Bear Stearns sign
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Kai Ryssdal:Let's get back to something Amy was telling us about. How banks are still trying to sort their way through the subprime mortgage debacle. The most recent example is Bear Stearns. We mentioned Wednesday it told investors in two of its high-profile hedge funds their money's essentially gone. All $1.5 billion of it. Right down the subprime drain. As might have been predicted it didn't take but 48 hours for threats of lawsuits to start flying. Marketplace's Alisa Roth has more from New York.

Alisa Roth: Earlier this week, Bear Stearns said there was "effectively no value" left in one hedge fund and "very little value" left in the other. Some investors may be trying to work out what the difference is. Others are starting to ask questions — like are there grounds for a lawsuit?

Jake Zamansky is one of several lawyers who says he's been retained to look into it. His clients want to know if Bear Stearns misled them about the risk of putting money into those funds.

Jake Zamansky: If there was improper disclosure, whether you're rich or poor, there may have been a violation of securities law. Investors are entitled to honest information. If that was not provided, then Bear Stearns has a problem.

Investors shoveled $1.5 billion into those Bear Stearns funds. With so much money at stake, there's potential for a slew of lawsuits.

But Janet Tavakoli, head of research firm Tavakoli Structured Finance, says litigation could be a hard sell. She says these investors were highly sophisticated. They included other Wall Street firms, which almost certainly knew the risks involved.

Janet Tavakoli: There is a tendency to cry over spilt milk.

But that doesn't mean they have to take big losses lying down, she says.

Tavakoli: It is reasonable to ask questions. Like, you know, in a market when it seemed that everyone was concerned about the value of subprime assets, why didn't we see the prices falling sooner, and would I have had an earlier opportunity to recover more of my money?

Investors may now be questioning their exposure elsewhere. Wondering what'll happen if the subprime market keeps falling and taking other hedge funds with it.

In New York, I'm Alisa Roth for Marketplace.