...and the first suits stemming from the Bear Stearns debacle have arrived:
The Washington Post reports: Bear Stearns Cos not only is seeking bankruptcy protection, but was hit on Wednesday by a legal claim stemming from the meltdown of two of its hedge funds, sending its shares, already under pressure from woes at a third fund, to a 19-month low.
The securities firm has been slapped with an arbitration claim for allegedly misleading investors about its exposure to subprime mortgages. The claim, filed with the NASD, was brought on behalf of a 73-year-old retired insurance salesman in Wisconsin who lost $500,000, according to the man's lawyers.
Investors have been widely expected to bring legal claims against Bear Stearns, which has been particularly hard hit by the contraction in the market for loans to home buyers with poor credit histories. "I think there's probably more where that came from," said Bill Fitzpatrick, an analyst at Johnson Asset Management in Racine, Wisconsin. "I suspect they're going to be vulnerable to a series of lawsuits."
The arbitration filed by Jacob Zamansky of law firm Zamansky & Associates, together with another lawyer, Ross Intelisano of law firm Rich & Intelisano, involves one of those funds, the High Grade Credit Strategies Credit Fund. It was filed on Wednesday morning and was brought against both Bear Stearns and Bear Stearns Asset Management, the lawyers said.