The fall of investment firms
Last week witnessed the collapse of two major global financial services firms -MERILL LYNCH and LEHMANN BROTHERS.
Lehmann brothers established in 1850 did business in investment banking,equity and fixed income sales,research and trading,investment management,private equity and private banking.
It filed for bankruptcy on 15th september under chapter 11 for bankruptcy protection.This was mostly due to an acute sub-prime mortgage crisis.The company was desperately seeking for a buyer.Meanwhile the company's stock prices.On september 15, following the declaration the Dow Jones index slid down by 500 points.The largest drop since september 11,2001.
Merrill Lynch was founded in 1914 and heralded the idea that everyone, not just the rich, should invest in the financial markets. That stance made Merrill not only one of the pillars of Wall Street, but a reputation as the stockbroker for Main Street as well. It survived wars and the Great Depression, but succumbed as an independent company to the mortgage meltdown that began in mid-2007. On Sept. 14, 2008, Merrill announced that it had agreed to be purchased by the Bank of America, rather than run the risk of being pulled under by turmoil surrounding the industry, as Bear Stearns and Lehman Brothers had been.
Earlier this year Bear Stearns,the noted global investment bank and brokerage firm was taken over by JP Morgan Chase.Bear stearns was established as an equity trading house in 1923 by Joseph Bear and Robert Stearns.This firm had survived the market crash of 1929 without laying off any employees.In 2005-2007, Bear Stearns was recognized as the "Most Admired" securities firm in Fortune’s "America's Most Admired Companies" survey, and second overall in the security firm section.
Bear Stearns also had faced subprime mortgage crisis.On march 14,2008,JP Morgan Chase in conjunction with the Federal reserve bank of New York provided a 28-day emergency loan to Bear Stearns in order to prevent the potential market crash that would result from Bear Stearns becoming insolvent.Two days later, Bear Stearns signed a merger agreement with JP Morgan Chase in a stock swap worth $2 a share.
It was very shocking for the investors of these firms who had stock shares of the respective companies.This gives us a fair idea about the unpredictability and the unexpectancy of bigger firms involved in crisis.
So investors beware because this might happen with the company you are investing with.It is always better to keep track of the company's progress when locking money with the firm.
Lehmann brothers established in 1850 did business in investment banking,equity and fixed income sales,research and trading,investment management,private equity and private banking.
It filed for bankruptcy on 15th september under chapter 11 for bankruptcy protection.This was mostly due to an acute sub-prime mortgage crisis.The company was desperately seeking for a buyer.Meanwhile the company's stock prices.On september 15, following the declaration the Dow Jones index slid down by 500 points.The largest drop since september 11,2001.
Merrill Lynch was founded in 1914 and heralded the idea that everyone, not just the rich, should invest in the financial markets. That stance made Merrill not only one of the pillars of Wall Street, but a reputation as the stockbroker for Main Street as well. It survived wars and the Great Depression, but succumbed as an independent company to the mortgage meltdown that began in mid-2007. On Sept. 14, 2008, Merrill announced that it had agreed to be purchased by the Bank of America, rather than run the risk of being pulled under by turmoil surrounding the industry, as Bear Stearns and Lehman Brothers had been.
Earlier this year Bear Stearns,the noted global investment bank and brokerage firm was taken over by JP Morgan Chase.Bear stearns was established as an equity trading house in 1923 by Joseph Bear and Robert Stearns.This firm had survived the market crash of 1929 without laying off any employees.In 2005-2007, Bear Stearns was recognized as the "Most Admired" securities firm in Fortune’s "America's Most Admired Companies" survey, and second overall in the security firm section.
Bear Stearns also had faced subprime mortgage crisis.On march 14,2008,JP Morgan Chase in conjunction with the Federal reserve bank of New York provided a 28-day emergency loan to Bear Stearns in order to prevent the potential market crash that would result from Bear Stearns becoming insolvent.Two days later, Bear Stearns signed a merger agreement with JP Morgan Chase in a stock swap worth $2 a share.
It was very shocking for the investors of these firms who had stock shares of the respective companies.This gives us a fair idea about the unpredictability and the unexpectancy of bigger firms involved in crisis.
So investors beware because this might happen with the company you are investing with.It is always better to keep track of the company's progress when locking money with the firm.
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