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SEC’s Bear Stearns Probe Zeroes In on ‘Put’ Trades
[Quote:]
The Securities and Exchange Commission is investigating the events leading up to the collapse of Bear Stearns Cos., specifically a surge in options contracts betting that the investment bank’s share price would drop precipitously, according to people familiar with the matter.
Wall Street really is just a bunch of robber barons.
Oh, and if you wonder why the bank was bought instead of bankrupted, here’s the answer for you, right in the headline. In case of a bankruptcy, they’d have to give that back.
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If bankrupted, all the investors, small and large, but mostly the small ones would have lost all their money. Maybe, maybe we should not always opt for “hey, sorry Aunt Mary,I know it was all your money, but we decided to bankrupt the institution. “
Only the shareholders. The rest, including the funds they maintained and the buildings they owned, would have been bought for pennies on the dollar by other banks. The assets would at least have brought in way more than $2 a share – after all, their building in NYC alone is worth about 5 times what was paid for the company right now. All the portfolio’s they maintained would have been bought as well, at a deep discount. The only difference I can see is that right now, the executives get to keep their bonus.
Well, now there is a chance that it will stand up. We don’t know how serious it is, but I have seen completely healthy banks brought down by panic. It went bankrupt. And guess what: the people who kept their money there lost it all. To the last penny.