Chronology of a Tipping Point (one e-mail):

But take a look at the timetable of events, as Roddy did, and draw your own conclusion:

March 10, the day the volume started to rise, and Bear's stock started to plunge, Bear Stearns issued a press release saying there "is absolutely no truth to rumors of liquidity problems."

March 11, as volume spiked higher, Bear's CFO, emphasized on CNBC that the rumors were false. But on that same day, according to Roddy, "the credit derivatives group at Goldman Sachs sent its hedge fund clients an e-mail" saying "it would no longer step in for them on Bear derivatives deals." This was important, Roddy points out, because in the weeks leading up to the Bear blowup, Goldman "had done a brisk business…agreeing to stand in for institutions nervous, say, that Bear wouldn't be able too cough up its obligations on an interest rate swap."

By March 12, "when word of the Goldman e-mail leaked out," Roddy writes, "the floodgates opened. Hedge funds and other clients, eventually running into the hundreds, began yanking their funds." At the same time, he says, banks other banks refused to issue any further credit protection on Bear's debt.

That, as we know now, was the beginning of the end.

And as it turns out, the Goldman e-mail may very well have been the tipping point, with market participants, both long and short, doing what they always do: Acting now, asking questions later.


Furthermore, as one short-seller notes, with other banks no longer writing credit default insurance on Bear debt, the best way to hedge Bear counter-party risk was to short its stock.

http://blogs.marketwatch.com/greenberg/2008/04/bear-blowup-why-it-wasnt-a-short-conspiracy/?mod=MWBlog