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Investment Banks, Hedge Funds, and Private Equity by David Stowell

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Investment Banking in 2008 (B)

A Brave New World

The Aftermath of Bear Stearns

Furious Bear Stearns shareholders found a loophole in the hastily arranged merger documents. In the rush to consummate the deal, JP Morgan had accidentally agreed to honor Bear’s trades for up to a year irrespective of shareholder approval of the merger. This oversight created the terrifying specter of Morgan failing to acquire Bear but nonetheless remaining on the hook for billions in potential losses from Bear trades gone awry. Holding negotiating leverage for the first time since the crisis began, newly minted Bear CEO Alan Schwartz pushed JP Morgan CEO James Dimon to up the final offer price from $2. In the ensuing week-long fracas, Bear once again appeared headed ...

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