Faced with the loss of $400 million in the Bear Stearns hedge fund debacle, Barclays is weighing its options—including the option to sue.
Barclays, which had said its exposure to the collapsed Bear funds was “not material,” may be reevaluating that position after Bear said last week that there was effectively nothing left in its two sub-prime mortgage-heavy hedge funds, The Wall Street Journal reports. The newspaper said the British bank is considering three options for trying to recover its investments, including arbitration and negotiation, as well as hauling Bear into court.
Barclays had more riding on the late High-Grade Structured Credit Strategies Enhanced Leverage Fund than most. In addition to its $400 million investment—which reportedly includes money from a Barclays investment product, a situation unlikely to endear the bank to its clients—Barclays had also lent the fund some $200 million, which has been repaid, the Journal reports, and offered it a further $250 million in credit, which wasn’t taken up.
Barclays isn’t the only one considering legal action: Two investors have hired Ross Intelisano, a lawyer who represented a group of Bayou Management investors, to look into how and why the Bear funds collapsed.
“They feel that the information they received was either untrue or inaccurate,” Intellisano told the Journal.