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Bullish in One Breath, Bearish In Next


Arrest of Bear Stearns employees a warning shot?


We all know that two former Bear Stearns fund managers were arrested this morning. There is one detail that I find interesting, and it happens to be missing from most articles reporting the news: Each was arrested at home.

In most prosecutions the Feds are happy to spare the manpower and let the indicted surrender voluntarily. That's not necessarily so for high-profile, politically charged cases. Is that a function of this particular case, or is a signal being sent to other current and potential targets?

The Bear managers are alleged to have shown a bullish face to their funds' investors while speaking bearishly to each other. Was this morning's Citigroup (C) warning an effort to get out in front of similar allegations?

That's going to be quite a balancing act. If the spigot of warnings and write-downs is about to be turned wide-open, that probably won't facilitate the slew of secondaries and other efforts to bolster capital ahead of the storm.

At least, not at prices this high.

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