What a great way to deal with your problems: shelve them until everyone else in the world has forgotten what happened, then pay up without ever admitting you made a mistake.
It’s been almost 5 years since Bear Stearns, the 80-year-old investment bank, cratered under the weight of aggressive failed bets on securitized mortgaged backed products and became a ward of JP Morgan. A settlement was was just agreed upon between aggrieved Bear Stearns shareholders and the company and executives. The plaintiffs in the shareholder lawsuit contended that Bear had “secretly abandoned any meaningful effort to manage the huge risks it faced” from exposure to subprime and other mortgage-related securities, according to Reuters.
$275 million was paid to shareholders based upon allegations that the former Chief Executive James Cayne and other executives misled investors about the company’s financial problems. The Bear Stearns execs get to deny any wrongdoing in the settlement.
This story was a big deal when it happened, but now the public has all but lost interest, since so many other huge banks have gotten away with equally outrageous misdeeds in the intervening years.
The lawyers will make out well with their cut, but shareholders will walk away with pocket change. Bear Stearns share price plummeted from $170 dollars per share to $10. The $10 was pushed upon Jamie Dimon by the Federal Reserve and Treasury after he offered only $2.00 per share.
The real winner, of course, is Jamie Cayne, the former CEO. Yes, he lost hundred of millions of dollars; however he does not face any criminal charges or personal liability to dip into his own pocket. He demolished an historic bank and is free to play bridge without any accountability.
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