* Preliminary approval granted; final hearing in September
* Plaintiffs said Bear knew business, stock were risky
* JPMorgan bought Bear in Fed-brokered takeover in 2008
April 5 (Reuters) – A federal judge granted preliminary
approval on Thursday to a $10 million settlement for former Bear
Stearns Cos workers who suffered large losses by holding company
stock in their retirement plan.
The settlement covers claims raised on behalf of more than
8,400 people who lost roughly $215 million in retirement savings
by owning Bear stock in an employee stock ownership plan between
Aug. 1, 2007 and March 24, 2008.
JPMorgan Chase & Co bought Bear that March in an
emergency buyout brokered by the U.S. Federal Reserve, and will
fund the settlement.
U.S. District Judge Robert Sweet in Manhattan called the
settlement “fair, adequate, and reasonable.”
He scheduled a Sept. 19 hearing to consider objections
before granting final approval.
The former Bear employees contended that the investment bank
knew its business model was unsustainable because it was heavily
tied to subprime and other risky mortgages.
They said this made it imprudent and a breach of fiduciary
duty for Bear to put company stock in the retirement plan.
Bear was driven to the brink of collapse when fleeing
clients caused a liquidity crunch. JPMorgan agreed to pay $10
per share for the 85-year-old investment bank, far below the
$170 that Bear shares once commanded.
Lead plaintiffs in the case are Shelden Greenberg, a Staten
Island, New York resident who worked at Bear from 1981 to 2003;
and Aaron Howard, a Los Angeles resident who worked at Bear from
1995 to 2007.
The case is In re: Bear Stearns Companies ERISA Litigation,
U.S. District Court, Southern District of New York, No.
08-md-01963.
