Market Discussion

[BigSully1]

What's next?

SEC Suspends Trading of 26 Companies
Thursday March 13, 1:16 pm ET 
SEC Suspends Trading of 26 Companies, Cites 'Corporate Hijackings'


WASHINGTON (AP) -- Federal regulators on Thursday temporarily suspended trading of 26 companies, saying it appears the firms have taken the identities of defunct or inactive publicly traded companies in a tactic called "corporate hijacking."
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The Securities and Exchange Commission said the suspensions, which start immediately and last through March 27, are part of the SEC's stepped-up effort to address fraud involving microcap securities.

"Today's trading suspensions are squarely aimed at putting the market on notice about the risks associated with acquiring non-operational or 'shell' companies, and with investing in microcaps," said Linda Chatman Thomsen, director of the SEC's Division of Enforcement.

The SEC said it ordered the suspensions because of questions regarding the accuracy of information pertaining to the companies status as publicly traded. The regulatory body said certain persons appear to have taken identification numbers and ticker symbols assigned to defunct or inactive public companies by falsely representing themselves as authorized officials of the original publicly traded corporation.

The commission warns investors and prospective investors that they should carefully consider the suspensions, and other information currently available or subsequently released by the companies.

The 26 companies whose trading was suspended today are: Andros Isle Development Corp.; Asante Networks Inc.; Beluga Composites Corp.; Cobra Energy Inc.; Complete Care Medical Inc.; Disability Access Corp.; El Alacran Gold Mine Corp.; Extreme Fitness Inc.; Gaming Transactions Inc.; Global Equity Fund Inc.; HealthSonix Inc.; IQ Webquest Inc.; JSX Energy Inc.; Kensington Industries Inc.; Kingslake Energy Inc.; L International Computers Inc.; Let's Talk Recovery Inc.; Mobilestream Inc.; Mvive Inc.; Native American Energy Group Inc.; Paramount Gold and Silver Corp.; Regal Technologies Inc.; Remington Ventures Inc.; Straight Up Brands Inc.; Transglobal Oil Corp.; and Turquoise Development Co.

[kslifka]

What's the next Investment broker to bite the dust???

Bear Stearns would have been a great short.  There has to be more brokers to fall.

[Houlahan]

I would guess and only a guess LEH or MER.

On a 10-Q report last year. LEH reported they were moving $11B from tier 2 to tier 3. As I understand, Tier 3 is an asset pool, which has no market for it. They have over $34 B in tier 3. Their options are 3 to 1. Puts to calls.

MER- options are 2.5 to 1.
Let me know your thoughts. Next week will be crazy.

[buddjas1]

 JPMorgan to buy Bear for $2 a share

http://news.yahoo.com/s/ap/jpmorgan_bear_stearns

OMG.  Black Monday?  Dow to test 10,000 this week?

Tokyo and Seoul open in 3 min....

Nikkei 225 -3.3%  8:23pm et

in free fall

[Houlahan]

Nikkei 225 is holding around 3.4%
http://finance.yahoo.com/intlindices?e=asia

Edit: Oops. 20 minutes later it is down 4%. yikes.

[BigSully1]

http://www.bloomberg.com/markets/stocks/futures.html

[kslifka]

U.S. futures down huge.  I'm hoping my prediction of S&P 1220 is the bottom....

Watch the volatility index today...it will probably spike to 40.   Hopefully it spikes early and comes down quickly throughout the rest of the day.

[BigSully1]

I wish I still had this 1

[kslifka]

How can Bear Stearns be worth only $236 million...down from $8 billion on Thursday.

Don't they own a big sky scrapper in downtown New York??

Or is this Enron all over again??

[pinoleropuro]

on the radio today this afternoon I heard that per their guestimations jus the skycraper in New York was worth at least 1.2 billion dollars and with the rest of their realestate around the country they guestimated it to be worth about 2.2 or so billion dollars which would have put the stock at around 15 to 18 dollars a share something like that.
but now that they announce they are being bought for 2/share it sure smells like another Enron.
its going to be very ugly this monday I feel like I am goingn to puke right now. 

[David Randolph]

How can Bear Stearns be worth only $236 million...down from $8 billion on Thursday.

Don't they own a big sky scrapper in downtown New York??

Or is this Enron all over again??

The problem is the derivatives. Several long term bears have been warning about the "derivatives time-bomb", even back in the 1998-2000 period.

On its latest balance sheet, Bear Stearns had $395 B in assets and $384 B in liabilities. The problem seems to be that in reality the assets are not really worth $395 B ... suppose that due to the crisis the assets are worth just $300 B instead ... then Bear Stearns would have negative equity of ($83 B) and its value would be zero. I guess if it weren't for the FED and the stake of sustainability of the financial system JPM wouldn't have bought it, not even for $2 a share (which is incredible since the stock closed at $30 on Friday).

