| NEW YORK
NEW YORK Nov 9 A U.S. judge has given final
approval to a $275 million settlement between former Bear
Stearns Cos shareholders and JPMorgan Chase & Co, which
bought the investment bank in 2008 when it was on the brink of
In an opinion posted on Friday, U.S. District Judge Robert
Sweet in Manhattan also approved the shareholders' $19.9
settlement with Deloitte & Touche LLP. Both settlements had been
announced in June. [ID: nL1E8H725O]
The all-cash settlements resolve claims against Bear and
several former executives including long-time chief executive
James Cayne, his successor, Alan Schwartz, and former chairman
Alan "Ace" Greenberg. The defendants denied wrongdoing in
agreeing to settle.
JPMorgan agreed to purchase Bear on March 16, 2008, in an
emergency buyout brokered by the U.S. Federal Reserve, as
fleeing clients were causing a liquidity crunch that drove Bear
to the brink of collapse.
After initially agreeing to pay just $2 per share for Bear,
JPMorgan later consented to pay $10 per share. That was far
below the $170 that Bear shares once commanded. More than $18
billion of market value at Bear was erased.
The settlement covers owners of Bear Stearns stock and call
options, and sellers of Bear put options, between Dec. 14, 2006
and March 14, 2008.
Investors, led by the State of Michigan Retirement Systems,
claimed that Bear had "secretly abandoned any meaningful effort
to manage the huge risks it faced" from subprime and other
mortgage-related securities. Such exposure contributed to the
collapse of two in-house hedge funds in the middle of 2007.
"Given the considerable obstacles standing in the way of a
full recovery damages, the proposed settlement amount of $294.9
million is within the range of reasonableness," Sweet said.
The judge overruled objections by one group of plaintiffs
who said the amount was "an unreasonably small fraction" of what
they deemed the suspected fraud amounted to.
Those plaintiffs had noted that JPMorgan had set aside
approximately $6 billion in anticipation of costs relating to
its purchase of Bear.
The judge also awarded the investors' main law firms about
$37.4 million in fees and expenses, citing their "Herculean
The law firms are Boston-based Berman DeValerio and New
York-based Labaton Sucharow.
The case is In re: Bear Stearns Companies Inc Securities,
Derivative and ERISA Litigation, U.S. District Court, Southern
District of New York, No. 08-md-01963.