Bear Stearns

Bear Stearns

Bear Stearns
Company type	Public NYSE: BSC
Industry	Investment services
Founded	1923
Headquarters	New York City, USA
Key people	Alan Schwartz, CEO
Products	Financial Services Investment Banking Investment Management
Revenue	US $16.151 billion (11/2007)
Net income	US $ 233 million (11/2007)
Number of employees	13,566 (11/2006)
Website	www.bearstearns.com

The Bear Stearns Companies, Inc. (NYSE: BSC) is the parent company of Bear, Stearns & Co. Inc., one of the largest global investment banks and securities trading and brokerage firms in the world. The main business areas, based on 2006 net revenue distrubtions, are: capital markets (equities, fixed income, investment banking; just under 80%), wealth management (under 10%) and global clearing services (12%).

About

Was a Wall Street Investment Bank( 1923-2008)until being acquired by JP Morgan Chase in March, 2008. The company was founded in 1923 by Joseph Bear, Robert Stearns, and Harold Mayer as an equity trading house. It serves corporations, institutions, governments and individuals. The company's business includes corporate finance, mergers and acquisitions, institutional equities and fixed income sales, trading and research, private client services, derivatives, foreign exchange and futures sales and trading, asset management and custody services. Through Bear Stearns Securities Corp., it offers global clearing services to broker dealers, prime broker clients and other professional traders, including securities lending. Bear Stearns is also known for one of the most widely read market intelligence pieces on the street, known as the "Early Look at the Market - Bear Stearns Morning View."

Bear Stearns' World Headquarters is located at 383 Madison Avenue, between E. 46th Street and E. 47th Street in Manhattan. The company currently employs more than 15,500 people worldwide. The firm is headquartered in New York City with offices in Atlanta, Boston, Chicago, Dallas, Denver, Houston, Los Angeles, Irvine, San Francisco, San Juan, Whippany, NJ and St. Louis. Internationally the firm has offices in London, Beijing, Dublin, Hong Kong, Lugano, Milan, São Paulo, Shanghai, Singapore, and Tokyo.

In 2005-2007, Bear Stearns was recognized as the "Most Admired" securities firm in Fortune’s "America's Most Admired Companies" survey, and second overall in the security firm section. The annual survey is a prestigious ranking of employee talent, quality of management and business innovation. This marks the second time in the past three years that Bear Stearns has achieved this top distinction. However, in light of their recent troubles related to the U.S. subprime mortgage market crisis (see below), the relevance of this rankings has been questioned.

Subsidiaries

Bear Stearns also conducts business through other wholly owned subsidiaries, including:

• Bear Energy LP,
• Bear Stearns & Co. Inc. (Consolidated),
• Bear Stearns Asset Management Inc,
• Bear Stearns Bank PLC,
• Bear Stearns Capital Markets Inc.,
• Bear Stearns Commercial Mortgage, Inc.,
• Bear Stearns Credit Products Inc.,
• Bear Stearns Financial Products Inc.,
• Bear Stearns Forex Inc.,
• Bear Stearns Global Lending Limited,
• Bear Stearns International Limited,
• Bear Stearns International Trading Limited,
• Bear Stearns Investment Products Inc.,
• Bear Stearns Mortgage Capital Corporation,
• Bear Stearns Securities Corporation (BSSC, formed July 1991),
• Bear Wagner,
• Custodial Trust Company,
• EMC Mortgage Corporation, and
• Rooftop Mortgages.

Financials

As of November 31, 2006, the company had total capital of approximately $66.7 billion and total assets of $350.4 billion. According to the April 2005 issue of Institutional Investor magazine, Bear Stearns is the seventh largest securities firm in terms of total capital.

Major shareholders

The largest Bear Stearns shareholders as of September, 2007 are:

• Joseph C. Lewis with 8.1 million shares, about 7% of the company
• Putnam Investment Management (largest institutional shareholder) with 7.03 million shares, about 6% of the company
• Bear Stearns Chairman James E. Cayne, owns about 5.8% of the company

Corporate culture/folklore

Alan "Ace" Greenberg was the chairman of the board for nearly two decades from 1978. He has become known for his regular quirky memos to the staff, exhorting them to cut costs by conserving energy, re-using paperclips, and fixing broken rubber bands by tying them back together. The memos, published in the book "Memos from the Chairman", are said to have created an "atmosphere of camaraderie and humor during the recession of the early '90s".

