The Wall Street Law Journal

Attention Former Bear Stearns Senior Managing Directors: JP Morgan Litigation Releases Intended to Prevent You From Filing Lawsuits that Could Be Worth Millions

SLIGHTLY EDITED VERSION OF PRIOR RELEASE ON PR WEB; WRITTEN BY BRETT D. SHERMAN

Today, The Sherman Law Firm announced that former Bear Stearns Senior Managing Directors (SMDs) who have not signed JP Morgan litigation releases and waivers may have viable damages claims for BSC stock losses (including lost value of CAP Plan units) for substantially more than $100 per share or unit.

New York, NY (PRWEB) June 30, 2008 -- Because the clock is rapidly ticking toward a deadline for many former Bear SMDs to decide whether or not to sign severance agreement waivers and/or "CAP plan" accelerated vesting agreements (which include litigation releases), The Sherman Law Firm urges each Bear Stearns Senior Managing Director that has not already done so to immediately seek legal counsel for an evaluation of his or her unique situation.

Numerous reports from former Bear Stearns employees confirm that JP Morgan has recently offered Bear Stearns Senior Managing Directors (a) accelerated vesting of CAP Plan units (CAP plan - or Capital Accumulation Plan - units are essentially restricted shares of Bear Stearns stock that senior Bear executives accumulated through a special program), and (b) severance packages that include salary and bonus-based payments, as well as other benefits. To accept either of these offers from JP Morgan, an ex-Bear Stearns Senior Managing Director must sign an agreement that includes comprehensive litigation waivers and releases.

The waivers and releases that JP Morgan is forcing Bear SMD's to sign in exchange for benefits are designed to permanently bar virtually any type of litigation claim against Bear Stearns / JP Morgan, including claims for stock losses. Senior Managing Directors who elect to refuse the offer to sign JP Morgan's litigation releases WILL retain the right to sue, but they will also give up JP Morgan severance pay and other benefits, such as accelerated vesting of CAP Plan units (at JP Morgan's price of $10 per share/unit rather than the $100 or more that each share might be worth in a securities fraud lawsuit).

A qualified lawyer should be able to quickly help Bear Stearns Senior Managing Directors analyze the relative pros and cons of accepting benefits from JP Morgan vs. preserving the right to sue for BSC stock or CAP plan losses (and/or other claims). For most Bear Stearns Senior Managing Directors, the analysis ultimately is not very difficult. The primary question is whether the potential financial upside of suing JP Morgan for BSC stock losses is enough to justify a decision to forgo severance pay and other benefits in favor of pursuing what could be a far greater payout in litigation.

ILLUSTRATIONS: ***The estimates that follow are good faith estimates based on current research and a rapidly developing landscape of underlying facts. Because of the constantly mutating nature of the Bear Stearns situation, all damages figures must be construed as examples for purposes of illustration only and in NO WAY can be interpreted as a prediction by The Sherman Law Firm, or a guarantee of damages awards, verdicts, settlements or other results:

It now appears to The Sherman Law Firm that Bear Stearns Senior Managing Directors with (a) 3,750 CAP Plan units may have viable claims for legal damages of up to $500,000 or more, (b) 5000 CAP Plan units may have viable claims for legal damages of up to $700,000 or more, (c) 12,000 CAP Plan units may have viable claims for legal damages of up to $1.6 million or more, (d) 17,000 CAP Plan units may have viable claims for legal damages of up to $2.3 million or more, and (e) 20,000 CAP Plan units may have viable claims for legal damages of nearly $3 million.

Because most former Bear Stearns Senior Managing Directors must decide whether to accept severance benefits and other JP Morgan offers in the near future, SMDs should consider contacting a lawyer at the earliest possible opportunity.
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Managing Attorney Brett D. Sherman and The Sherman Law Firm - which is based in the New York City Metropolitan Area - represent former Bear Stearns employees, including Senior Managing Directors, from all over the country who have decided to "opt-out" of Bear Stearns class actions. Clients of The Sherman Law Firm (a) know that the average settlement in securities fraud class actions is less than 3% of total losses, and (b) believe that the chances of a higher recovery - though not guaranteed - are far better in an individual opt out lawsuit or arbitration against JP Morgan / Bear Stearns. Much more information on these topics is available at The Bear Stearns Law Blog.  Or contact The Sherman Law Firm directly by email - information@shermanlawyers.net, or by telephone at 201-723-9470.

CAP Plan Releases for Senior Bear Stearns Employees Hint that JP Morgan may be Desperate to Limit Litigation.

By Brett Sherman

Regarding severance benefits and litigation releases, the Bear Stearns Law Blog offered the following opinion in a prior post:

Severance packages exist solely to entice employees to sign severance agreements in which employees waive the right to sue to the employer.

In an interesting (and revealing) development, JP Morgan has gone well beyond the garden variety severance agreement in the firm's quest to obtain the signature of former Bear Stearns employees on litigation waivers.  The bank is offering benefits to former Bear employees that are not included in severance packages.  To qualify for one of these added perks (usually accelerated vesting of one benefit or another), the employee must sign an agreement - wholly independent of the severance agreement - that itself includes a comprehensive litigation waiver.  

JP Morgan is keenly aware that it faces the potential of immense legal liability to Bear Stearns employee shareholders and other Bear investors.  If it turns out - as seems quite possible today - that subprime hedge fund fraud during the first half of 2007 can be proved to be the proximate cause of the eventual downfall of Bear Stearns, then many shareholders may have viable damages claims for $140 per share or more. 

Well before the arrests of hedge fund managers Ralph Cioffi and Matthew Tannin, JP Morgan knew that civil and criminal prosecutions in connection with the failure of two Bear funds in June 2007 were a very real possibility.  JP Morgan also knew that lawyers, economists, business analysts, newspaper writers, law enforcement officials, and the SEC all would conclude that the failure of those funds resulted in the ultimate downfall of Bear Stearns itself. 

Because Bear's share price fell as the company fell, JP Morgan realizes that  many Bear shareholders (a) are potential plaintiffs, and (b) have apparently strong litigation claims.  Therefore, JP Morgan is trying hard to beach as many BSC shareholders as possible before the coming tidal wave of litigation. 

The strategy JP Morgan seems to have decided upon is to offer multiple incentives to former Bear employees, each with its own agreement, each with its own litigation waiver clause.  If a former Bear Stearns employee signs on the dotted line of an agreement for any one of the benefits offered (severance benefits, early vesting of stock options, acceleration of CAP Plan benefits for former Bear executives, etc.), the waiver clause will kick in and the employee will almost certainly be a permanent spectator to all JP Morgan litigation.

JP Morgan also may believe that two or more waivers are better than one for employees who accept benefits and later argue that they should not be bound by a litigation release for one reason or another.  It would likely be quite difficult to credibly argue that you didn't understand you were giving up the right to sue JP Morgan when you sign two or more agreements that include comprehensive litigation waivers. 

One other thing about JP Morgan's multiple waiver strategy - It isn't exactly subtle. 

The Sherman Law Firm