Toward a Proximate Cause? AP reports that the June 2007 "implosion of the [Bear Stearns subprime] hedge funds foreshadowed Bear Stearns' own demise..."

By Brett Sherman

In a story published this morning - Ex-Bear Stearns managers arrested at their homes
the Associated Press reported that Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin were arrested by federal authorities on suspicion of "misleading investors about the risky subprime mortgage market."  According to the AP story, the arrests were the product of a securities fraud investigation that has been going on for more than a year.  Details of the indictment are expected later today (Thursday, June 19). 

In a recent post, I pointed out how (in my opinion), the story was one worth following closely for former Bear Stearns employee shareholders and Bear Stearns investors who suffered substantial losses and are contemplating an opt out lawsuit or other claim against BSC / JP Morgan.  From the start of the Bear meltdown, there were arguments to be made that subprime hedge fund implosions in 2007 were the starting gun for the long slide into oblivion for Bear Stearns. 

These arrests, and comments from writers who have followed the events closely (The AP, The Wall Street Journal) do not prove that the proximate cause of Bear Stearns stock losses are to be found in the 2007 hedge fund collapses or the events leading up to them.  However, each comment like this morning's pronouncement by the AP that the "implosion of the [Bear Stearns subprime] hedge funds foreshadowed Bear Stearns' own demise..." and yesterday's WSJ observation that Bear "never recovered" from the collapse of the two hedge funds are the type of comments that make the words PROXIMATE CAUSE flash before this lawyer's eyes.

More on this story as it continues to develop...  To reach Brett Sherman, call 201-723-9470, or email me at Brett.Sherman@shermanlawyers.net.

Comments

[RaIrlvarlCap]

i am gonna show this to my friend, dude