I was talking to a friend earlier about the Bear news and it turned to the CEO finally getting what he deserves…and it’s kind of nice to know that some of the people responsible for creating all of this mess are going to suffer a bit. But I think we should all keep in mind that thousands of Bear employees are going to lose their jobs as a result of today’s developments, and more importantly, many of them probably had a substantial amount of their savings invested in the company. Many have families and children. Lots of people losing their life savings…keep them in your thoughts.
Like he said… $236mil… staggering. Good luck to all of those without a job because of this in the coming weeks/months. (Seriously)
Jimmy Caine Rip
I hope that all the people there gets 3 months salary.
This guy lost big 
March 17 (Bloomberg) – Joseph Lewis, the billionaire investor who bought 9.4 percent of Bear Stearns Cos. last year, lost $1.16 billion on his stake after JPMorgan Chase & Co. agreed to buy the securities firm for $2 a share. Lewis, the New York-based firm’s second-largest holder, paid an average of about $107 apiece for 11 million shares, according to a filing submitted last year to the Securities and Exchange Commission. The stake has plunged 98 percent in value since the purchases. Bear’s biggest investor at year-end was money manager Barrow Hanley Mewhinney & Strauss Inc., whose 9.7 percent holding has fallen by $991 million. New York-based JPMorgan, the third-largest U.S. bank, said yesterday it will pay about $240 million for Bear, which was crippled last week after clients pulled money and investors balked at trading with the firm because of losses on its subprime-mortgage holdings. Bear’s market value was $13.6 billion at Nov. 30, the end of its fiscal year. This was done in the market's best interests,'' said David Hendler, an analyst at CreditSights Inc., a financial- research firm in New York. Unfortunately Bear Stearns shareholders are at the short end of the stick and they only got this token payment.’’ Lewis, a former foreign exchange trader who was born in an apartment above a pub in London’s East End, declined to comment through a spokesman. The loss is almost half his $2.5 billion fortune, as estimated by Forbes magazine in its 2007 survey. Barrow Hanley president James Barrow didn’t immediately return a phone call yesterday to the firm’s Dallas headquarters. Investment bank Morgan Stanley, the third-largest holder with a 5.4 percent stake, may have lost about $546 million since Dec. 31. James Cayne, Bear’s former chief executive officer and fourth-largest holder with a 4.9 percent stake, saw the value of his holding drop by $504 million. Bear’s fifth-largest shareholder, Baltimore-based Legg Mason Capital Management, a unit of Legg Mason Inc. run by Bill Miller, may be down $493 million. Messages left at the offices of Cayne, Miller and Jim Wiggins, a spokesman for New York-based Morgan Stanley, weren’t immediately returned. To contact the reporters on this story: Katherine Burton in New York at kburton@bloomberg.net; Sree Vidya Bhaktavatsalam in Boston at sbhaktavatsa@bloomberg.net.
Hate to sound calous here, but it seems to me that if a Bear employee had a substantial amount of his life savings tied up in investments in Bear, he has no one to blame but himself. If we are talking about bank accounts, the principal should be ok because of FDIC insurance. If, however, we are talking about Bear stock…well, these folks worked in the FINANCE industry. Isn’t investing your LIFE SAVINGS in your EMPLOYER’S STOCK the exact opposite of DIVERSIFICATION? Isn’t DIVERSIFICATION the FIRST RULE of INVESTING? Tons of Enron employees violated this very same cardinal rule, and lost big. However, they at least had the excuse of not necessarily working in the investment industry, and therefore not knowing what a mistake this is. I would venture to say that the folks at Bear don’t have quite the same excuse of ignorance.
its pretty bleak on the sell-side right now. job opptys in NYC are virtually non-existent.
True, but those same lying CEO’s etc. were telling them a week ago that the stock was unfairly undervalued and that they were liquid. I doubt most employees (ie Research Analysts) would be privy to the firm’s liquidity position. It is true that they should have been diversified, but don’t escape the fact that the powers that be were lying through their teeth
How can the CEO get away with lying and not face some sort of recourse?
