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The Bear Stearns Companies, Inc.

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New Program


Shareholder Rights and Transaction Alternatives

in a proposed sale of

The Bear Stearns Companies, Inc.

Plans are being developed for a Forum program to provide Bear Stearns shareholders with the information needed to consider their alternatives.  Comments and suggestions will be welcomed.


Forum Report


Timely Attention to Bear Stearns Shareholder Issues

            Discussions of investor concerns about Bear Stearns during the past week have raised a wide range of questions about the choices shareholders may have – and the choices they may create.  And as you probably know from reading the news, some of these questions involve significant legal and governance issues that may set important precedents for the evolving global marketplace, beyond any case-specific effect on value realizable by holders of Bear Stearns stock.

Separating the Forum into two parts

            To determine what information Bear Stearns shareholders need for their decisions, and to get that information in time for it to be of use, we will probably divide the Forum program into two sections:

  1. Shareholder Rights – Addressing issues relating to voting rights as well as basic property rights, participants in this part of the Forum may be expected to focus on corporate governance and legal questions.
  2. Transaction Alternatives – Developing alternative terms or parties that might be considered if the currently proposed transaction proves to be impractical, this part of the Forum would involve primarily investment analysis and corporate finance perspectives.

            This division of activities is also intended to allow Forum participants to be selective in their attention to the issues they consider most important.

Practical Focus

            As indicated, the Bear Stearns situation is complicated by many issues that must be considered very thoroughly in the context of evolving global marketplace policies.  These include the hotly debated action to sell just under 40% of Bear Stearns stock to a prospective buyer without shareholder approval, as well as some fundamental questions about property rights that have not yet attracted much attention.  Most notably, some observers who are less focused on details of corporate law and “good governance” view the biggest and most obvious question to be how a prospective buyer has gained apparent control of property and operations before the purchase is approved, and who was responsible for allowing it.

            On a very practical level, though, we must put these and all other issues into a context of the actual choices available to Bear Stearns shareholders.  Reaching the conclusion that it’s wrong to allow the sale of a 39.5% block of voting stock to JP Morgan, for example, won’t do a shareholder any good unless he also has the information needed to do something about it.  Some shareholders have reportedly demonstrated this by engaging shareholder rights lawyers to initiate litigation in Delaware that challenges the 39.5% stock sale, but I understand from M&A lawyers that there may be additional types of deal-blocking actions that other shareholders might want to consider.

Need to develop constructive alternatives

            It should be emphasized, too, that addressing what shareholders oppose will serve no purpose unless we also address constructive alternatives.  Assuming nobody knows of another bidder that has the interest and ability to replace JP Morgan, it’s unlikely that the currently proposed transaction will be stopped unless it can be replaced by something that’s reasonable and fair to all the parties.  This will require creative solutions, along the lines of a suggestion by a hedge fund manager (he gave me permission to use his suggestion, anonymously) that JP Morgan issue securities with rights to some portion of proceeds from fair market dispositions of Bear Stearns assets.

Organizing panels and workshops

            We expect to be considering the organization of panels or workshops over the next few days to address the various issues, with an appropriate sense of urgency for choices that require immediate attention but also an appreciation of the need to understand the realistic goals to which any single decision may contribute.

            Your advice about the kind of information and expertise you need, and when you’ll need it, will be welcomed to guide us.  I’ll also welcome your suggestions of experts we might invite to help Forum participants define and analyze their choices.

           GL – March 31, 2008


Gary Lutin

Lutin & Company

575 Madison Avenue, 10th Floor

New York, New York 10022

Tel: 212-605-0335






This Forum program is open, free of charge, to all shareholders of The Bear Stearns Companies, Inc. ("BSC") and to any fiduciaries or professionals concerned with their investment decisions.  Its purpose is to provide shareholders with access to information and a free exchange of views on issues relating to their evaluations of alternatives, addressing issues described in the Forum Summary.

As stated in the posted Conditions of Participation, all Forum participants are expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

Inquiries and requests to be included in the Forum's distribution list may be addressed to

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.