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Bear Stearns Securities Fraud Lawyers

The lawyers and attorneys at our firm are offering free case evaluations to victims of Bear Stearns securities fraud. Bear Stearns stockholders lost billions after the investment bank was forced into a "shot-gun marriage" with JP Morgan Chase in March 2008. JP Morgan was able to acquire Bear Stearns for a mere $10 per share, even though the stock of the investment bank had been trading at $60 per share a week before the acquisition.

There is evidence that Bear Stearns developed a scheme to conceal its risky subprime mortgage portfolio and overstated its financial condition, all the while assuring investors the company had sound risk management. If you or someone you know suffered a financial loss as a result of this fraud, we urge you to contact one of the Bear Stearns securities fraud lawyers at our firm to protect your legal rights.

The "rescue" by JP Morgan became necessary after the collapse of the subprime mortgage market in 2007. Bear Stearns was one of the biggest underwriters of complex investments linked to mortgages, and in 2007, the investment bank had to write down more than $1.9 billion due to over-exposure to subprime mortgages. Two of its hedge funds, heavily invested in subprime mortgages, had folded in July.

Bear’s investors became increasingly reluctant to do business with the company. Despite the company’s assurances that it had plenty of cash on hand to continue operations, it collapsed in March 2008. Because it was linked to so many other financial institution, the collapse of Bear Stearns threatened the already precarious financial markets. 

The Federal Reserve was desperate to prevent a “fire sale” of Bear Stearns’ assets, which could have further depressed markets. The Fed bailout included the $30 billion in non-recourse funding to JP Morgan.  Non-recourse funding means that if the collateral goes bad, the Fed can’t come after JP Morgan for other assets.  In the end, taxpayers could be on the hook for the Bear Stearns debacle.

While Bear Stearns stockholders saw the value of their shares decline all year, some investors managed to dump their stock before the 2007 write downs. Those fortunate Bear Stearns stockholder were Alan Greenberg, Sam Molinaro, James Cayne and Warren Spector -- all top officers at Bear Stearns. Between them, the four quietly cashed out more than $57 million worth of company stock before the crisis hit.

The executives saved themselves nearly $16 million by their well-timed sales, which were disclosed in a series of public filings. Company filings also reveal that Bear Stearns awarded a staggering $140 million in bonuses to top executives in 2006, just before the crisis left other Bear Stearns investors reeling.

Prior to the announcement of the takeover, the SEC enforcement division had written a letter to JP Morgan that discussed “investigations and potential future inquiries into conduct and statements by Bear Stearns”.  In the letter, the SEC enforcement attorneys “declined to provide assurances about possible future enforcement actions” and said it would be premature to reach conclusions about their inquiry.

In June 2008, Ralph Cioffi and Mathew Tannin, managers of the collapsed Bears Stearns hedge funds, were indicted by a federal grand jury on nine counts of conspiracy, securities fraud and wire fraud.  US prosecutors say e-mails, suggesting that their funds were headed for trouble, were allegedly sent by the two four days before they told investors they were comfortable with their holdings.  Tannin allegedly e-mailed Cioffi saying he was afraid that the market for bond securities they had invested in was “toast,’’ and suggested shutting the funds, the Journal said. 

Legal Help for Victims of Bear Stearns Securities Fraud

If you are a Bear Stearns shareholder and suffered a financial loss, you have valuable legal rights. Please contact us by filling out our online form or calling 1-800-LAW INFO (1-800-529-4636) for a free consultation with one of our experienced Bear Stearns securities fraud lawyers.

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