Long Twilight of Bear Fund

Chidem Kurdas

Credit fund failures in 2007 were the first public sign of disaster at Bear Stearns, some nine months before its bailout by the Feds and sale to JP Morgan. In what looks like another instance of the time it can take to liquidate credit assets, a Bear Stearns fund can still be found in investors’ portfolios.

 After the collapse of two collateralized debt obligation-investing Bear Stearns funds in the summer of  2007, there was word of an insider trading investigation as to whether a manager moved his own money from the doomed funds into another Bear vehicle called Structured Risk Partners. 

The two collateralized debt obligation funds, which were highly leveraged, lost $1.6 billion and went into bankruptcy. As you may recall, two Bear credit managers faced charges but were acquitted. 

Turns out that Structured Risk Partners stayed on investors’ books, albeit at a large loss. It has taken over four years to unwind.

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