Bear Stearns moved quickly on Friday to replace a senior executive whose unit ran two hedge funds that nearly collapsed this month because of aggressive bets on mortgage securities.
The executive, Richard Marin, was succeeded as chairman and chief executive of Bear Stearns Asset Management by Jeffrey Lane, a vice chairman at Lehman Brothers and a Wall Street veteran known for his administrative skills.
Bear Stearns said that Marin would remain as a special adviser to Lane. Through a spokesman, Marin declined to comment.
That Bear Stearns is bringing in a new leader for its asset management business, a small but fast-growing division, was not a surprise; executives inside the firm had called the near-collapse of the funds a black eye dealt to the firm's reputation for prudent risk management. What is striking is how quickly the firm moved.
In an interview early this week, the chief executive of Bear Stearns James Cayne described the hedge funds' problem as a "body blow of massive proportions."
Lane, who was approached about the job earlier this week by Warren Spector, a president and cochief operating officer at Bear, knows his new colleagues well. Neuberger Berman, an asset management firm that Lane previously led, held merger talks with Bear Stearns before it was eventually acquired by Lehman Brothers in 2003.
Shares of Bear Stearns, which until recently had performed better than those of other investment banks, have fallen 6.7 percent in the last two weeks. They closed down 2.8 percent, or US$4, to US$140 on Friday.
In addition to Marin, questions have arisen about Ralph Cioffi, the manager of the two hedge funds that had borrowed more than US$10 billion to invest in complex securities that trade infrequently and are hard to value.
In a telephone interview on Friday, Lane said that Cioffi was still with the firm and working with Thomas Marano, the head of the firm's mortgage business and a respected trader, to help unwind the two funds in an orderly manner.
"Everybody is an employee at will," Lane said, "and there is never too much talent at the company."
The Securities and Exchange Commission has also started an informal inquiry into issues surrounding the Bear hedge funds and how the industry is valuing mortgage-related securities like those that Bear holds.
Though Bear and its executives had only invested US$40 million of their own money in the fund, the firm was compelled to initially pledge a US$3.2-billion credit line to rescue the older of the two funds when lenders demanded more collateral to secure their loans. The bank later reduced that amount to US$1.6 billion.
Investors had also sought to redeem their stakes in the fund, but they have been unable to do so since May.
Friday's announcement came a day after reports that Marin maintained a personal blog, on which he described the efforts to save the two funds, which had borrowed billions of dollars from other investment banks, as "trying to defend Sparta against the Persian hordes of Wall Street."
Lane, 65, a native of Brooklyn, New York, worked his way up on Wall Street, holding several administrative and managerial roles. Under his leadership, Neuberger, which for most of its history was a private partnership known for its mutual funds, went public and sold itself for US$2.6 billion to Lehman Brothers.
Some analysts said on Friday that Lane would bring a steady hand to Bear Stearns Asset Management, which had set an aggressive goal to account for 10 percent of the firm's revenue by 2010.
But Lane, who for the last four years has not been involved in day-to-day management of a business at Lehman, said he was not interested in baby-sitting a child suffering from growing pains. He said he expected to expand the business through acquisitions.
"I don't think anybody here is interested in retreating," he said. "From adversity comes opportunity. This is a great franchise, and we are going to move forward."
To many, Tatu City on the outskirts of Nairobi looks like a success. The first city entirely built by a private company to be operational in east Africa, with about 25,000 people living and working there, it accounts for about two-thirds of all foreign investment in Kenya. Its low-tax status has attracted more than 100 businesses including Heineken, coffee brand Dormans, and the biggest call-center and cold-chain transport firms in the region. However, to some local politicians, Tatu City has looked more like a target for extortion. A parade of governors have demanded land worth millions of dollars in exchange
An Indonesian animated movie is smashing regional box office records and could be set for wider success as it prepares to open beyond the Southeast Asian archipelago’s silver screens. Jumbo — a film based on the adventures of main character, Don, a large orphaned Indonesian boy facing bullying at school — last month became the highest-grossing Southeast Asian animated film, raking in more than US$8 million. Released at the end of March to coincide with the Eid holidays after the Islamic fasting month of Ramadan, the movie has hit 8 million ticket sales, the third-highest in Indonesian cinema history, Film
BIG BUCKS: Chairman Wei is expected to receive NT$34.12 million on a proposed NT$5 cash dividend plan, while the National Development Fund would get NT$8.27 billion Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday announced that its board of directors approved US$15.25 billion in capital appropriations for long-term expansion to meet growing demand. The funds are to be used for installing advanced technology and packaging capacity, expanding mature and specialty technology, and constructing fabs with facility systems, TSMC said in a statement. The board also approved a proposal to distribute a NT$5 cash dividend per share, based on first-quarter earnings per share of NT$13.94, it said. That surpasses the NT$4.50 dividend for the fourth quarter of last year. TSMC has said that while it is eager
‘IMMENSE SWAY’: The top 50 companies, based on market cap, shape everything from technology to consumer trends, advisory firm Visual Capitalist said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) was ranked the 10th-most valuable company globally this year, market information advisory firm Visual Capitalist said. TSMC sat on a market cap of about US$915 billion as of Monday last week, making it the 10th-most valuable company in the world and No. 1 in Asia, the publisher said in its “50 Most Valuable Companies in the World” list. Visual Capitalist described TSMC as the world’s largest dedicated semiconductor foundry operator that rolls out chips for major tech names such as US consumer electronics brand Apple Inc, and artificial intelligence (AI) chip designers Nvidia Corp and Advanced
RSS