Over the last two days, Bear Stearns (BCS) shares have gone from an intra-day high of $60.43 to a low of $58.50. Based on news from CNBC, the shares could go lower in the next week.
It appears that law firm Bernstein Litowitz Berger and Grossman is being retained by some investors in two hedge funds that were virtually wiped out from large bets on risky mortgages are preparing to sue the financial company, according to Reuters. The theory behind the legal action is that documents describing the risks of the funds were misleading.
Reuters points out that the investors in the funds were sophisticated, so the suit may not wash.
But, BSC does not need the distraction, and the sub-prime mortgage hedge fund issue may be getting worse. If so, Bear Stearns may be in for several months of scrutiny as the market looks for people to blame.
Another witch hunt from investors who won’t blame themselves for losing their money.
Douglas A. McIntyre
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