Judge OKs $295 mln settlements for ex-Bear shareholders

NEW YORK Sat Nov 10, 2012 4:46pm IST

The entrance to JPMorgan Chase's international headquarters on Park Avenue is seen in New York October 2, 2012. REUTERS/Shannon Stapleton/Files

The entrance to JPMorgan Chase's international headquarters on Park Avenue is seen in New York October 2, 2012.

Credit: Reuters/Shannon Stapleton/Files

Related Topics

Stocks

   

NEW YORK (Reuters) - A U.S. judge has given final approval to a $275 million settlement between former Bear Stearns Cos shareholders and JPMorgan Chase & Co, which bought the investment bank in 2008 when it was on the brink of collapse.

In an opinion posted on Friday, U.S. District Judge Robert Sweet in Manhattan also approved the shareholders' $19.9 settlement with Deloitte & Touche LLP. Both settlements had been announced in June. <ID: nL1E8H725O>

The all-cash settlements resolve claims against Bear and several former executives including long-time chief executive James Cayne, his successor, Alan Schwartz, and former chairman Alan "Ace" Greenberg. The defendants denied wrongdoing in agreeing to settle.

JPMorgan agreed to purchase Bear on March 16, 2008, in an emergency buyout brokered by the U.S. Federal Reserve, as fleeing clients were causing a liquidity crunch that drove Bear to the brink of collapse.

After initially agreeing to pay just $2 per share for Bear, JPMorgan later consented to pay $10 per share. That was far below the $170 that Bear shares once commanded. More than $18 billion of market value at Bear was erased.

The settlement covers owners of Bear Stearns stock and call options, and sellers of Bear put options, between December 14, 2006 and March 14, 2008.

Investors, led by the State of Michigan Retirement Systems, claimed that Bear had "secretly abandoned any meaningful effort to manage the huge risks it faced" from subprime and other mortgage-related securities. Such exposure contributed to the collapse of two in-house hedge funds in the middle of 2007.

"Given the considerable obstacles standing in the way of a full recovery damages, the proposed settlement amount of $294.9 million is within the range of reasonableness," Sweet said.

The judge overruled objections by one group of plaintiffs who said the amount was "an unreasonably small fraction" of what they deemed the suspected fraud amounted to.

Those plaintiffs had noted that JPMorgan had set aside approximately $6 billion in anticipation of costs relating to its purchase of Bear.

The judge also awarded the investors' main law firms about $37.4 million in fees and expenses, citing their "Herculean effort."

The law firms are Boston-based Berman DeValerio and New York-based Labaton Sucharow.

The case is In re: Bear Stearns Companies Inc Securities, Derivative and ERISA Litigation, U.S. District Court, Southern District of New York, No. 08-md-01963.

(Reporting By Basil Katz; Editing by David Gregorio)

FILED UNDER:
Photo

After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.

Republic Day

Reuters Showcase

RK Laxman Dead

RK Laxman Dead

'Common Man' cartoonist RK Laxman dead at 93  Full Article 

Banking Revolution

Banking Revolution

India turns to corner shops, mobile phones for banking revolution.  Full Article 

Nuclear Group

Nuclear Group

China urges India to take steps to satisfy standards of NSG  Full Article 

Gold Market

Gold Market

Chinese gold demand holds up ahead of holiday, Indian buying weak  Full Article 

India-U.S. Relations

India-U.S. Relations

Column - U.S. and India should join to balance China's rise  Full Article 

Padma Bhushan

Padma Bhushan

India honours Bill Gates with civilian award  Full Article 

Fashionable Modi

Fashionable Modi

When Modi met Obama, his name was all over - his suit  Full Article 

New Greek PM

New Greek PM

Greek leftist Tsipras sworn in as PM to fight bailout terms  Full Article 

Australian Open

Australian Open

Venus fireworks illuminate Australia Day  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage