Reply #25: Bear Stearns likely to face hedge fund lawsuits

[UpInArms]

http://news.yahoo.com/s/nm/20070628/bs_nm/bearstearns_hedgefund_lawsuits_dc

NEW YORK (Reuters) - Investors in two struggling Bear Stearns Cos. (NYSE:BSC - news) hedge funds that made bad bets on risky mortgages will almost surely file lawsuits in hopes of recouping losses, but legal experts say they could have a tough time proving their case.

Already, some investors in the funds are talking to lawyers about bringing cases. Potential lawsuits likely would hinge on whether investors were fully informed of risks, lawyers say.

Ross Intelisano, an attorney who handles investor cases against financial firms, said his law firm has been contacted by two investors in the Bear Stearns funds -- a fund of funds and a small institutional investor he would not identify -- about possibly bringing lawsuits.

The law firm has not been retained in the Bear Stearns matter yet "but that may change," Intelisano said. His firm, Rich & Intelisano, currently represents investors who lost a combined $20 million in the 2005 collapse of the Bayou hedge fund amid charges of fraud and mismanagement.

The troubled Bear Stearns funds invested in complex portfolios of debt linked to the subprime-mortgage market, which has seen rising defaults. Bear Stearns has said it would lend $1.6 billion -- half of what it originally pledged -- to one of the funds to prevent it from collapsing. It said it does not expect to bail out the second ailing fund.

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