Barclays on Wednesday lodged a lawsuit against Bear Stearns in New York, aimed at recovering funds it lost as a result of the “shocking” failure of one of Bear’s hedge funds. Barclays is seeking the return of $300m-$400m, say people familiar with the case, although the complaint alleges that Bear has withheld information to which Barclays is entitled, preventing Barclays from determining the precise damages from Bear’s “misconduct”. The complaint, lodged in a New York court, comes after the failure of months of high-level discussions between the two banks. Bear is on Thursday expected to report a big Q4 loss on mortgage-related writedowns. The complaint alleges that Bear Stearns, along with Ralph Cioffi, the senior portfolio manager who at the time led Bear’s high-grade structure credit strategies group, and Matthew Tanin, the group’s chief operating officer, had “long known” that the fund and its underlying assets were worth far less than their stated values in the early months of this year and were at risk of further losses. Cioffi has since left Bear.

This entry was posted by Gwen Robinson on Thursday, December 20th, 2007 at 5:43 and is filed under Capital markets. Tagged with barclays, bear stearns. Edit this entry.