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Traders Magazine, April 2008

Michael Scotti

Stunned" was the word traders used to describe Bear Stearns' fall last month. It's hard to believe the firm is gone, they said. What's worse, a stock that traded at $160 a year ago, is now valued at $2 a share in a sale to JPMorgan. That represents a staggering amount of lost wealth for millions of shareholders. Mutual funds, pension funds were big losers, but Bear's own employees held about 30 percent of the stock. It's painful to think about how many former and recent employees were routed financially-friends, acquaintances and former colleagues of yours and mine. Precipitated by an old-fashioned run on the bank, the name of Bear Stearns now sadly joins a list of illustrious firms that have closed in the last 40 years. For some it was mis-marking trades, like in Kidder Peabody's case, and for others it was the back-office mess, which claimed a number of old-line firms. History books are our only reminder of big White Shoe firms that couldn't make it, like Loeb, Rhodes & Co. and McDonnell & Co. Not many of us were around in 1970, when firms couldn't clear and settle trades properly. Still, you can be sure Bear Stearns won't be the final addition to this long-running chapter of failed firms.

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