Saturday, July 21, 2007

Gentlemen, take your positions...

This article describing the end of the star-crossed relationship between Bear Stearns and Barclays as a result of the recent Hedge Fund collapse is interesting. The "adjudicator" of public opinion is used more often (and I must quantify this) it seems in large securities cases. That this tactic would be used is somewhat obvious - reputational risk is a large component of any investment bank's cache and ability to attract and retain clients.

As I said before, this is the beginning of the story with regards to Bear's legal liability, and if the "people familiar with the situation" have it correct, that Bear did indeed step outside of accepted parameters and did not disclose this to its investors, then one can easily recommend that Bear write this entire episode off and settle very, very quickly.

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