Bear Execs Resign in Wake of Fund Troubles
Bear Stearns co-president and co-chief operating officer Warren Spector resigned Aug. 5 in the wake of a costly collapse of two Bear-sponsored hedge funds that invested in risky subprime-related assets.
The two funds -- once valued at more than $40 billion -- filed for bankruptcy protection early last week. Bear told investors in the funds that one was worthless and the other had lost 90% of its value. The two funds were housed in an asset management group that Mr. Spector oversaw. Alan Schwartz, who had been its other co-president and co-COO, was named sole president.
"In light of the recent events concerning [Bear Stearns Asset Management's] High Grade and Enhanced Leverage funds, we have determined to make changes in our leadership structure," Bear chairman and chief executive James Cayne said. "I have every confidence in this team to continue Bear Stearns' 84-year legacy of success and profitable growth." Mr. Spector had spent his entire career at Bear Stearns since joining the firm as a trader in 1983.
Bears Stearns officials had indicated in an earlier teleconference that the market's recent mortgage-related credit crunch has led to worse conditions seen in the fixed-income markets in more than two decades, but said the company is prepared to weather the storm.
Comparing the recent credit crunch to other major market disruptions over the past four decades, Mr. Cayne said he believed the company would survive the current crisis as it has past ones. (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.bondbuyer.com/ http://www.sourcemedia.com/