When the Titanic was sinking, some of the members of the crew jumped into the lifeboats -- ahead of women and children.
According to a breaking story from BusinessWeek, something similar may have happened with Bear Stearns' (NYSE: BSC) two hedge funds which collapsed during the summer. It looks like some of the firm's insiders were able to jump ship before the clients could get out.
BusinessWeek says that the SEC and the U.S. Attorney's office in Brooklyn are looking into the matter.
No doubt, the clients are likely to cooperate with the authorities. Keep in mind that the financial loss was about $1.6 billion as the two funds filed for bankruptcy in July.
However, this is not to say that insider redemptions are wrong. After all, such things are common. But if investigators can show that the insiders knew things were going off the cliff yet continued to say rosy things to clients or blocked redemptions, then Bear Stearns could be in trouble.
Tom Taulli is the author of various books, including The Complete M&A Handbook
