(Please note that Brett Sherman is not related to former Bear Stearns shareholder Bruce Sherman; Disclosure - The Sherman Law Firm represents former Bear Stearns shareholders with allegations and claims similar to those described below)
REPRESENTED BY DAVID BOIES' LAW FIRM, BIG SHAREHOLDER BRUCE SHERMAN SAYS BEAR STEARNS EXECUTIVES JIMMY CAYNE AND WARREN SPECTOR LIED TO HIM.
Bruce Sherman, formerly one of Bear Stearns' largest shareholders, is whistling a brand new tune.
Sherman used to openly heap praise on former Bear Stearns CEO Jimmy Cayne for producing record profits and growing Bear's stock price at an incredible rate during the housing bubble. Now, Sherman is the plaintiff in a new securities fraud lawsuit against Cayne, Bear Stearns, and others.
Boies, Schiller & Flexner, headed by renowned trial lawyer David Boies, represents Mr. Sherman. Boies is a formidable attorney. He is probably best known for representing Al Gore during the former VP's challenge to the legitimacy of the 2000 presidential election. Mr. Boies uses a tell it like it is style to simplify complex issues with plain English explanations and arguments. It is unclear at this time how much direct involvement David Boies will have in the litigation.
The complaint was filed in the the U.S. District Court for the Southern District of New York. Sherman asserts a cause of action for federal securities fraud and a host of similar claims.
Sherman's core allegations are that defendants knowingly (a) overstated the value of Bear Stearns' assets (particularly mortgage-backed securities and related instruments), and (b) vastly overstated the quality and integrity of Bear's risk management systems.
At one point, Bruce Sherman was Bear Stearns largest stockholder. Sherman owned a 5.9% stake, or 5.5 million shares. Sherman's stock previously was worth hundreds of millions of dollars. In March 2008, he suffered an immense financial loss when he sold his Bear stock holdings for a fraction of their former value after the investment bank collapsed.
Much more on this story to come...