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October 12, 2008 4:13:15 AM CDT



Baffled Execs Say Rumor Killed Stearns

Posted Jul 5, 08 12:06 PM CDT in Glossies Business 

(Newser) – Bear Stearns' collapse and shotgun marriage to JP Morgan were sparked by little more than a rumor, Vanity Fair reports. True, the investment bank had stumbled—a $1.6 billion bailout of troubled funds hurt its image—but whispers of liquidity problems were false: Bear had $18 billion in cash reserves. Now former executives and the SEC want to know who killed the company.

Bear execs say that two hedge funds, and competitor Goldman Sachs, started the rumor to reap a profit—a claim the accused deny. But if Bear's demise was engineered, the details may never emerge. "Even with subpoena power, I'm not sure the SEC will get to the bottom of this, because the standard of proof is just too difficult," said one investment firm chairman. "But I hope they do."

Source Vanity Fair

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The headquarters for securities firm Bear Stearns is shown March 16, 2006 in a New York file photo.   (AP Photo/Mark Lennihan, File)
People enter and exit the Bear Stearns corporate headquarters in New York in this July 18, 2007 file photo.   (AP Photo)
People pass the entrance to Bear Stearns corporate headquarters in New York, Wednesday, July 18, 2007.   (AP Photo)
The logo for Bear Stearns is shown at its corporate headquarters in New York, in this July 18, 2007 file photo.   (AP Photo)
Graphic shows Bear Stearns Cos. daily trading since March 10.   (AP Photo)
A stock dealer reacts in front of the German stock index (DAX) display at the Stock exchange in Frankfurt, Germany, Monday, March 17, 2008.   (AP Photo)
An entrance to Bear Stearns is shown on Monday, March 24, 2008 in New York.   (AP Photo)
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