Jbo 4.2/Hibernate 3

Pretty much following the Transaction demo in Trailblazer demo:
http://trailblazer.demo.jboss.com/EJB3Trail/services/transaction/index.html

This sample shows rolling back an update transaction which works fine for me. The problem is that if my session bean is adding a new record it does not roll back when I throw a TransException.

In the code sample below "rec" is updated and "rec2" is a new record. I try to force a rollback by throwing a TransException. The rec update is rolled back but the new row (from rec2) is still persisted:

OutboundQueue rec = em.find(OutboundQueue.class, Integer.valueOf(1503));
 rec.setMessage("This message has been updated:" + new Date());

 OutboundQueue rec2 = new OutboundQueue();
 rec2.setGroupId("1");
 rec2.setMessage("123123123");

 em.persist(rec);
 em.persist(rec2);

 if (rec != null)
 throw new TransException();

Here is my EntityManager def:

@PersistenceContext(type = PersistenceContextType.TRANSACTION)
 protected EntityManager em;

I am including the following annotation on my method:

@TransactionAttribute(TransactionAttributeType.REQUIRED)

I've noticed that the flush mode on em is AUTO. I tried setting it to COMMIT via:

em.setFlushMode(FlushModeType.COMMIT);

... but it had no affect.

Any idea what might be wring here?