Bear Stearns (BSC) to sack trading chief

Bear Stearns (NYSE: BSC) is planning to fire one of its co-presidents and the head of its trading operations. It must be that the CEO, James E. Cayne, was not available to be dismissed.

The Wall Street Journal (a subscription serivce) writes that Warren Spector, who runs stock and bond trading, will be gone on Monday. At least he has a month to enjoy the summer before Labor Day.

The departure of Mr. Spector is fairly typical of big company behavior. Investors in BSC will probably never know the extent to which he was familiar with the problems at three hedge funds at the company. On Friday, Bear Stearns had to tell a frightened market that it had "reduced its reliance on short-term loans so it isn't vulnerable to being shut off from the day-to-day loans required to fund its trading operations." Due to these concerns, BSC has lost about 30% of its market value this year.

The balance sheets and investing activities of a huge financial firm like Bear Stearns are bound to be immensely complex. It investors in a huge variety of financial instruments from all over the world. That means that it is probably that Mr. Spector would not know the details of all the firm's activities. He would need to rely on others to do that by bringing in specialists who understand each market and its dynamics.

So, why is Mr. Spector leaving?

Douglas A. McIntyre is a partner at 247wallst.com.