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25 Jul 2007

Law Firm Considering Legal Action Against "Bear Funds"

The Law Firm of Klayman & Toskes, P।A. announced that it is investigating the possibility of taking legal action against Bear Stearns & Co., Inc on behalf of investors who lost money in the Bear Stearns High-Grade Structured Credit Strategies Fund and the Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Fund ("the Bear Funds").

This investigation is being launched on the heels of Bear Stearns' July 18 announcement that "there is effectively no value left for the investors in the Enhanced Leverage Fund and very little value left for the investors in the High-Grade Fund।"

Over the past few years, many brokerage firms, including Bear Stearns, bundled mortgages and sold them to investors as interest-paying bonds. Accompanying these products came an alphabet soup of securities like CMOs, CDOs, RMBSs and Alt-As. Most of these products are part of hedge funds, and were purchased by wealthy investors and institutions.

However, some individuals were unsuitably steered to invest in these risky products. Many of these investors and institutions did not understand how these products work, nor were the risks of owning these products fully explained to them at the time of purchase.

Combined, the Bear Funds had investor capital of about $1.56 billion. With this capital, and additional leverage taken out on the capital, Bear Stearns bet heavily on the market for subprime mortgages and invested in thinly traded collateralized debt obligations. Its gamble turned out to be wrong. As a result of the slumping U.S. housing market, the Bear Funds have collapsed within a very short period of time, and investors have lost about $1.9 billion.

Because of the collapse of the Bear Funds, K&T anticipates that it will be filing numerous claims on behalf of institutions and individuals who invested in these Funds. Moreover, as Federal Reserve Chairman Ben Bernanke has said that losses from the subprime mortgage fallout could reach $100 billion, K&T is also looking into the possibility of filing claims against other large brokerage firms who sustained losses in their mortgage-backed securities and subprime mortgage products.

K&T represents high-net worth investors throughout the nation in securities litigation and arbitration matters, against major Wall Street brokerage firms for securities violations including misuse of margin, failure to supervise, unsuitability, and misrepresentation and omission of material fact.

The Expanding Hedge Fund Practice Of Finn Dixon & Herling

Finn Dixon & Herling LLP announced today that they have significantly expanded their hedge fund practice.

The law firm recently made a number of lateral hires, resulting in what is believed to be the largest hedge fund practice group at a Connecticut law firm. In particular, Matthew Eisenberg, a prominent hedge fund attorney formerly of the law firm of Cobb & Eisenberg LLC, became a partner of the firm in the first quarter of 2007.

Mr। Eisenberg joins partners Harold B. Finn and Erik Bergman as leaders of the firm’s Hedge Fund/Alternative Investment Fund practice group. They are supported by an experienced team of attorneys and paralegals.

Brett Dixon, the firm’s administrative partner, stated “We are very excited about the significant recent growth of our hedge fund practice। The exceptional team of legal professionals that we have assembled provides Finn Dixon with substantially increased cumulative experience and capacity with regard to fund structurings and formations, as well as investment adviser and broker-dealer registration and compliance matters.”

Mr। Eisenberg added, “Finn Dixon’s hedge fund practice group works closely with the firm’s tax, private equity, mergers & acquisitions, banking/finance, employment law and litigation practice groups. These areas of expertise are critical to a sophisticated hedge fund practice, given the increasing complexity and hybridization of fund products and the business/regulatory environments in which they operate. Furthermore, Finn Dixon’s 'boutique' approach to client servicing, which emphasizes partner access and an individualized approach to client relationships, is well suited to the demands of fund managers.”

Finn Dixon provides a broad spectrum of legal services to the alternative investment community. Clients include hedge funds, funds of funds, private equity funds, commodity pools, investment advisers, broker-dealers and third party marketers. The firm's fund manager clients, ranging in size from $100 million to $10 billion, are located throughout North America, as well as in Europe and Asia.