in view of its overall investment policy and the composition and diversification of its portfolio.  Plans established with, or for which services are provided by, the Company and/or Bear Stearns should consult with counsel prior to making any such acquisition.

Certain employee benefit plans, such as governmental plans (as defined in Section 3(32) of ERISA), and, if no election has been made under Section 410(d) of the Code, church plans (as defined in Section 3(33) of ERISA), are not subject to Section 406 of ERISA or Section 4975 of the Code.

However, such plans may be subject to the provisions of applicable federal, state or local law (“Similar Law”) materially similar to the foregoing provisions of ERISA or the Code.  Fiduciaries of such plans should consider applicable Similar Law when investing in the notes.  Each fiduciary of such a plan will be deemed to represent that the plan’s acquisition and holding of the notes will not result in a non-exempt violation of applicable Similar Law.

USE OF PROCEEDS AND HEDGING

At closing we will transfer the net proceeds from the sale of the Notes to BSIL, for its general corporate purposes.  In addition, BSIL, on or before the date of this pricing supplement, will enable us to hedge our anticipated exposure in connection with the Notes by the purchase and sale of exchange-traded and over-the-counter options on, or other derivative or synthetic instruments related to, the Components, cash or forward contract positions in the currencies to which the Components relate, futures contracts on the Components and/or options on such futures contracts.  At various times after the initial offering and before the maturity of the Notes, depending on market conditions (including the levels of the Components), in connection with hedging with respect to the Notes, we expect that BSIL will increase or decrease those initial hedging positions using dynamic hedging techniques and may take long or short positions in listed or over-the-counter options contracts on, or other derivative or synthetic instruments related to, the Components, cash or forward contracts in the relevant currencies, futures contracts on the Components and/or options on such future contracts.  In addition, BSIL may periodically purchase or otherwise acquire a long or short position in the Notes and may, in our or its discretion, hold or resell such Notes.  BSIL may also take positions in other types of appropriate financial instruments that may become available in the future.  If BSIL has a long hedge position in the currencies to which the Components relate, or options contracts in, or other derivative or synthetic instruments related to the Components, then BSIL may liquidate a portion of its holdings at or about the time of the maturity of the Notes.  Depending on, among other things, future market conditions, the total amount and the composition of such positions are likely to vary over time.  BSIL will not be able to ascertain our profits or losses from any hedging position until such position is closed out and any offsetting position or positions are taken into account.  Although we have no reason to believe that such hedging activity will have a material effect on the price of such options, currencies, futures contracts or options on futures contracts or on the Components, we cannot guarantee that BSIL will not affect such prices or Components as a result of its hedging activities.  You should also refer to “Use of Proceeds” in the accompanying prospectus.

PS-31

SUPPLEMENTAL PLAN OF DISTRIBUTION

Subject to the terms and conditions set forth in the Distribution Agreement dated as of June 19, 2003, as amended, the Agent Accession Agreement dated [•], 2005, and the Terms Agreement, dated [•], 2005, we have agreed to sell to each of the agents, as principal, and each of the agents has severally, and not jointly, agreed to purchase from us, the aggregate principal amount of Notes set forth opposite its name below.

The agents intend to initially offer $[•] of the Notes to the public at the offering price set forth on the cover page of this pricing supplement, and to subsequently resell the remaining face amount of the Notes at prices related to the prevailing market prices at the time of resale. In the future, the agents may repurchase and resell the Notes in market-making transactions, with resales being made at prices related to prevailing market prices at the time of resale or at negotiated prices.  We will offer the Notes to Bear Stearns at a discount of [•]% of the price at which the Notes are offered to the public.  Bear Stearns may reallow a discount to other agents not in excess of [•]% of the public offering price.

In order to facilitate the offering of the Notes, we may grant the agents a 30-day option from the date of the final pricing supplement, to purchase from us up to an additional $[•] of Notes at the public offering price, less the agent’s discount, to cover any over-allotments.   The agents may over-allot or effect transactions which stabilize or maintain the market price of the Notes at a level higher than that which might otherwise prevail in the open market.  Specifically, the agents may over-allot or otherwise create a short position in the Notes for its own account by selling more Notes than have been sold to them by us.    If this option is exercised, in whole or in part, subject to certain conditions, the agents will become obligated to purchase from us and we will be obligated to sell to the agents an amount of Notes equal to the amount of the over-allotment exercised. The Agents may elect to cover any such short position by purchasing Notes in the open market.

Payment of the purchase price shall be made in funds that are immediately available in New York City.

The agents may be deemed to be “underwriters” within the meaning of the Securities Act.  We have agreed to indemnify the agents against or to make contributions relating to certain civil liabilities, including liabilities under the Securities Act.  We have agreed to reimburse the agents for certain expenses.

The Notes are a new issue of securities with no established secondary market.  The Notes will not be listed on any securities exchange; and we do not expect a secondary market to develop.  Bear Stearns has advised us that, following completion of the offering of the Notes, it intends under ordinary market conditions, to indicate prices for the Notes on request, although it is under no obligation to do so and may discontinue any market-making activities at any time without notice.  Accordingly, no guarantees can be given as to whether an active secondary market for the Notes will develop or, if such a secondary market develops, as to the liquidity of such secondary market.  We cannot guarantee that bids for outstanding Notes will be made in the future; nor can we predict the price at which any such bids will be made.  The Notes will cease trading as of the close of business on the Maturity Date.

Bear Stearns may stabilize or maintain the price of the Notes by bidding for or purchasing Notes in the open market and may impose penalty bids, under which selling concessions allowed to syndicate members or other broker-dealers participating in the offering are reclaimed if Notes previously distributed in the offering are repurchased in connection with stabilization transactions or otherwise.  The effect of these transactions may be to stabilize or maintain the market price of the Notes at a level above that which might otherwise prevail in the open market.  The imposition of a penalty bid may also affect the price of the Notes to the extent that it discourages resales of Notes.  No representation is made as to the magnitude or effect of any such stabilization or other transactions.  Such stabilizing, if commenced, may be discontinued at any time and in any event shall be discontinued within a limited period.  No other party may engage in stabilization.

PS-32

Because Bear Stearns is our wholly-owned subsidiary, each distribution of the Notes will conform to the requirements set forth in Rule 2720 of the NASD Conduct Rules.

LEGAL MATTERS

The validity of the Notes will be passed upon for us by Cadwalader, Wickersham & Taft LLP, New York, New York.

PS-33