Financial News Online US- A federal judge has granted Bear Stearns a trial before the prime broker can be ordered to pay nearly $160m (€111m), as the bank’s board reportedly considers a succession plan for chief executive James Cayne.
US District Judge Naomi Reice Buchwald in Manhattan said yesterday a “trial will be necessary” to determine whether Bear Stearns acted in “good faith” when it accepted money for a defunct hedge fund.
Buchwald ruled on an appeal of a February order by US Bankruptcy Judge Burton Lifland that Bear Stearns pay nearly $160m to investors in the Manhattan Investmen Fund. Lifland had found that Bear Stearns failed to properly monitor the activities of the fund before it collapsed in early 2000.
The fund, run by Austrian-born manager Michael Berger, lost nearly $400m of investors’ money by making wrong bets on Internet stocks during the technology boom of the late 1990s.
