Bear Stearns Chairman sells 31 mln pounds of stock

Bear Stearns Chairman sells 31 mln pounds of stock
By Dan Wilchins Reuters - Thursday, March 27 10:50 pm

NEW YORK (Reuters) - James Cayne, Chairman of Bear Stearns Cos Inc sold $61.3 million (31 million pounds) of his shares of the company according to a filing on Thursday, signalling the bank's shareholders are unlikely to get a higher price for their shares.

JPMorgan agreed earlier this week to increase its original bid for Bear Stearns, which had faced a run on the bank and was close to collapse.

Some investors were clearly hoping JPMorgan Chase would increase its bid again, or that Bear Stearns would find another buyer, because Bear Stearns shares closed on Thursday at $11.23 on the New York Stock Exchange, about 20 percent above the current value of JPMorgan's offer.

If getting a higher price were likely, Cayne would be unlikely to sell his shares.

Bear's share price fell about 5 percent in after market trading to $10.68. The share sale took place on March 25 but was disclosed in a document after the market closed on Thursday.

The 5.66 million shares Cayne sold would have been worth about $1 billion last year, when Bear's share price peaked at over $170.

JPMorgan Chase's sale is expected to close by mid-June, assuming a majority of shareholders approve it.

The banks helped ensure the deal would be approved earlier this week when JPMorgan agreed to buy 95 million newly issued Bear Stearns shares, equal to a 39.5 percent stake in the company.

Bear's board members agreed to use their shares to vote in favour of the deal. It is not clear who bought Cayne's shares.

Cayne in January stepped down as chief executive after nearly 15 years at the helm of what was once the fifth-largest investment bank in the United States.

Bear Stearns experienced a run on the bank earlier this month as clients withdrew funds and the investment bank lost access to a form of secured financing known as repo funding.

Bear Stearns, once the fifth-largest U.S. investment bank, earned most of its profit from U.S. bonds, and had a large mortgage-backed securities business, which made some investors concerned about its stability.