Bear Stearns co-president Warren Spector's fate was decided last Wednesday, when he reportedly was asked to resign by CEO James Cayne. Over the weekend, Bear Stearns announced Spector's resignation, following S&P's downgrade of its credit outlook from "A+" to "junk" on Friday. Spector was head of fixed income and asset management, and thus, is being held responsible for the firm's hedge fund losses, which now extend across three funds, two of which have filed for bankruptcy (see full summary). Shares of Bear Stearns continued to free fall Friday, dropping 6.3% to $108.35. They are now down 28% since June -- when the hedge fund woes were publicly acknowledged -- and 33% year-to-date. An analyst at Punk, Ziegel & Co. in Florida told Bloomberg that by ousting Spector, management is acting as if it "didn't know what was going on, and that is just totally unsupportable. If there is no oversight system, people should be looking at Jimmy Cayne." Co-president and investment banker Alan Schwartz has been appointed president.
Sources: Press release, Bloomberg, TheStreet.com, Wall Street Journal
Commentary: Another Bear Stearns Hedge Fund Hit with Margin Calls • Brokers Are The New Homebuilders - Forget The Bailouts • Risky Business: Hedge Funds Can Freeze Redemptions
Stocks/ETFs to watch: BSC. Competitors: GS, LEH, MER. ETFs: IAI, KCE
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