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.