On November 9, 2012, the Hon. Robert Sweet of the United States District Court for the Southern District of New York gave final approval to $294.9 million in settlements with the Bear Stearns Companies ("Bear Stearns" or the "Company"), auditor Deloitte & Touche LLP ("Deloitte") and certain individual defendants to resolve fraud claims stemming from investment losses suffered in the Company's 2008 collapse.
The State of Michigan Retirement Systems ("Michigan") was the court-appointed lead plaintiff in the lawsuit, which accused the defendants of misleading investors about Bear Stearns' risky exposure to the U.S. housing market and subsequent write-downs to its assets that led to a collapse of the Company and its stock. Berman DeValerio is co-lead counsel. Partners Joseph Tabacco and Patrick Egan headed the firm's litigation team, which included Of Counsel John Sutter and Associate Matthew Pearson.
Under the proposed settlements, the Company and the individual defendants would pay $275 million, with Deloitte contributing an additional $19.9 million.
Further Information on Settlement and Claims Process
The Court appointed The Garden City Group, Inc. to serve as the claims administrator for the settlements. Further information about the claims process and settlement can be found here.
If you have any questions about your claim form or the claims process, please contact representatives of Garden City Group at the number provided above.
Background On The Case
On Jan. 5, 2009, Judge Sweet appointed Michigan as the lead plaintiff to represent investors who sustained losses caused by the collapse in the Company's stock price. At the same time, he named Berman DeValerio and Labaton Sucharow LLP as co-lead counsel. The State of Michigan Retirement Systems said in court filings that their Bear Stearns holdings lost $62 million.
Investors alleged that Bear Stearns and certain of its former executives violated Sections 10(b) and 20(a) of the Exchange Act of 1934 and related rules and regulations, including the U.S. Securities and Exchange Commission Rule 10b-5, which requires that plaintiffs prove that executives intentionally or recklessly misled investors. The class-action case sought to recover damages for violations of these federal securities laws on behalf of all investors who purchased Bear Stearns' securities described below.
The Lead Plaintiff's Consolidated Class Action Complaint (the "Complaint") was filed February 27, 2009 on behalf of a class consisting of all persons and entities that, between December 14, 2006 and March 14, 2008, inclusive (the "Class Period"), purchased or otherwise acquired the publicly traded common stock or other equity securities, or call options of or guaranteed by Bear Stearns, or sold Bear Stearns put options.
During 2006 and 2007, according to the Complaint, Bear Stearns knew it was overvaluing assets and improperly assessing the risks for its growing portfolio of mortgage-backed securities, but failed to tell investors about the dangers that risk posed to the Company's financial well-being. That risk grew even more in the spring of 2007 when two Bear Stearns hedge funds collapsed, forcing the company to absorb their investments, which contained $2 billion more in soon-to-be-worthless subprime-linked investment vehicles.
After Bear Stearns' began writing down its assets in the late fall of 2007, its lenders balked at lending the Company money it needed for day-to-day operations. But the Company kept making misleading public statements about its financial health, plaintiffs claimed.
Bear Stearns' final act unfolded quickly, according to the Complaint. On March 10, 2008, Wall Street began buzzing with rumors about Bear Stearns' liquidity problems, which the Company disputed. On May 29, 2008, shareholders approved the sale of the 85-year-old Company to JPMorgan for $10 a share.