Subprime mortgage hedge fund crisis

Main article: 2007 subprime mortgage financial crisis

See also: Subprime lending and Collateralized debt obligation

On June 22, 2007, Bear Stearns pledged a collateralized loan of up to $3.2 billion to "bail out" one of its funds, the Bear Stearns High-Grade Structured Credit Fund, while negotiating with other banks to loan money against collateral to another fund, the Bear Stearns High-Grade Structured Credit Enhanced Leveraged Fund. The funds were invested in thinly traded collateralized debt obligations found to be worth less than their mark-to-model value. Merrill Lynch seized $850 million worth of the underlying collateral but only was able to auction $100 million of them. The incident sparked concern of contagion as Bear Stearns may be forced to liquidate its CDOs, prompting a mark-down of similar assets in other portfolios. Richard A. Marin, a senior executive at Bear Stearns Asset Management responsible for the two hedge funds, was replaced on June 29 by Jeffrey B. Lane, a former Vice Chairman of rival investment bank, Lehman Brothers.

During the week of July 16, 2007, Bear Stearns disclosed that the two subprime hedge funds had lost nearly all of their value amid a rapid decline in the market for subprime mortgages.

On August 1, 2007, investors in the two funds took action against Bear Stearns and its top management. The law firms of Jake Zamansky & Associates and Rich & Intelisano both filed arbitration claims with the National Association of Securities Dealers alleging that Bear Stearns misled investors about its exposure to the funds. This was the first legal action made against Bear Stearns, though there have been several others since then. Co-President Warren Spector was forced to resign on August 5, 2007, as a result of errant trades that led to the collapse of two hedge funds backed primarily by subprime loans. A September 20 report in the New York Times noted that Bear Stearns posted a 61 percent drop in net profits due to their hedge fund losses. With Samuel Molinaro's November 15 revelation that Bear Stearns were writing down a further $1.2 billion in mortgage-related securities and would face their first loss in 83 years, Standard & Poor's downgraded their credit rating from AA to A.

On March 14, 2008, the Associated Press reported that JPMorgan Chase, in conjunction with the Federal Reserve Bank of New York, would provide temporary funding because "Bear Stearns says its liquidity significantly deteriorated over the past day and the temporary funding will help it continue operating normally." The article further quoted Bear Stearns as indicating "there is no guarantee any permanent strategic alternatives will be successful." JPMorgan Chase will provide funding as necessary for up to 28 days and will also assist Bear Stearns in finding permanent financing.

On March 16, 2008, it was reported that Bear Stearns would be sold to JP Morgan for $2 a share. This represents a staggering loss, in league with that of now infamous Enron, as its stock had once traded at $172 a share as late as January 2007, and $93 a share as late as February 2008.

Notable current and former employees

Business

• Jeffrey Epstein—private investor
• John D. Howard—private equity manager
• Jerome Kohlberg, Jr., Henry Kravis and George R. Roberts—founders of Kohlberg Kravis Roberts & Co.
• Sanford I. Weill—former chairman and CEO of Citigroup
• Gerald Schwartz—Chairman and CEO of Onex Corporation
• Christopher Gardner—CEO of the brokerage firm Gardner Rich & Co, and author of the memoir The Pursuit of Happyness, being the basis for a 2006 film of the same name.
• John A. Mulheren—financier and philanthropist, CEO of Bear Wagner Specialists (acquired by Bear Stearns in 2001) from 1991 until his death in 2003.
• Carleton A. Holstrom —CFO from 1977 to 1987, took Bear Stearns public in 1985.

Politics and public service

• Aída Álvarez—Administrator of the U.S. Small Business Administration (1997–2001)
• Carol Bellamy—Executive Director of the United Nations Children's Fund (1995–2005)
• Raymond W. Kelly—Commissioner of the New York City Police Department (1992–1994; 2002–present)

Other

• Jon Favreau—comedian/actor/director
• Sidney Hertzberg—basketball player
• Lawrence Kudlow—economic commentator
• John Baclawski—investment banker
• Bill Fischetti-investment banker

See also

• Primary dealers

External links

• Bear Stearns Home Page

Data

• Bear Stearns Companies Inc. Summary
• Bear Stearns Companies Inc. Company Profile