Yellowdogtexan
03-17-2008, 01:41 PM
Let the fun begin. http://news.yahoo.com/s/nm/20080317/us_nm/bearstearns_lawsuits_dcNEW YORK (Reuters) - Angry Bear Stearns Co Inc shareholders have wasted no time in calling their lawyers to pursue possible legal claims over the company's $2-a-share fire sale to JPMorgan Chase & Co.
But while the deal may draw legal challenges from investors over its low price, it is unlikely the pact would be killed by the courts, legal experts say.
That's because the venerable investment bank, which agreed to the emergency deal under pressure from the U.S. Federal Reserve as the credit crunch widens, appears to have few other options short of filing for bankruptcy, legal experts say.
Shareholders "could move to enjoin the deal, but that's a tough hurdle," said Michael Kelly, a partner at law firm McCarter & English in Wilmington Delaware, who specializes in defending corporations in litigation. "I'm sure the board is going to say this is the best option in our judgment."
Bear Stearns is being sold for just $236 million. The deal's value is more than 90 percent below the company's Friday closing share price of $30.85. But JPMorgan said the price tag would total about $6 billion to account for litigation and severance costs.
Shareholders hit by big losses on their Bear holdings are exploring all legal avenues, say class-action lawyers who specialize in bringing lawsuits against large companies. Possible plaintiffs include individual investors, institutions and company employees. The firm's 14,000 staff own about 30 percent of the company.
"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," said Ira Press, a lawyer at New York-based class-action firm Kirby McInerney, which has spoken with dismayed Bear investors.
"This is a stock that has gone from $50 to $2 literally overnight, and I also know of people who had assumed that the worst had passed when it closed at $30," he said.
Shareholders might sue Bear and its executives and officers for securities fraud, contending they failed to disclose the company's true financial health, lawyers say.
All of the officers and directors of Bear Stearns will be sued and we will see how good of D&O coverage they have.
But while the deal may draw legal challenges from investors over its low price, it is unlikely the pact would be killed by the courts, legal experts say.
That's because the venerable investment bank, which agreed to the emergency deal under pressure from the U.S. Federal Reserve as the credit crunch widens, appears to have few other options short of filing for bankruptcy, legal experts say.
Shareholders "could move to enjoin the deal, but that's a tough hurdle," said Michael Kelly, a partner at law firm McCarter & English in Wilmington Delaware, who specializes in defending corporations in litigation. "I'm sure the board is going to say this is the best option in our judgment."
Bear Stearns is being sold for just $236 million. The deal's value is more than 90 percent below the company's Friday closing share price of $30.85. But JPMorgan said the price tag would total about $6 billion to account for litigation and severance costs.
Shareholders hit by big losses on their Bear holdings are exploring all legal avenues, say class-action lawyers who specialize in bringing lawsuits against large companies. Possible plaintiffs include individual investors, institutions and company employees. The firm's 14,000 staff own about 30 percent of the company.
"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," said Ira Press, a lawyer at New York-based class-action firm Kirby McInerney, which has spoken with dismayed Bear investors.
"This is a stock that has gone from $50 to $2 literally overnight, and I also know of people who had assumed that the worst had passed when it closed at $30," he said.
Shareholders might sue Bear and its executives and officers for securities fraud, contending they failed to disclose the company's true financial health, lawyers say.
All of the officers and directors of Bear Stearns will be sued and we will see how good of D&O coverage they have.