They say that with each risk comes a dose of overconfidence. Same was the case with Bear Stearns. It’s passion to take risks no matter what brought it into a new arena to try itself, corporate takeovers, voluntary and hostile. The company was often dubbed as “masterful at disguising takeover maneuvers” that also earned it negative publicity and dislike among different business sectors.
The company became highly unpopular in its practice to engage in “mock battles” with clients, as happened with GNR (Global Natural Resources), once the company determined that GNR’s management had undervalued its assets and that greater profits could be appreciated. In a surprising move to help with corporate takeovers, the company introduced and encouraged an “option agreement” allowing clients to buy stock in the company’s name, which was later put to a forced shameful end in an act by The Department of Justice and Securities & Exchange Commission, through the filing of lawsuits against several clients, all of which were eventually settled.
The 1987 crash of Wall Street devastated the company, resulting in involuntary vacation and elimination of various posts in the organization. However, with the economy eventually stabilizing, this change helped in increasing brokerage commissions and revenues from its investment banking division, to a significant extent. Finally, the company had achieved the position of becoming the top equity underwriter inLatin America. By 1992, the company had successfully included capital industry, biotechnology, and machinery stocks in its ever-expanding analysis of the corporate sector.
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