"“We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.” "

Chinese premier Wen Jiabao 12th March 2009

""We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system."

Timothy Geithner US Secretary of the Treasury, previously President of the Federal Reserve Bank of New York.1/3/2009

Friday, December 21, 2007

Bank robbers don't carry guns and wear masks these days

"The good times of too-high price almost always engender much fraud. All people are most credulous when they are most happy; and when much money has just been made, . . . . there is a happy opportunity for ingenious mendacity." Walter Bagehot Lombard Street 1873

Bear Stearns - serial NY Bankruptcy Court appearances - fugitive UK citizen in the dock in Vienna - white collar crime - banking Caribbean styleiz Bear Stearns - serial NY Bankruptcy Court appearances - fugitive UK citizen in the dock in Vienna - white collar crime - banking Caribbean style Postman Patel Sat. Sept 1 st 2001.

"Bear Stearns had two funds that got creamed in so-called collateralized debt obligations, or CDOs, backed by home-loan bonds and other "assets" they were"Bear Stearns High-Grade Structured Credit Strategies Master Fund Ltd., 07-12383 " which raised US $642 million on the launch last last summer. (Ralph Coffi managed the fund and to lose 20% in it's brief 10 mionth life - they had "re-stated losses" in April from 6.5% to 18.97 or 23% for the year). It looks like investors have lost their shirt and attorney's are hovering on behalf of distressed clients.

A sister and less ambitiously titled fund - " Bear Stearns High- Grade Structured Credit Strategies Enhanced Leverage Master Fund Ltd., 07-12384," fared better but flunked all the same. However the 4 year old fund which launched with US$916 had been thrown a US$3.2 Bn lifebelt by Bear Stearns.

In August Judge Lifland in the Bloomberg) S. Bankruptcy Court, Southern District of New York (Manhattan) this week refused to grant protection from U.S. lawsuits for Bear Stearns Cos.' two bankrupt hedge funds, finding the Cayman Islands wasn't the proper jurisdiction for them to liquidate assets.``The only adhesive connection with the Cayman Islands that the funds have is the fact that they are registered there,''

``There are no employees or managers in the Cayman Islands, " he added in his written judgement," the investment manager for the funds is located in New York, the administrator that runs the back-office operations of the funds is in the United States along with the funds' books and records, and prior to the commencement of the foreign proceeding, all of the funds' liquid assets were located in the United States.''

On the Sunday Afternoon of August 4th August 4th Bear Stearns CEO Warren J. Spector resigned.

Barclays Bank sue BS

Barclays Bank is understood to be seeking unspecified damages, in an amount to be determined in a jury trial - BS say , "we believe this lawsuit is an attempt by Barclays to avoid taking responsibility for its own actions." Ho.Ho.Ho.

Barclays said that it had lent up to $400 million to Bear's asset management division (BSAM).

It claims that it was defrauded by the unit and Matthew Tannin, a Bear Stearns fund manager, with the help of Ralph Cioffi, another executive. (fingered by Lord Patel in SEptember)

Mr Cioffi is already under investigation by the Securities and Exchange Commission, the American regulator, over allegations that he withdrew about $2 million of his own money from one of the funds before its collapse.

Barclays alleges (with good cause) that Mr Cioffi and Mr Tannin misled it over the value and security of the funds, the High-Grade Structured Credit Strategies Fund and the High-Grade Structured Credit Strategies Enhanced Leverage Fund.

In the court papers Barclays also claims that Bear Stearns dumped troubled investments in the riskier of the two funds. (Bankers , my word is my bond etc., ?????)

It states: "Bear Stearns, BSAM and Cioffi hatched a plan to make more money for themselves and further to use the Enhanced Funds a repository for risky, poor-quality investments by creating a new investment vechicle called Everquest Financial Ltd ... co-led by Cioffi and through which he stood to benefit personally."

"Bear Stearns is solidly in the red on $1.9bn sub-prime hit"

Is the headline in Friday's Times after BS announced $854 million loss(US$6.9 a share) for the three months to November compares to a $563 million profit in the final quarter of 2006 ( US$4.00 a share - a OS$10.00 turnround). Revenues fell from $2.4 billion to a $379 million loss in the final quarter. For the full-year, profits fell from $2.1 billion to $233 million while turnover declined from $9.2 billion to $5.9 billion.

Elsewhere Morgan Stanley's Chief Executive Officer John Mack said he would not accept a bonus this year after reporting the first (and whopping loss) loss in the 72 year history of the bank.

See also Deal Breaker "Bear also owned a significant minority stake in ACA, the small bond insurer downgraded yesterday by Standard & Poor’s. Although Bear didn’t have a managerial role in ACA, it’s potential collapse does not sit well with some managers already wary of what the fund manager who spoke to DealBreaker called “the Bear curse.

Also Financial Times " Bear to tackle fall in prime brokerage" ..."Bear’s decline in prime brokerage began about three years ago and has been accelerated by its recent mortgage-related troubles, including the collapse of two hedge funds run by the bank’s asset management division,...."The troubles have raised questions about its financial stability."

Also Blogging buyouts Were Bear Stearns' collapsed hedge funds pyramid schemes?

Also the Big Picture

Billionaire Warren E. Buffett said his Berkshire Hathaway won’t buy a stake in Bear Stearns, while China Citic Bank said it is not in any talks to buy into troubled bank and currently has no plan for such a stake purchase.

October 18th 2007 NYT Buffett and Citic Deny Bear Stearns Talks

Billionaire Warren E. Buffett said his Berkshire Hathaway won’t buy a stake in Bear Stearns, while China Citic Bank said it is not in any talks to buy into troubled bank and currently has no plan for such a stake purchase.

Their denials follow a New York Times report last month that Bear Stearns, among the institutions hardest-hit by the subprime mortgage crisis in the United States, was in talks with investors, including Mr. Buffett and Citic, about selling a stake."

BS shares were approx US$115 a share at the time and closed shade below US$90 yesterday.


Anonymous said...

This may be significant,

"Law Society of England and Wales and Others v Shah and Others

Chancery Division

“Where a third party was not able to pursue a debt claim directly against a bankrupt due to the fact that the bankruptcy had been discharged, thereby extinguishing the claim, the third party could none the less pursue the claim against the bankrupt’s insurers once the third party had obtained a decision admitting the claim in bankruptcy.”

Note that the link is only active for one week.

George Dutton said...

"Authors@Google: Paul Krugman"

"The Economist said he is "the most celebrated economist of his generation."

Will be worse than anything since the Great Depression...


(C) Very Seriously Disorganised Criminals 2002/3/4/5/6/7/8/9 - copy anything you wish