Burned firm sues Bear Stearns

Bear Stearns is being sued over the now-infamous failure two of its hedge funds, published reports said. Navigator Capital Partners, an investment firm in Delaware, and one of the investors in Bear Stearns’ high-grade structured credit strategies fund, have filed a class action with the Supreme Court in New York, Financial News said. The claim accuses Bear Stearns Asset Management and a slate of executives of “neglecting to manage the fund in a manner that would minimize risk and control losses in connection with sub-prime mortgage backed securities,” Financial News reported. The plaintiffs alleged also that firm also failed to tell investors that they hadn’t fulfilled those management responsibilities. Ralph Cioffi, a senior managing director and founder of the fund; Matthew Tannin, also senior managing director and chief operating officer of the fund; and Raymond McGarrigal, a portfolio manager and managing director, have also been named as defendants in the suit, Financial News said. While the case would be the first U.S. court claim against Bear Stearns over the hedge funds, an investor has already filed an arbitration claim against the firm earlier this week (InvestmentNews, Aug. 1).