Lehman Shorts Scared by Bear Stearns Investigation 6 comments
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Does anyone really think that the shorts put Bear Stearns (BSC) out of business? Someone needs to get the blame, but deep down, we all know that Bear had take on way too much risk and got stuck in one big margin call. Lehman (LEH) seems to be next in line; Bear's Achille's heel was subprime residential mortgages, and Lehman's is over-leveraged commercial real estate. Lehman was trading down yesterday until the article below crossed the wires, and the shorts went scrambling.
US senator asks Justice, SEC to probe Bear trading
A Democratic senator said on Thursday that he was asking the U.S. Justice Department and the Securities and Exchange Commission to investigate stock trading prior to JPMorgan Chase's agreement to buy Bear Stearns in a deal engineered by the Federal Reserve.
"Congress must continue to look into this deal and possible illegal behavior," said Montana Sen. Jon Tester. "I am calling on the proper law enforcement authorities to investigate whether illegal insider trading may have fueled Bear Stearns' downfall," the first-term member of the Senate Banking Committee said in remarks on the Senate floor.
Tester said he was asking the Justice Department and the SEC to investigate and report on "the role that short selling played in the events surrounding Bear Stearns' collapse."
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This article has 6 comments:
But the Senator is missing the point with Bear Stearns, the problem was a weak balance sheet and an over exposure to risk.
If somebody willfully sells a decent stock short, just to make a quick buck, I would understand his point of view ( but it still would not be illegal).
But as the short sellers analyzed the company, and quite rightly saw it as massively over priced, owing to its risk profile and liquidity, an investigation will be without foundation, and likely to be for political posturing purposes only.
If stock price manipulation by spreading rumors from which the originators derive a financial gain is an illegal act, then the Bear case deserves to be investigated until the perpetrators are found and dealt with.
Here's one from GRMN garmin: message board
"Garmin will announce Bankruptcy"
There are lots of examples of phony rumors like this.