The Bear "Naked" Truth: Short Sales and Rumors

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Practical Compliance & Risk Management for the Securities Industry
After watching Bear Stearns and Lehman Brothers collapse amidst a frenzy of rumors and innuendo, corporate executives and many others are convinced that, contrary to the age-old adage, words can indeed break more “bones” than sticks and stones. On the morning of Monday, March 10, 2008, Bear Stearns had $18 billion in cash reserves; less than a week later, its board of directors approved a merger with J. P. Morgan, eff ectively selling the bank for a mere $236 million—a fraction of the value of its Madison Avenue headquarters. Just six months later, rumors swirled as Lehman Brothers plunged into bankruptcy.