II Credit Goes To Bear Stearns, But Firm Still Seeks Damages

Bear Stearns has won the first portion of a legal conflict withDeutsche Bank over the employment status of a group of three analysts led byMarion Boucher-Soper (BW, 5/27), but the litigation is far from over as Bear Stearns is seeking damages from Boucher-Soper and her two colleagues.

An expedited National Association of Securities Dealers arbitration panel ruled that Boucher-Soper, Bear Stearns' former investment-grade research chief, will be allowed to begin working at Deutsche Bank next Monday. Her starting date was central to the legal wrangling because June 1 is the date that Institutional Investor Magazine sets for its All-American Fixed-Income Research Team cutoff.

Ann Maysek and Joseph Princiotta, who also were involved in the legal proceedings, last year finished in second place and third place, respectively, in the finance and basic industry categories. They started on June 3 so they, too, will count towards Bear Stearns' total.

Bear Stearns is seeking the damages from Boucher-Soper and her two colleagues as compensation for potential lost revenue from investment banking mandates generated by the analysts, a Bear Stearns lawyer says. Bear Stearns submitted a series of underwriting mandates that it says Boucher-Soper team's was instrumental in landing for the firm (see below).

The panel's ruling allows Boucher-Soper to start approximately 100 days after her March 11 resignation from Bear Stearns. Bear Stearns sought to hold her to the 120 day "garden leave" specified in her contract.

Maysek declined comment when reached at her desk at Deutsche Bank; Princiotta and Boucher-Soper could not be reached at either their residences or respective offices. Their lawyers did not return repeated phone calls seeking comment.

Bear Stearns makes clear that the three analysts were extraordinarily effective, and says it paid the three accordingly. Boucher-Soper was guaranteed $1.75 million, Maysek $700,000 and Princiotta $600,000. As part of his agreement to join Deutsche, Princiotta will repay a "special bonus" of $150,000 given to him on November 30, 2001.

Bear Stearns' Bond Analysts Can Make It Rain

The following list is taken directly from an exhibit submitted in Bear Stearns' May 15 request for judicial intervention. It covers transactions Bear Stearns says were at least partially given to the firm because of the analyst's relationship with the issuer. Bear Stearns argued that without the proper time to hire replacements, they would potentially lose these mandates.