Who Sank Bear Stearns?
Executives at the firm have complained that a whisper campaign started by short sellers contributed to the flight of capital and forced the company to turn so quickly to JP Morgan Chase and the Federal Reserve Bank for a bailout. Lehman Brothers also claims to be a victim of a vicious “short-and-distort scheme.” The shorts played so nasty that Lehman CFO Erin Callan went on CNBC and complained to “Closing Bell” anchor Maria Bartiromo that the SEC needed to investigate the abusive tactics of short sellers. (Perhaps the best revenge was that once Lehman secured additional funding, its stock rallied, shaking out many of the shorts in a classic squeeze.) Securities and Exchange Commission Chairman Christopher Cox claims to be on the case. Testifying in April before the Senate Banking Committee, Cox said: “The SEC very aggressively pursues insider trading, market manipulation, and the kinds of illegal naked short-selling that has been very publicly alleged in [the Bear Stearns] case.” Just
