Bloomberg is reporting that Bear Stearns may possibly be ordered to pay USD180 million to a failed hedge fund in a court ruling that will help determine how aggressively Wall Street firms monitor their most lucrative trading clients.
Bear Stearns may have to return money that they took as the fund slid toward insolvency. Bear Stearns are accused of covering their own back and not investigating the insolvency adequately.
This ruling would add to the pressure on securities firms to monitor hedge funds. Federal regulators are looking in to whether the securities industry sets strict enough limits when lending to hedge funds.