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Bear Stearns Expands Top Management With Unit Heads

Date: Saturday, September 8, 2007
Author: Yalman Onaran, Bloomberg

Sept. 7 (Bloomberg) -- Bear Stearns Cos. expanded its top management committee to include more division heads following the collapse of two hedge funds and the ouster of co-president Warren Spector.

The management and compensation group will increase from seven members to 15, including the addition of mortgage chief Tom Marano and Michel Peretie, the head of international operations, Chief Executive Officer James ``Jimmy'' Cayne said in a memo.

Bear Stearns added executives in charge of daily operations as it tries to recover from the failure of the hedge funds in June and a decline in its fixed-income business after investors fled risky mortgage-backed bonds. Half of the group's new members used to report to Spector, who was forced out Aug. 5.

``They traded efficiency for more voices,'' said John A. Challenger, who runs the personnel placement company Challenger, Gray & Christmas Inc. ``They must have felt that every division and department as well as risk management should be heard in top management and be kept aware of major decisions.''

Bear Stearns spokesman Russell Sherman confirmed the contents of today's memo and declined to comment further.

New committee members also include Craig Overlander, co-head of fixed income, and Steve Meyer, co-head of equities. Jeff Mayer, the other co-head of fixed income, and Bruce Lisman, the equities co-chief, were already on the committee.

New Members

David Glaser and Jeff Urwin, co-heads of investment banking, were brought in, as well as Chief Risk Officer Michael Alix and Peter Cherasia, head of information technologies.

After Spector's ouster, Alan Schwartz became the firm's sole president, and Chief Financial Officer Sam Molinaro was given the additional title of chief operating officer. Schwartz and Molinaro, along with CEO Cayne, are already part of the management committee. Spector was a member before his departure.

Steve Begleiter, responsible for corporate strategy, and Robert Steinberg, who handles risk management and new products, are existing members who retain their posts.

The two hedge funds run by the firm's asset management unit collapsed because of wrong way bets on mortgage-backed assets as rising defaults on loans led to larger-than-expected declines in such assets' values.

Bear Stearns closed the funds after granting $1.6 billion in emergency financing. The attempted bailout was the biggest since the collapse of Long-Term Capital Management LP in 1998.

Shares of Bear Stearns have declined more than 30 percent this year as the hedge fund troubles led to concern about its ability to keep clients and rising mortgage defaults shrank fixed-income trading. Bear Stearns is the second-largest underwriter of mortgage-backed securities behind Lehman Brothers Holdings Inc.

Bear Stearns fell $2.30 to $105.37 at 4:01 p.m. in New York Stock Exchange composite trading.

To contact the reporter on this story: Yalman Onaran in New York at yonaran@bloomberg.net .