Bear Stearns demoted the head of its asset-management unit and brought in a former Lehman Brothers executive to "restore investor confidence," after two of the unit's hedge funds nearly collapsed last week.
The news was broken by CNBC's David Faber and later confirmed by Bear Stearns.
Jeff Lane, a long-time money manager and vice chairman of Lehman, will be taking over the money management business at Bear Stearns. Lane replaces Richard Marin, who will stay with the unit as a senior adviser to Lane.
“That business has been under great pressure as the result of the near failure of two large hedge funds at Bear Stearns,” Faber said.
"Our focus is on restoring investor confidence in BSAM, serving our clients with excellence and assuring them of our commitment to provide them with the highest quality asset management products and services," said Bear Stearns CEO James Cayne in a statement.
Earlier this week, Bear said it would spend $1.6 billion to bail out a hedge fund heavily invested in risky securities backed by mortgage loans. A larger fund also teetered on the brink of collapse before Bear won a reprieve from lenders clamoring for more collateral.
Lane, 65 years old, once ran money manager Neuberger Berman before it was sold to Lehman Brothers in 2003.