A Bear Stearns (im)morality tale

Who pocketed the most millions from Wall Street's biggest embarrassment? Was it the guy originally blamed for creating the mess?

By Andrew Leonard
Published March 20, 2008 3:10PM (EDT)

Do you suppose that soon-to-be-former Bear Stearns chairman Jimmy Cayne is gnashing his teeth about this crazy Wall Street twist of fate?

Last August, Cayne, then serving as both chairman and CEO, forced out his heir apparent Warren Spector, blaming him for the implosion of two hedge funds. (And so began the great credit crunch -- the collapse of those hedge funds will likely be remembered by future economic historians as the Wall Street meltdown equivalent of the assassination of the archduke Franz Ferdinand.)

A reader points to a Bloomberg News story reporting that "a spat over politics" in 2004 had resulted in Cayne changing "the company's deferred compensation plan, prompting Spector to sell $382 million of stock."

Cayne's current stake in Bear Stearns, if the takeover by J.P. Morgan goes through at a price of $2 per share: $12 million. His 5 percent stake in the company was worth $1 billion a year ago.

Nice work if you can get it. Spector walks away essentially unharmed by the disaster, having already pocketed hundreds of millions of dollars, while Cayne watches many more hundreds of millions vanish into the ether.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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