Two Bear Stearns Hedge Funds 'Essentially Worthless': CNBC

Bear Stearns' two troubled hedge funds that bet heavily on risky subprime loans are "essentially worthless," CNBC's Charlie Gasparino reported.

The net asset value for one Bear fund, known as the High-Grade Structured Credit Strategies Fund, is about 9 cents on the dollar, while the other is even "less than that," Gasparino said.

"The real question now becomes what is Bear Stearns liability?" Gasparino said, speaking of the investment bank's potential legal exposure.

Prominent investor attorney Jake Zamansky, Gasparino said, "has received several phone calls from investors asking him to study whether they should bring lawsuits against Bear Stearns. What they're saying to Zamansky is that Bear Stearns somehow misrepresented whether they should stay in the fund instead of leaving when they wanted to earlier in the year."

Bear Stearns Asset Management said in June that it would not plan to bail out its High-Grade Structured Credit Strategies Enhanced Leverage Fund, the net asset value of which
has fallen to "almost nothing," according to the source.

Bear Stearns was forced last month to bail out that fund with $1.6 billion to prevent a fire sale of those assets.

That fund was down about 5 percent through April. The Bear Stearns High-Grade Structured Credit Strategies fund had $925 million of investor capital and gross long positions of $9.682
billion through March 31.

The Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage fund reported $638 million of investor capital and gross long positions of $11.15 billion.

Company spokesman Russell Sherman declined to comment, but said that an e-mail was sent to investors on Tuesday which would be made available later.

Thomas Marano, the head of the firm's mortgage department who was picked to help salvage the fund, declined to comment.