The USD is at $1.5861 versus the Euro currency ... I'm worried.

[BigSully1]

How can Bear Stearns be worth only $236 million...down from $8 billion on Thursday.

Don't they own a big sky scrapper in downtown New York??

Or is this Enron all over again??

Read this article;

"Bear execs lack golden parachutes, stock plan crunched"

but pay very close attention to these paragraphs;

"JPMorgan Chief Financial Officer Mike Cavanagh late Sunday said taking over Bear would generate about $6 billion in merger-related costs."

"JPMorgan has not broken down those figures, but much of that will be earmarked for severance pay and potential exit packages for top executives like Schwartz."

It seems that Bear execs made a sweetheart deal with Morgan, and common shareholders and maybe even taxpayers got the shaft. All of this with the Feds approval. Only in America.....

Here's the whole article;
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Bear Execs Lack Golden Parachutes

by Joseph A. Giannone

NEW YORK (Reuters) - Barring some unexpected boardroom generosity by JPMorgan Chase & Co, executives at Bear Stearns Cos may find that their walking away money has been crunched by the credit crisis.

Bear stock soared to a record high of $172.61 in January last year as Wall Street's mortgage and buyout booms peaked, but those shares have plunged as the bank played a leading role in fuelling a subprime mortgage crisis that continues to inflict damage on financial markets.

Bear Stearns' shares, which sank to $30.85 Friday on worries the bank was quickly running out of cash and needed a Federal Reserve bailout, now fetch just $2 each under JPMorgan's bailout late on Sunday.

The plunging shares, plus a lack of the normal payout expected when a company is taken over, known as 'golden parachutes', delivers a serious blow to the bankers, traders and other executives worldwide at a firm that has long encouraged its above-average levels of inside ownership.

"The current stock ownership by executive officers reflects a significant personal investment in the company by those who are most responsible for the company's future success," the bank said in a proxy statement.

Employees own around 30 percent of the bank.

Yet loyalty to the firm has cost employees as Bear's fortunes turned south.

According to Bear's recent proxy statement, the executive committee members at the fifth-largest U.S. investment bank owned about 9 percent of the firm's outstanding stock at the end of January.

Based on shares outstanding in January, shares held by the top handful of executive officers plunged in value from about $1.8 billion 14 months ago to just $22 million today.

Bear Stearns officials were not immediately available for comment on compensation related to the JPMorgan takeover.

NO PARACHUTES

The proxy also revealed that Bear does not offer golden parachutes for executive officers in the event of it being taken over.

Bear offers a Capital Accumulation Plan and a Stock Award Plan, yet both possess a "double-trigger provision," which means awards and all benefits are not accelerated unless the participant is fired without cause by the new company or resigns for a good reason.

These plans also suffered from Bear's plunging market value. Back in November, when Bear's shares traded at around $153, the market value of unvested equity awarded to Chairman James "Jimmy" Cayne was $47.5 million, while shares awarded to CEO Alan Schwartz were valued at $44.9 million, the proxy said.

Schwartz replaced Cayne as CEO in January as shareholders, upset by Cayne's hands-off approach during a serious financial crisis, pushed the long-time chief to step aside.

That said, JPMorgan Chief Financial Officer Mike Cavanagh late Sunday said taking over Bear would generate about $6 billion in merger-related costs.

JPMorgan has not broken down those figures, but much of that will be earmarked for severance pay and potential exit packages for top executives like Schwartz.

A person familiar with the transaction told Reuters that roughly $1 billion of those costs would be earmarked for severance and retention.
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Remarking on that last sentence, O.K. roughly $1B for severance and retention, and how much of the $6B for the potential exit packages for top execs that was spoken of?

[ravenquork]

Maybe some hope left-

SAN FRANCISCO (MarketWatch) -- The Federal Reserve on Sunday cut the rate on direct loans to commercial banks by a quarter-point and said it will allow primary dealers to borrow at the rate in exchange for a broad range of investment-grade collateral. In a statement, the central bank also extended the maximum term of discount-window loans to 90 days from 30 days. The Fed also OK'd the financing deal announced by J. P. Morgan Chase & Co.

[tokyopua]

Some serious armaggedon talk out there, listening to CNBC now, they put on special worldwide broadcasts that they usually dont because of this situation, Squack box Europe.  There was some commentary like the banks have created the "largest pyramid scheme" in history, and talk like there is going to be the tech market year 2000 equivalent bubble in financials.  Glad I am in cash aside from holding UTVG for some reason still 

[pinoleropuro]

our founding fathers would be ashamed of what has happened to the US economy.