A new chief executive doesn't appear to be adding any more polish to Bear Stearns' ( BSC) severely tarnished reputation in asset management.

After steering two highly leveraged hedge funds into bankruptcy, Bear is shutting down a third that invested in asset-backed securities, according to Bloomberg, citing a letter to the fund's investors. The hedge fund is being closed after plummeting in value bay 39% last year and losing more than $300 million in August, Bloomberg notes.

Rumors about the asset-backed hedge fund, which had been facing slack performance had surfaced in late July nearing the height of the credit crisis. Bear Stearns Asset-Backed Securities, as the fund run by Bear exec Colin Gordon was called, at one point it had about $900 million under management.

Cramer: Bear Stearns' Cayne Should Go

The fund, which presently has a value of about $500 million, will be unwound and its investors refunded, according to the news report.

A call to a spokesman at Bear in New York was not immediately returned.

Bear's shuttering of the fund comes a day after Alan Schwartz was named CEO , replacing James Cayne, who relinquished the title as its largest investors began to grouse over the firm's poor performance. Bear has seen its share value plunge by a $100 over the past year. Cayne remains at the investment firm as chairman.

Bear's reputation has been deeply wounded by its experience with a pair of now-bankrupt funds -- which have spurred lawsuits from investors and federal probes -- and this latest hedge fund slipup is likely to only add more salt as Schwartz attempts to revitalize the franchise during continued rocky times for financial firms.

Schwartz said during a CNBC interview broadcast on Wednesday that markets are still in the midst of a credit crisis. He noted that Wall Street is still in a "difficult credit market environment" further buckled by what he described as "not a lot of transparency."

Still, Schwartz said in the interview that Bear is well-capitalized and could be well-positioned to take advantage of fresh opportunities, despite the overarching turmoil that has surrounded the firm he is now charged with steering.

That message may finally be resonating with investors, who have sent shares of the company up in trading Wednesday by nearly 3.5% to $73.96. A shaky day of trading on Tuesday dragged shares down when news of Bear's management shift began to leak.