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Forum Report: Focus on Issues Relevant to Investor Decisions

(April 23, 2008)

 

 

Sent: Wednesday, April 23, 2008 11:47 AM
Subject: Information relating to Bear Stearns valuation

 
The news article copied below reports developments concerning access to information about valuations of Bear Stearns assets.
 
It should be emphasized that this article is being distributed to Forum participants for its relevance to practical investment decisions of Bear Stearns shareholders.  Several people have raised questions suggesting possible misunderstandings about the purpose of the Bear Stearns Forum, or about the issues it may consider.  As stated in the "Forum Summary" posted on this program's home page, our intent is "to focus only on the decisions that may be made by Bear Stearns shareholders, as investors, and on providing the information they need to properly consider those investor decisions."  We will NOT be addressing issues about who should be blamed, whether Bear Stearns should or could have been saved, or what the government should or should not do.
 
A Forum Report will be distributed later today summarizing plans for two workshops to develop information relevant to shareholder decisions.  I will welcome your comments on either the information required for decision-making or the Forum's plans for providing it.
 
             - GL
 
Gary Lutin
Lutin & Company
575 Madison Avenue, 10th Floor
New York, New York 10022
Tel: 212/605-0335
Email: gl@shareholderforum.com
 
 
 
The Wall Street Journal

April 23, 2008

 

SEC Rebuffs
Lawmakers
Over Bear

Citing Privacy,
Agency Won't Say
Why It Ended Probe
By MICHAEL SICONOLFI
 April 23, 2008; Page C1

Securities regulators refused a congressional request to disclose why they dropped an investigation into whether Bear Stearns Cos. harmed investors by improperly valuing complex debt securities.

The Securities and Exchange Commission cited confidentiality in its decision involving the late-stage probe of the Wall Street firm.

[Charles Grassley]

At issue is a move by the SEC to abort an enforcement case into activities at Bear Stearns several months before the firm imploded in March. The firm has agreed to be acquired for a fire-sale price by J.P. Morgan Chase & Co.

The Wall Street Journal reported in December that investigators including the SEC had pulled back from bringing two cases begun in 2005 against Bear Stearns involving collateralized debt obligations, or thinly traded investments that package pools of loans. In an April 2 letter, Sen. Charles Grassley, an Iowa Republican, requested information from the SEC into the circumstances surrounding the dropped case.

"The Commission does not disclose the existence or nonexistence of an investigation or information generated in any investigation unless made a matter of public record in proceedings brought before the Commission or the courts," SEC Chairman Christopher Cox said in an April 16 letter to Sen. Grassley, the ranking member of the Senate Finance Committee.

[Christopher Cox]

The move sets the stage for further wrangling. Legislators could argue that they previously have sought -- and received -- much more-sensitive-classified data, and that the SEC investigations wouldn't harm the parties involved because they had been dropped. Bear Stearns soon will lose its independence, becoming part of J.P. Morgan Chase.

Legislators also could argue that the SEC wouldn't be releasing data to the public, but rather to Congress. Meantime, the SEC's inspector general is investigating circumstances related to the dropped Bear Stearns case, following a request by Sen. Grassley.

An SEC spokesman declined to comment. Bear Stearns has said it cooperated with both investigations. Sens. Grassley and Max Baucus (D., Mont.), chairman of the Finance Committee, said Tuesday they will continue to pursue the information from the SEC.

The SEC branch office in 2005 said it planned to recommend that Bear Stearns be charged for the way it priced and valued about $63 million of CDOs.

  URL for this article:
http://online.wsj.com/article/SB120892044378837399.html
 

 
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This Forum program is open, free of charge, to all shareholders of The Bear Stearns Companies, Inc. ("BSC") and to any fiduciaries or professionals concerned with their investment decisions.  Its purpose is to provide shareholders with access to information and a free exchange of views on issues relating to their evaluations of alternatives, addressing issues described in the Forum Summary.

As stated in the posted Conditions of Participation, all Forum participants are expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

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The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.