| NEW YORK
NEW YORK The liquidators of two Bear Stearns
Cos BSC.N mortgage hedge funds that collapsed last year,
filed suit on Monday against the company and its auditor,
Deloitte & Touche [DLTE.UL], seeking to recover over $1 billion
The suit, filed in U.S. District Court in Manhattan,
accuses Bear, the managers of the hedge fund, and Deloitte, of
not living up to assurances that the funds were relatively safe
and conservative investment vehicles.
The liquidators added that the funds were never designed to
withstand even a "slight downtick" in the housing market.
Bear Stearns and its hedge fund managers "conceived,
marketed and managed hedge funds that they knew would be viable
so long as -- but only so long as -- the U.S. housing market
continued to rise," the suit said.
The suit charges that the company, the fund managers, and
Deloitte violated their fiduciary and professional duties. The
suit said Deloitte's preparation of the funds' audits was "at a
The suit is also seeking punitive damages.
Bear Stearns, which is being acquired by JPMorgan Chase
(JPM.N), declined to comment on the lawsuit and a Deloitte
spokesman did not immediately return calls seeking comment.
Geoffrey Varga and William Cleghorn, who filed the suit,
were appointed as liquidators of the funds in March by the
Grand Court of the Cayman Islands, according to the lawsuit.
(Editing by Tim Dobbyn)