Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Friday, February 16, 2007

Bankruptcy Court Says Bear Stearns Has to Pay Hedge Fund Investors

A bankruptcy court in New York ordered Bear Stearns to pay $160 million to investors in a failed hedge fund, Manhattan Investment Fund, headed by Michael Berger.  According to the court, Bear Stearns, one of the prime brokers for the fund, had suspicions of fraudulent activity, asked questions of Mr. Berger, but failed to verify the explanations provided.  Bear Stearn's failure to act diligently allowed the fraud to continue, says the court.   Bear Stearns says it plans to appeal.  See NYTimes, Bear Stearns Told to Pay $160 Million to Investors and WSJ, Bear Stearns Is Told to Return
$125.1 Million in Hedge Case.

http://lawprofessors.typepad.com/securities/2007/02/bankruptcy_cour.html

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