Bear Stearns Sued Over Concealed Mortgage Losses
Posted by admin under: Main Nov 21
A Bear Stearns shareholder who owns 115 shares of the embattled investment bank filed a lawsuit against the company late Monday at the U.S. District Court in Manhattan.
Plaintiff Samuel Cohen’s lawsuit claims Bear Stearns knowingly developed a plan to hide its “tremendously risky subprime mortgage portfolio,” and at the same time assured its investors that the company was properly handling its risk.
The lawsuit accuses Chief Executive James Cayne and 16 others, including President Alan Schwartz, Chief Financial Officer Sam Molinaro and other directors of being “well aware of the impending crisis” in the mortgage industry before the truth was revealed in mid-Summer.
Among other things, the complaint seeks damages, improved corporate governance, separating the chairman and chief executive roles, and other changes.
Bear Stearns responded with a statement, saying the lawsuit lacked merit and that it would defend itself accordingly.
Shares of Bear Stearns are down roughly 42 percent this year, with its market value falling roughly $10 billion since the beginning of the year.
Analysts expect Bear to report a fourth-quarter loss of $1.36 per share, according to Reuters Estimates, after writing down $1.2 billion related to mortgage losses.
The investment bank’s shares ended the day down 18 cents, or 0.19%, to $93.87, well below its 52-week high of $172.61.
In related news, an AIG shareholder sued several of the company’s officials on Tuesday over the insurer’s exposure to subprime mortgages.
Shares of AIG ended the day down 91 cents, or 1.64%, to $54.44, just above its 52-week low of $53.06.
Source: Bear Stearns Sued Over Concealed Mortgage Losses
Wednesday, November 21st, 2007 at 10:18 am and is filed under Main. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.