Investors in two funds managed by Bear Stearns are mulling legal action after the firms recorded such huge losses as to render them virtually valueless, Reuters reports.
A letter from Bear Stearns sent to clients this week said that there was “effectively no value” left in the High-Grade Structured Credit Strategies Enhanced Leverage Fund.
However, according to a recent report, a lawyer who specialises in lawsuits involving financial companies said that two investors had approached him with a view to mounting legal action to recover their investments.
“They are shocked and angered by the losses,” says the lawyer, Ross Intelisano, of Rich & Intelisano. “They were under the impression that the losses were much milder.”
The funds’ losses came after both bet heavily on risky sub-prime home loans.