Bear Stearns' Cayne Sells Stake

Cayne sold 5.66 million shares for exactly $10.84 a share on March 25, according to a filing with the Securities and Exchange Commission. His stake was once valued at about $1 billion when the stock was trading at $171.50 per share.

His stake at one point plunged to about $27 million when JPMorgan announced nearly two weeks ago it would acquire the No. 5 U.S. investment bank for $2 per share. JPMorgan later upped that offer to $10 per share, and agreed to acquire 39.5 percent of the company without a shareholder vote to block any rival offers.

On Thursday, Bear Stearns Chief Executive Alan Schwartz said in a letter filed to the SEC that the company will issue 95 million shares to JPMorgan within the next 10 days as part of the takeover deal. He said the latest agreement was "essential to maintaining the company's financial stability."

In addition, Schwartz said Bear Stearns is able to bypass shareholder approval because "securing stockholder approval would seriously jeopardize the financial viability" of the company. About one-third of the company's shares are owned by Bear Stearns' 14,000 employees.

Cayne, who serves as non-executive chairman, was said to be unhappy about the deal struck to sell the company he worked at for most of his life. He served as chief executive for 15 years until January, when he stepped down after Bear Stearns announced its first loss since being founded 85 years ago.

There has been some speculation that Cayne might join forces with Joseph Lewis, a billionaire financier who owns about 12 percent of the company. Lewis has expressed his interest in blocking a deal many considered to be hastily arranged, and one which severely undervalues Bear Stearns.

Both have recently tried to recruit investors to counter the JPMorgan offer, according to a report in the New York Post last week.

A spokesman for Lewis could not be reached for comment. And, spokesmen for JPMorgan and Bear Stearns declined to comment.

Bear Stearns shares rose 2 cents to $11.23 in trading Thursday. However, the stock fell more than 5 percent in after-hours trading. JPMorgan shares fell $1.25 to $42.86.