Lawmakers Seek More Details
On Bear-JPMorgan Deal
DOW JONES NEWSWIRES
April 3, 2008 9:20 a.m.
WASHINGTON (Dow Jones)--Some Washington lawmakers are
seeking more information about compensation and severance arrangements
to top executives at Bear Stearns Cos. (BSC) and JPMorgan Chase & Co. (JPM)
as part of the merger agreement reached last month.
Senate Finance Committee Chairman Max Baucus, D-Mont.,
and Sen. Charles Grassley, R-Iowa, the senior Republican on the
committee, also requested information from the Securities and Exchange
Commission regarding its role in and reaction to Bear's collapse.
Among other things, they're asking whether the SEC is
investigating possible manipulation in Bear's stock, which plunged to
about $5 a share from nearly $60 in a matter of days in mid-March. The
request follows an earlier one from the lawmakers about why the SEC had
not brought any charges in an investigation of Bear's valuation of
mortgage-backed securities holdings.
The lawmakers sent letters Wednesday to Bear President
and Chief Executive Alan Schwartz and JPMorgan Chase Chairman and CEO
James Dimon seeking details on executive compensation plans and any
changes to them in light of JPMorgan's planned acquisition of Bear.
Lawmakers asked the firms to provide information by
April 9, on employment contracts, deferred compensation arrangements,
severance plans, preferred stock and other stock-based compensation
arrangements for executives, and other compensation, including expense
reimbursements.
Separately, Baucus and Grassley asked SEC Chairman
Christopher Cox to supply "complete details" on the agency's regulatory
oversight of Bear up to the announced acquisition by JPMorgan Chase on
March 16. Specifically, the lawmakers requested information on "the
influence of outside parties," including hedge funds, and any SEC
investigations into possible market manipulation in Bear's stock.
Additionally, the lawmakers are questioning the
adequacy of the SEC's capital and liquidity standards for investment
banks it supervises, noting that days before Bear collapsed, Cox
publicly expressed confidence in the "capital cushion" of banks such as
Bear.
"On what did you base your conclusion and why did it
prove to be apparently inaccurate in light of later events?" the
lawmakers asked.
The SEC's role in the Bear-JPMorgan deal, reached over
a weekend, and JPMorgan's ability to acquire 39.5% of Bear through
shares issued without stockholder approval - seemingly at odds with New
York Stock Exchange rules - also need to be explained, according to the
lawmakers.
Although oversight of the SEC falls to the Senate
Banking Committee, Baucus and Grassley said their committee needs to be
involved as it has oversight of federal tax matters, including
tax-deferred compensation, and over U.S. Treasury securities used to
guarantee the Bear Stearns deal.
-By Judith Burns, Dow Jones Newswires; 202-862-6692;
judith.burns@dowjones.com
|
