Cayne mutiny: Bear boss is out

James Cayne will retain the role of chairman and will be replaced by Alan D. Schwartz, the company's president.

The Bear Stearns Cos. Inc. chief executive James “Jimmy” Cayne will become the third chief executive of a major financial services company to step down in recent months, according to published reports.
The company has been battered by troubles in the mortgage market, a fourth-quarter loss and collapsed hedge funds.
Mr. Cayne’s cause was not helped by a November Wall Street Journal article alleging that the CEO sometimes smoked marijuana at the end of the day after bridge tournaments.
Mr. Cayne,73, will retain the role of chairman and will be replaced by Alan D. Schwartz, the company’s president, according to published reports.
Mr. Cayne joined the company in 1969 and became the chief executive in 1993, earning a reputation for being disengaged as the credit crisis began to unfold.
Last month, Bear also took a $1.9 billion write-down in the quarter ended Nov. 30, reflecting the reduced value of subprime-mortgage-related securities, and posted a $854 million loss for the quarter.
In July, two of the company’s subprime mortgage-backed hedge funds collapsed, which led to $1.5 billion in investor losses and a slew of executive firings at the company.
Mr. Cayne’s departure follows the exits of Merrill Lynch & Co. Inc. chief executive E. Stanley O’Neal (InvestmentNews, Oct. 30) and Citigroup Inc. chief executive Charles O. Prince (InvestmentNews, Nov. 5) after their respective companies posted write-downs worth upwards of $8 billion.