Prime Brokerage

  • 04 May 2007 at 4:39 PM
  • Banks

Rumor Mill: Prime Brokerage Bust Up At Bear Stearns?

BearStearnsEmptyLobby.jpgA top Bear Stearns prime brokerage executive has left the firm, according to a source who spoke with DealBreaker on the condition of anonymity. The source identified the departing executive as one of the heads of prime brokerage at Bear Stearns. DealBreaker has not been able to independently confirm or corroborate this story, however, so we regard it as unsubstantiated rumor at this point. Bear Stearns did not return calls seeking confirmation or clarification.
Since March, the prime brokerage business at Bear Stearns has been led by Leonard Feder and Louis Lebedin. Feder was brought over from the structured trading desk to replace Jeff Dorman who had left for Deutche bank. DealBreaker placed several calls to Bear Stearns seeking confirmation. At one point a Bear Stearns employee said “Everyone here knows what DealBreaker is. No one is going to answer your questions or call you back.”
A woman identifying herself as “Breeda” answered the phone at Feder’s desk. Breeda said he was traveling in England and would not return for more than a week. She would not comment when asked about the rumored resignations.
Lebedin’s phone was answered by a woman calling herself Gladys. She said that Lebedin was in a meeting but declined to comment about the rumored resignations.
Bear Stearns prime brokerage unit has been a center of controversy for some time. Earlier this year a federal bankruptcy judge ordered Bear Stearns to pay almost $160 million to investors in a hedge fund that was a prime brokerage client. The judge said Bear Stearns bore responsibility for inadequately monitoring its client and failing to detect that the hedge fund was a fraud.
Last year Ron Suber, who was responsible for overseeing Bear Stearns’ prime brokerage hedge fund business, left the firm. He had been implicated by federal authorities in a scandal involving mutual funds and abusive hedge fund traders. In 2006, Bear Stearns paid $250 million in penalties to settle allegations that it had facilitated abusive trading practices by hedge fund clients.
Try to keep in mind that this is only unsubstantiated rumor at this time.