Bear Stearns probe launched as profits plunge

15 April 2008

The failed investment bank Bear Stearns, which was bought out by JP Morgan in a Fed-engineered deal last month, is to be investigated.

Yesterday, the institution also revealed that its profits had dropped by 80 per cent in the quarter just prior to its near-collapse, brought about by the credit crunch.

The figures revealed that net profits in the three months to February fell from $554 million to $115 million - a precipitous decline brought about by a stunning 40 per cent drop in net revenues.

Two separate probes are being conducted into the bank by the Securities and Exchange Commission and the Federal Trade Commission.

Bear is being investigated for "anti-competitive practices" over its purchasing of municipal securities and its alleged breaking of consumer protection laws.

In a statement released with the profits statement, which came a week after the official filing deadline, the bank cited "a difficult operating environment" due to the "global liquidity crisis" as explaining the 80 per cent fall.

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