NEW YORK (Reuters) - The Securities and Exchange Commission is investigating the events leading up to the collapse of Bear Stearns specifically a surge in options contracts betting that the investment bank's share price would fall sharply, according to the Wall Street Journal. Citing people familiar with the matter, the paper reported the SEC probe focuses on a surge last week in "put" options that came days before the firm's proposed sale to J.P. Morgan Chase & Co. for stock now valued at about $278.5 million, or $2.32 a share.A put option allows the buyer of the option the right to sell a certain number of shares in the company at a specific price within a set time. (Reporting by Edward Tobin; Editing by Derek Caney).
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Don Quixote Note: There is always a way to make money and the Insiders who profited may be the subject of a few "Perp Walks" soon. Eliot Laurence Spitzer who recently lost his day job as Governor of New York may yet be called back into his country's service to prosecute these white collar thieves. As attorney general, Spitzer took cases relating to corporate white collar crime, securities fraud, internet fraud and environmental protection. He most notably pursued cases against companies involved in computer chip price fixing, investment bank stock price inflation, and the 2003 mutual fund scandal. His expertise may prove invaluable in this matter. (irony intended).
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