Bear Seizes Own Hedge Fund’s Assets

Jul 27 2007 | 1:37pm ET

Just a month after scrambling to prevent lenders from seizing the assets of two troubled hedge funds, Bear Stearns is getting in on the action itself.

The New York-based investment bank seized securities from its High-Grade Structured Credit Fund—the fund it gave a $1.6 billion lifeline—to “protect against future price declines,” Bear spokesman Russell Sherman told Bloomberg News. The High-Grade Structured Credit Leverage Fund was the victim of an asset seizure—though not of the in-house variety—last month.

Bear said it expects to lose no money from its assumption of the $1.6 billion debt last month—recently reported to be down to $1.4 billion. But like the funds’ other investors, who learned two weeks ago that their investments had lost essentially all their value, Bear will probably be out its own $34 million investment. It will also probably not see $43 million in unsecured loans it made to the funds, and has decided to forego its management fee, costing it about $30 million.

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