MANHATTAN (CN) – Shareholders claim Bear Stearns issued false and misleading reports on its business operations the day before the stock crashed, forcing the company to be sold for $2 share.
Lead plaintiff Frederick Schwartz says he bought 1,000 shares of Bear Stearns on March 13, the day after defendant CEO Alan Schwartz “publicly reassured the investing public that the Company was not facing a liquidity crisis and that the balance sheet of the Company had not weakened at all.”
Fred Schwartz sued on behalf of investors who bought BS securities on March 13 and 14. He also sued CFO Samuel Molinaro Jr. and Chairman of the Board James Cayne.
Fred Schwartz says Bear Stearns’ share price spiked to $66.30 in morning trading on March 13, after Alan Schwartz’s deceptive public statements. After the market closed that day, Bear Stearns sought emergency funding from the Federal Reserve and JPMorgan Chase. That news caused its share price to drop to $30 on March 14, knocking $3.5 billion off its market cap, the complaint states.
On March 16, JPMorgan Chase announced it was buying Bear Stearns for $2 a share, with up to $30 billion in financing provided by the Federal Reserve, the complaint states. Bear Stearns shares had traded at $170 a year before the collapse.
Plaintiffs’ lead counsel is Michael Mosher of Paris, Texas.