Bear, Auditor Sued Over Mortgage Funds’ Collapse

Apr 8 2008 | 11:23am ET

The court-appointed liquidators of two collapsed Bear Stearns hedge funds have sued the firm and its auditor for violation of fiduciary and professional duties.

The suit seeks the recovery of $1 billion in losses, as well as punitive damages, from Bear and auditor Deloitte & Touche. The Cayman Islands-appointed liquidators, Geoffrey Varga and William Cleghorn, accuse Bear of promising investors that the funds were relatively safe and conservative, when in fact they could not survive even a “slight downtick” in the mortgage market.

Bear Stearns “conceived, marketed and managed hedge funds that they knew would be viable so long as—but only so long as—the U.S. housing market continued to rise,” the suit, filed in Manhattan federal court yesterday, alleges.

For its part, Deloitte was “at a minimum negligent” in auditing the funds.


Lifestyle

Survey: Wall Street Banks Still Top Silicon Valley, Hedge Funds for Freshly-Minted MBAs

Jun 21 2016 | 9:01pm ET

Contrary to concerns that Wall Street isn't as appealing to new graduates as it...

Guest Contributor

The Future of the Blockchain in Financial Services Communications

Jun 17 2016 | 1:05pm ET

Over the past year, a large portion of the financial services industry has awakened...