He has ruled that Bear Stearns should pay $125 million to collapsed hedge fund Manhattan Investment Fund. The fund, for which Bear Stearns was a clearing broker, went bankrupt in 2000 after four years in operation. The manager, Michael Berger, reportedly lost $400 million of clients’ money but covered it up for three years. Court statements say that Bear Stearns reported concerns about the fund to the SEC but did so only a year after doubts were first raised internally. Judge Lifland said Bear Stearns "failed to act diligent in a timely manner" and should return $125 million in margin payments that the fund had made. The case has raised concerns on Wall Street that brokers must now be responsible for their clients’ activities.
Topics
