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Wednesday, December 12, 2007

The Bear Stearns/KPMG Whitewash Job

I naturally attended a meeting in Wilmington Delaware today with KPMG on behalf of clients that invested in the failed Bear Stearns High Grade Structured Credit Strategies Fund. KPMG has been hired by Bear Stearns Asset Management (BSAM) to investigate the collapse and liquidate what's left of the failed financial carcass.

The so-called investigation gives me great pause for concern. First, it is BSAM, the subject of investigation, who is paying for it. Second, BSAM has paid KPMG $500,000, which KPMG believes may only be enough to produce a "preliminary report with summary findings." Knowing a big four accounting firm, this will barely cover their photocopying charges.

Surprisingly, KPMG likely won't be producing documents to investors and may only release their "summary findings."

In other words, investors will have to simply trust KPMG, who are ultimately accountable to the firm that burned them in the first place.

Rest assured, Bear Stearns' management isn't sweating KPMG's report.


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