Blitzkrieg of Bear Stearns update 1

While the Securities and Exchange Commission finally begins to investigate the large purchase of deep out-of-the money put options well before the precipitous drop in the stock from $70 and the eventual weekend fire sale for approximately $236 million, as well as the unusually large short position put into play prior to those events that accelerated the selling frenzy, a number of questions remain within shareholder groups (including the employee's of Bear Stearns who own roughly 30% of the company) as well as being answerable to taxpayers.

While some will question the action by the U.S. Treasury in facilitating the J.P. Morgan deal in less than appropriate fair market conditions, the picture-perfect poison-pillesque deal JP Morgan’s chief executive Jamie Dimon, negotiated in securing an option Bear Stearns office at 383 Madison for roughly $300+ million under current fair market value and the odd timing of Fed’s funding position that seemed to provide the necessary lifeline for Lehman et al while throwing Bear Stearns under the bus, there are many additional eye-brow raising questions that remain to be answered as the asset base is transferred in what is likely the largest purchased price discrepancy in acquisition history.

While some of the media seemingly suffers selective amnesia or turn a knowing blind-eye to the expropriation of assets, questions on how "free" the free-market system worked in the fall of Bear Stearns will not go away.