Another Bear hedge fund on the rocks

A third Bear Stearns Cos. Inc. hedge fund is in trouble due to the subprime mortgage market, according to published reports. The Bear Stearns Asset-Backed Securities Fund, valued at $850 million, has stopped investor redemptions and reported that it expected losses in July, the New York Times said. However, the bank doesn’t plan to liquidate this fund, saying that its assets—which are tied to Alt-A and prime mortgages—are worth more than market conditions allow, Reuters reported. Bear Stearns has already seen a pair of its hedge funds deflate this summer, wiped out by bets on the mortgage market. Investors in the High-Grade Structured Credit Strategies Enhanced Leverage Fund were told there was no value left, while there was “very little value” in the High-Grade Structured Credit Strategies Fund. The New York-based bank has reportedly hired a few outside law firms in anticipation of investor suits, the Times said.