Lawyers' Phones Ringing After 90% Plummet in Bear Stearns Value
After a stunning loss in the value of Bear Stearns stock that cost employees and investors big bucks over the weekend and led to widespread turmoil in stock markets today, the financial outlook is at least a bit brighter for two groups: elite corporate counsel and, in all likelihood, plaintiffs securities lawyers.
Having seen the value of their shares of Bear Stearns plummet some 90 percent in value since Friday, furious investors reportedly were abuzz in phone calls with lawyers today. While no one is talking on the record yet about exactly what claims might be made, securities class actions could well focus on whether the major investment bank properly disclosed to shareholders risks that could affect its stock price, according to Reuters.
“This is a stock that has gone from $50 to $2 literally overnight,” Ira Press, an attorney with the Kirby McInerney class action firm in New York, tells the news agency. “I can’t divulge privileged conversations, but shareholders don’t contact me when they are happy with the way things are going with their investments.”
JPMorgan Chase, which is to purchase the now-struggling investment bank at a fire-sale price, has set aside $6 billion to pay such claims and employee severance costs, according to Legal Week.
Meanwhile, cash registers are already ringing up big bills for corporate counsel. A team of heavy hitters from Skadden Arps Slate Meagher & Flom headed by partner Peter Atkins is advising Bear Stearns on the purchase deal, the British legal publication notes. Sullivan & Cromwell chairman H. Rodgin Cohen is leading a team of lawyers representing the Bear Stearns board of directors, and Lazard, the investment bank’s financial adviser, is represented by Cravath Swaine & Moore.
Additional coverage:
Wall Street Journal (sub. req.): “Credit Crisis Hits Wall Street”
Associated Press: “Why Fed Helped JPMorgan Buy Bear Stearns”
