Want to be the most popular guy on the beach this June/July/August? Might we suggest purchasing this Bear Stearns Asset Management beach towel and watching the ladies swarm? Add a couple cases of Mike’s HL and it won’t even be fair.
Like many of the former Bear Stearns workers not currently employed, erstwhile CEO Alan Schwartz will be taking the summer off to plot his next career move. (Things are slightly different for Schwartz in that he has actual job offers, but whatevs.) Supposedly he’s deciding between staying with the newly formed Bearpont Morgan Chase, where the slot for a “We are drowning in liquidity” guy remains unfilled, or heading over to private equity, possibly with Kohlberg Kravis Roberts. According to the Post, Schwartz has told friends that he’s being “judicious” about the decision, though that quote was surely taken out of context and has less to do with Big Al’s career trajectory than a late season summer share, having missed the deadline to join Jimmy Cayne at bridge camp.
Bear’s Schwartz To Mull Bids Over Summer [NYP]
Yesterday we said a Christmas card signed by alpha-generator extraordinaire Ralph Cioffi was the best item being auctioned off on eBay. Like Goldman Sachs, which self-flagellated Monday over a May 5 recommendation for investors to add to U.S. financial and consumer stocks, we just want to tell you how clearly, deeply, almost catastrophically wrong we were. The BEST item up for grabs, which we will have no qualms fighting dirty for, is a sealed deck of limited edition Bear Stearns playing cards, commemorating Ace Greenberg’s March 8, 1999 50th anniversary, bearing his face and a money shot of the trademark bowtie.
Related: Hey Kids, You Wanna See A Card Trick?
SEC chair Christopher Cox missed the 5am conference call when Ben Bernanke and Hank Paulson decided that the Fed would lend funds to rescue Bear Stearns from bankruptcy, the Wall Street Journal reports on today’s front page. The call’s time changed and no one bothered to tell Cox, who didn’t know until he came into the office a few hours later.
As you know, Bear Stearns former hedge fund managers Ralph Cioffi and Matthew Tannin were arrested this morning. The dream team was charged with securities fraud for telling clients in the pair of BSC funds created to invest in that can’t miss asset class, subprime mortgages, that nothing was fucked last year when in reality, that wasn’t exactly the case.
According to the indictment, in an email to a member of his team at the end of March 2007, Tannin wrote, “[b]elieve it or not– I’ve been able to convince people to add more money.” Clearly, Tannin was shocked by this turn of events, as he well should have been. But what’s shocking is not the fact that people didn’t necessarily understand that subprime was toxic sludge, but that they didn’t see Bear’s “we’re trying too hard” oversell of this stuff and go, “Whoa, wait just one minute.” I’m not intimately familiar with the jargon used in formal pitches to investors but “we have some awesome opportunities,” which is what indictment records state Cioffi instructed brokers to tell clients, strikes me as something that would be a tip-off run for your lives. Seriously, they might as well have gone with, “this shit kicks ass” or “you bitches will thank me in the morning” or “all other funds suck balls in comparison to ours.” On a related noted, if forthcoming testimony doesn’t reveal they did, I plan using those pitches verbatim when I open my own place in 5-10.
Ex-Bear Stearns managers charged with fraud [Reuters]
Behind The Scenes Of Bear’s Fund Meltdown [DealBook]
Bear Stearns former hedge fund managers Ralph Cioffi and Matthew Tannin were both arrested on criminal charges this morning for their pivotal roles in the whole telling investors the subprime funds were a-okay when in reality…well, you know. One would think being in charge of the two ridiculously-named and damn near impossible say three times fast entities–High Grade Structured Credit Strategies Fund and High Grade Structured Credit Strategies Enhanced Leverage Fund– would be punishment enough but apparently, not so much.
Here’s Ralph being escorted to federal court in Brooklyn:
And here’s Matthew, patiently waiting his turn for the same:
Meanwhile, in another part of town:
Did Jimmy Cayne’s Shitty Interpersonal Skills Accelerate The Downfall Of Bear Stearns? One Hedge Fund Manager, Who’s Been In The News A Lot Lately, Says YesBy John Carney
Most people, Dick Fuld/Erin Callan/LEH shareholders notwithstanding, agree that porn star and Greenlight Capital founder David Einhorn is a very nice guy and an extremely decent human being. New York magazine’s profile of the man of the hour corroborates the story, with anecdotes from Bill Ackman, who says he’s “a super-high-quality human being,” Greenlight employees who note that the firm is “run in a humane way,” and those with whom Einhorny plays tennis, competing in “goofy, good-natured game[s] in which every halfway decent shot is loudly praised.” So obviously he wasn’t going to make things as easy for us, pull-quote-wise, when discussing Bear Stearns and the management team run by drug-using, card-sharking, responsibility-shirking Jimmy Cayne, as say, Bill Chapman or Daniel Loeb. It took some digging (that’s biz speak for “reading the article”), but finally, on Page 4, we found it.
This man was spotted outside the Federal Reserve Bank of New York yesterday at 11:20 am.
As you know, last night Columbia’s Baker Field played host to the big lacrosse match-up between Bear Stearns and Lehman Brothers. We were supposed to go but decided instead, from about 6:30 to around 10:00 PM, after everyone else had gone home, to walk outside sans phone/wallet/keys, in order to test the efficacy of the automatic lock that’d recently been installed on the office door, just to make sure it was up to snuff. Turned out it was. (In a remarkable show of symmetry, at the exact same moment, Jimmy Cayne was getting locked out of his apartment, though he had a much better excuse than sheer stupidity.)
Anywho, the Bear team (which is comprised of former Bears and Bank of America employees) ended up beating the pants off LEH, 11-4, a show we’re very sorry to have missed. Poetic justice and all that shit. Although, in actuality, it would’ve been more fitting for the Bear players to have spent the hour taking free shots on Jimbo C, with guns.
BSC was the league’s inaugural champion last year. Then the firm imploded. Will 2008′s title winner follow suit? Stay tuned! (Although 2007 was the “official” first season, this thing has been going on for a while. Previous champs have included Amaranth, LTCM and Seth Tobias.)
Bear Avoids Collapse as Lacrosse Team Thumps Lehman [Bloomberg]
Washington Mutual announced this morning that it has retained the services Michael Solender, former general counsel of Bear Stearns, as its chief legal officer, reporting to (for now) CEO Kerry Killinger. The work probably won’t be as challenging without the many frequent interruptions throughout the day with queries such as, “Tell me again, what is the exact amount of pot I can have on me without it being hideously construed as an intent to distribute? I keep forgetting. And also, what’s the deal with state lines? ‘Cause I’m heading to Detroit,” but at least it’s work.
Washington Mutal Names Legal Chief [MarketWatch]
The Post reports that former Bear CEO Alan Schwartz may be having second thoughts about taking a job at Bearpont Morgan Chase. One source “familiar with the matter” says it’s the humanist in Schwartz that’s causing him to reconsider, claiming that the fact that more than half of Bear’s employees are without jobs (though not without pay) is “not sitting well with him.”
Another countered that JPMorgan is the one balking at the hire, which would be almost as bad as inviting Jimmy Cayne along for the ride, even in the capacity as (Wal-Mart-esque) greeter. Both parties declined to comment and this is obviously a very tough decision for Schwartz. And he may very well join the handful of former BSC-ers who actually got jobs over on Park. But should he show some solidarity and say no thanks, he’s going to have some time on his hands. If that turns out to be the case, what should Schwartz do next?