In what is likely to be a bit of a blockbuster, SEC charman Christopher Cox sent a letter to Swiss regulators indicating the Bear Stearns (NYSE:BSC) did not have to go the way of all flesh. According to The New York Post "the "fate of Bear Stearns was a lack of confidence, not a lack of capital," Cox, the head of the Securities and Exchange Commission, wrote in a five-page letter sent to a Swiss regulator."
That letter will lead angry Bear Stearns sharedholders, who watched the stock fall from over $30 near $2, to question why JP Morgan (NYSE:JPM) was able buy the brokerage at a deep discount with help from the Federal Reserve. The missive may encourage Congress and regulators to question whether the takeover of BSC involved foul play.
JP Morgan has come under additional scrutiny for making high pay offers to key Bear Strearns employees to keep them on board after the takeover. JPM CEO James Dimon has approached a number of important Bear Stearns bankers. The Post also reports that "He’s basically bribing them for their votes," said Richard Bove, an analyst at Punk Ziegel & Co. "In this environment, there are no jobs on Wall Street, so he can bribe them by letting them keep their jobs and they’ll vote for him."
Douglas A. McIntyre