Ok…the CEO’s were lying. I can’t remember the last time I didn’t make the assumption that any CEO was lying! But even if I believed them, putting your life savings (or even a significant portion of it) into the same company that pays your salary is the very definition of speculation. Life savings is for investing, not for speculating. Sorry…after Enron, I don’t understand how anyone, especially someone who works in the finance industry, could possibly think that is a wise way to invest.
gangrel Wrote: ------------------------------------------------------- > Hate to sound calous here, but it seems to me that > if a Bear employee had a substantial amount of his > life savings tied up in investments in Bear, he > has no one to blame but himself. If we are > talking about bank accounts, the principal should > be ok because of FDIC insurance. If, however, we > are talking about Bear stock…well, these folks > worked in the FINANCE industry. Isn’t investing > your LIFE SAVINGS in your EMPLOYER’S STOCK the > exact opposite of DIVERSIFICATION? Isn’t > DIVERSIFICATION the FIRST RULE of INVESTING? > > Tons of Enron employees violated this very same > cardinal rule, and lost big. However, they at > least had the excuse of not necessarily working in > the investment industry, and therefore not knowing > what a mistake this is. I would venture to say > that the folks at Bear don’t have quite the same > excuse of ignorance. Sounds pretty callous to me. Most banks pay bonuses partially (or fully) in restricted stock with lengthy vesting periods. This causes many employees to maintain overly large holdings in their employer in an attempt to align their interests with that of the bank, force employees to stay with the bank longer to receive their stock (although with continually rolling vesting periods, when you leave, you are forced to leave something on the table), and to get away without having to pay out cash. Not their fault.
mcthorp Wrote: ------------------------------------------------------- > gangrel Wrote: > -------------------------------------------------- > ----- > > Hate to sound calous here, but it seems to me > that > > if a Bear employee had a substantial amount of > his > > life savings tied up in investments in Bear, he > > has no one to blame but himself. If we are > > talking about bank accounts, the principal > should > > be ok because of FDIC insurance. If, however, > we > > are talking about Bear stock…well, these > folks > > worked in the FINANCE industry. Isn’t > investing > > your LIFE SAVINGS in your EMPLOYER’S STOCK the > > exact opposite of DIVERSIFICATION? Isn’t > > DIVERSIFICATION the FIRST RULE of INVESTING? > > > > Tons of Enron employees violated this very same > > cardinal rule, and lost big. However, they at > > least had the excuse of not necessarily working > in > > the investment industry, and therefore not > knowing > > what a mistake this is. I would venture to say > > that the folks at Bear don’t have quite the > same > > excuse of ignorance. > > > Sounds pretty callous to me. Most banks pay > bonuses partially (or fully) in restricted stock > with lengthy vesting periods. This causes many > employees to maintain overly large holdings in > their employer in an attempt to align their > interests with that of the bank, force employees > to stay with the bank longer to receive their > stock (although with continually rolling vesting > periods, when you leave, you are forced to leave > something on the table), and to get away without > having to pay out cash. Not their fault. Exactly. I guess one could set up some sort of derivative strategy with this via swaps, but that would require some capital and let’s face it, expertise. Remember, not every employee of a firm this size is a high flying trader who has a ton of liquid capital. It wasn’t a hedge fund
Anyone here works at Bear? Did you guys get pink slips? Are you you getting severance?
why is BSC trading at 3 and not at 2 today?
12 months on-going shareholder approval.
Ahh, but once the stock is received, was there a requirement to hold on to it? If not, why not start selling it off as soon as it is paid out? Also, it these stock distributions were distributions above and beyond employee base compensation, it doesn’t really fit the category I would describe as “life savings.” The way it was described earlier, it sounded to me like a number of employees were buying Bear stock through an ESP or 401(k) either in large quantities or exclusively. This was the behavior I was addressing. I still stand by my position that stock in one’s employer, either distributed or purchased at a discount, should be liquidated at the earlies possible time and invested elsewhere. To not do so violates basic principles of investing.
CFAdummy Wrote: ------------------------------------------------------- > why is BSC trading at 3 and not at 2 today? BSC was offered 0.05473 shares of JPMorgan Chase common stock, which happened to be valued at (roughly) $2/sh at close of Friday. Look at the price action of JPM today… This is still a developing story, who knows what shareholders are going to do.
I’d bet that most of the upper management got compensated with stock options. Most of the employee ownership was probably from senior management. However, they probably have an employee stock purchase plan. I work for one of the big ibanks. Theres an option to put your 401k into company stock, and also a purchase plan to buy stock and get 2 options. However, there is a requirement to hold on to this stock for 2 years and the options vest 2 years. I asked a question the other day of whether or not to invest in this plan and I got mixed answers. I’m probably not going to put money into the stock purchase plan. Well, I feel sorry for low level employees who put money into these plans if Bear had one.
Has anyone heard of speculation of another bidder in this deal?? Or no one else would touch BSC, even at say $3?
Probably just a lot of covering