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OpEdNews Op Eds    H2'ed 6/15/08

Proof of Insider Trading in Bear Stearns Collapse

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A JANUARY 03 Former Chariman & CEO Alan "Ace" Greenberg exercises options to buy 150,000+ shares at $73.75 and he immediately sells all of those shares at the market price of $163.11. He realizes an immediate profit of $13 million.

B JUNE 22 Bear Stearns commits $3.2bn in secured loans to bail out one of its hedge funds. It says its troubles are 'relatively contained'.
C JULY 17 Bear Stearns reveals that one of its hedge funds has lost all of its value. Another worth 9 per cent of its value at the end of April.
D OCTOBER 22 Bears Stearns secures a share-swap deal with Citic, China's largest securities firm. Citic pays $1bn for about 6 per cent stake in Bear Stearns. The US bank agrees to eventually pay the same for about 2 per cent of Citic.
E NOVEMBER 1 Newspaper suggests that CEO Cayne was out of touch during the collapse of the two hedge funds. He dismisses the media concerns as "noise".
F DECEMBER 7 Joe Lewis, Bahamas-based billionaire, up his stake to 8 per cent, showing that he believes the Bear Stearns shares are undervalued.(He went on to realize a $1 Billion loss in Bear Stearns)
G DECEMBER 20 The bank reports its first-ever quarterly loss. The loss is nearly four times analysts' forecasts, and includes a $1.9bn writedown on its holdings of mortgage assets.
H DECEMBER 21 Company Insiders sell almost $50 million in stock. Insiders included CEO James Cayne (Who personally dumped $15 million of the stock), former CEO Alan Greenberg (Sold $8 million) and Future CEO Alan Schwartz ($6 million sold).

2008 JANUARY 7 2008 CEO Cayne retires under pressure, but stays on as non-executive chairman. Alan Schwartz becomes president and chief executive.

FEBRUARY 14 In reaction to the fall in the bank's share price since the share-swap deal, it emerges that Citic has been renegotiating the agreement.

FEBRUARY 28 Rebel investors in Bear Stearns seize two of the bank's failed hedge funds in an attempt to regain some of the $1.6bn lost in the previous summer's collapse.

MARCH 7 Carlyle Capital Corporation sees its shares suspended in Amsterdam.
The $22bn hedge fund suffered exposure to mortgage backed securities, and had received substantial additional margin calls and default notices from its lenders.Bear Stearns is seen as heavily exposed to Carlyle Group, founder and 15 per cent owner of CCC. *Carlyle Capital Corp. (CCC) was formed in August 2006 by the Carlyle Group for the purpose of making investments in U.S. mortgage-backed securities. In March 2008, only 19 months after being formed, CCC defaulted on about US$ 16.6 billion of debt. Previous and Current board members of the Carlyle Group include
George H.W. Bush, former United States President George W. Bush, current United States President Shafig Bin Laden, brother of Osama Bin Laden James Baker, former US Secretary of State Arthur Levitt, former Chairman of The Securities and Exchange Commission (SEC) Donald Rumsfeld, former Secretary of Defense

March 10, 2008 Alan "Ace" Greenberg, responding to the price liquidity runors which caused shares of Bear to drop 10% in early trading, told CNBC that the liquidity rumors surrounding the company are "totally ridiculous." Shares responded and initially jumped on the news, only to lose more ground later in the day.

March 11, 2008
Noon: Federal Reserve Chairman Ben S. Bernanke attends a lunch meeting with the "Who's Who on Wall St." Attendees JPMorgan Chase 's Jamie Dimon, Goldman Sachs’s CEO Lloyd Blankfein, Lehman Brothers boss Richard Fuld, Morgan Stanley President James Gorman, Citigroup’s Robert Rubin, Blackstone Group’s Stephen Schwarzman and Merrill Lynch’s John Thain. Who's noticeably absent? Bear Stearns! Every major financial institution in the United States, except Bear Stearns, had a meeting about bank liquidity. There were rumors of liquidity problems at Bear Stearns since that Monday! What do you think they were talking about???
Evening: Jim Cramer, when asked his view of selling Bear Stearns, responds "NO, NO, NO! ...Bear Stearns is FINE...Bear Stearns is not in trouble..Don't move your money from Bear...That's just silly, don't be silly!"
MARCH 13 CCC collapses. Bear Stearns shares fall 17 per cent as investors grow anxious about its exposure to CCC. Schwartz comments: "Our balance sheet is not weakened at all."

Obvious Insider Trading The following chart proves that there was insider trading during the Bear Stearns collapse. Look at the major jump in stock price AFTER the deal was announced that Bear would be sold for $2/share but BEFORE any news that JP Morgan would increase their offer to $10/share. The price exceeded $7/share before the news of an increased offer. Would you be willing to pay $7 for a company which is to be sold for $2? Would you even be willing to pay $2.01 for a company to be sold for $2? Somebody new something!!
What about Jimmy Cayne? The former CEO was largest employee stock holder. He didn't sell his remaining 5.6 million shares at $2. He sold his shares on March 25th, the day after the SECOND offer price of $10!

MARCH 14 JP Morgan and the New York Federal Reserve rush to the rescue of Bear Stearns. Shares crash almost 50 per cent.
MARCH 16 JP Morgan agrees to buy Bear Stearns in a deal that values the stricken bank's shares at $2 each, with JP Morgan exchanging 0.05473 of each of its shares for one Bear share.
MARCH 22 A powerful group of shareholders including British billionaire Joe Lewis plot a legal challenge against the $2 a share, cut-price offer.
MARCH 23 It emerges that JP Morgan is in talks with the US Federal Reserve and Treasury Department about a possible increased offer for Bear Stearns.
MARCH 24 JP Morgan raises its offer for Bear Stearns to $10 a share

Jimmy Cayne, Bear Stearns’ chairman and former chief executive, sells his 5pc stake.
People's life savings were wiped out and many sold at $2 on the news of the offer but someone was buying, and buying heavily! Someone made a FORTUNE because they had non-public information.
The criminals can easily be identified if the SEC did its job and investigated this. There hasn't been ANY inquiries to date!
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Proof of Insider Trading in Bear Stearns Collapse

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