Investors in two beleaguered funds overseen by Bear Stearns have been told they will only a small proportion of their money back, it has been reported.
A letter to shareholders seen by Bloomberg said that "unprecedented declines" in the value of the bonds used to bet on subprime mortgages had rendered the funds effectively without value.
The letter went on to say that there is "effectively no value left" in the High-Grade Structured Credit Strategies Enhanced Leverage Fund and "very little value left" in the High-Grade Structured Credit Strategies Fund.
The company's asset management division will now "seek an orderly wind-down of the funds over time," the letter went on to reveal.
Since news of the funds' difficulties broke Bear Stearns has moved to tighten lending controls and has embarked on management changes in an attempt to restore customer confidence.
Last month, the bank provided $1.6 billion of funding to rescue the High-Grade Structured Credit Strategies Fund in the interim.