Savings Experiment: Snow Removal
Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerIn a press release given the clever headline typical of government organizations -- Answers to Frequently Asked Investor Questions Regarding The Bear Stearns Companies, Inc. -- the commission said that it had "declined to provide assurances about possible future enforcement actions" to JPMorgan Chase & Co. (NYSE: JPM) as part of the buyout talks, which the SEC said it was in "close contact" with during the deal negotiations.
The SEC also said it is looking at possible improper trading by "market participants" who may have knowledge of the looming collapse.
A few things are interesting here. Nearly every press release put out by a public company contains a "safe harbor for forward looking statments" disclaimer that says, in summary, "What we are saying wildly optimistic and may even be borderline dishonest. You can't sue us if we're wrong, so na-na-boo-boo."
But the Bear Stearns statement, in which the company "stated that there is absolutely no truth to the rumors of liquidity problems that circulated today in the market," contained no such disclaimer -- one of the few cases where the safe harbor statement would have been more than just boilerplate!
Does this matter? I'm not a securities lawyer so I have no idea. But either Bear Stearns went from what Alan Schwartz described as having a strong balance sheet, liquidity, and capital situation in a few days, or the statement was misleading or uninformed.
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Reader Comments (Page 1 of 1)
4-03-2008 @ 1:23PM
me said...
It is so bothersome to read this in mainstream news; as if JP Morgan is coming to the rescue for the betterment of society and as a last resort to prevent a financial meltdown - (THIS IS A SWEET DEAL FOR JP MORGAN!!!).
It is annoying, not only because it is an illegal deal, but because the Senate Banking Committee is a powerless bunch, showing up now to portray some semblance of authority adding their 2 cents, but unable to prevent it today or tomorrow. Very sad state of affairs.
Just as an aside, ironically, JP Morgan had a strong persuasion in the creation of the Federal Reserve or that is the rumor - Not to get off on a tangent, but it is very suspicious, given the fact JP Morgan are making out like bandits today in this deal - with the Fed's promotion and today, the Senate Banking Committee's approval.