New York City holds Bear Stearns (NYSE:BSC) stock in some of its pension funds, and along with almost all other investors in the brokerage, lost a lot of money.

According to Reuters, the NYSE controller said "I think a lot of people are going to be taking a look. ... Was there some deception in there or was this just a miscalculation?" A lot of people will ask the same question, which could lead to a lot of lawsuits.

Could a rash of lawsuits kill the Bear Stearns buyout by JP Morgan (NYSE:JPM)? Stranger things have happened.

At the heart of the argument is whether management knew that the company was falling apart when it said that it felt it would weather the storm of client withdrawals. The other possibility is that the catastrophe happened so fast that executives at Bear Stearns believed that they were OK one day and on the brink of disaster the next. Customers may have pulled money out that fast.

It will all come out in the depositions.

Douglas A. McIntyre is an editor at 247wallst.com.