Posted on 03/19/2008 7:48:21 PM PDT by kiriath_jearim
U.S. regulators are investigating whether traders illegally sought to force Bear Stearns Cos. shares into a tailspin last week by spreading false information about the firm's finances, two people familiar with the inquiry said.
The Securities and Exchange Commission probe is focusing on whether hedge funds or other investors bet on a drop in the company's shares while spreading rumors that the New York firm was nearing collapse, said the people, who declined to be identified because the inquiry isn't public.
(Excerpt) Read more at latimes.com ...
After what happened, how false could the information have been?
Well, the same two guys must be spreading rumors about MER now, the volume in the deep out of the money puts is absurd, they are gonna try and take it down like Bear.
70 on Friday down to 4 on Monday. Sounds normal. /s
So Fed and JPM acted on the basis of rumors?
that's good logic. it's like saying the guy who shot you was right when he predicted your demise.
Not quite the same. The negative stories about Bear Sterns appear to have been totally accurate. The company was in such poor condition it was liquidated for less than the value of their headquarters building. They didn’t sell at $2 a share because of their overwhelming financial health.
Indirectly. Reacted is more accurate.
Rumors caused creditors to cut and run.
Industry capital minimums could not be met without the credit. Liquidation of assets is mandated by regulations to maintain capital ratios.
Bear was facing bankruptcy upon the removal of credit (as would any of its industry peers and most businesses).
They didn't sell at $2 per share at all. The deal is proposed, not done. Furthermore, the stock closed over $5 today.
What's you're net worth? If you bank withdrew your mortgage, would you be able to finance your house yourself?
Since you'll probably answer "yes I could," I'll assure you that no financial institution can operate without willing creditors. That's what this is all about.
I have wondered the exact same thing.
How far can this rumor thing go - seems like nothing is immune now.
Witch hunts. Dotcom bubbles. Tulip Bulb Manias. Extermination of tens of millions of neighbors just because...
This is nothing new.
demolishing an operation like bear stearns and giving it way might just be one of them. But I wouldn't be surprised if it wasn't all over.
the former CEO of Overstock.com has been shouting from the rooftops that this is what happened to his company. I don’t know what the truth is in this instance. I do know that anyone who trusts Wall Street with his money is a damn fool.
Essentially, something caused a "run on the bank." If not for that Bear probably could have survived.
ie: Enron.
Hard to say in this case, but this kind of crap goes on all the time. Even Cramer admits it.
Bulls hate the bearish rumors and scream for the SEC but entirely overlook bullish rumors. They consider the latter to be “price discovery” LOL
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.