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James Cayne

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James Cayne

Ethnicity Caucasian
Employer Bear Stearns
Known for CEO of Bear Stearns
Net worth $900 Million
Successor Alan Schwartz
James E. "Jimmy" Cayne (born February 14, 1934) is an American businessman, a former CEO of Bear Stearns. In 2006 he became "the first Wall Street chief to own a company stake worth more than $1 billion"[1] but he lost most of that in the 2007–2008 collapse of Bear Stearns' stock and sold his entire stake in the company for $61 million.[2] CNBC named Cayne as one of the "Worst American CEOs of All Time".[3]

Early life and career

Cayne grew up in Evanston, Illinois. His father was a patent attorney.[4] He is uncle to hedge fund investor Richard Cayne Perry.[5] Cayne attended Purdue University, but he left before graduating to join the United States Army.[6]

His first job was as a traveling salesman selling photocopiers in the Midwest.[7] He subsequently sold scrap iron and municipal bonds.[8] In 1969 he was playing bridge full-time in New York City when Alan C. Greenberg, then a relative novice at the bridge table, hired him as a stockbroker at Bear Stearns.[9] Cayne became president in 1985, CEO in 1993, and Chairman of the Board (while continuing as CEO) in 2001. He was replaced as CEO only in 2008[10] and he was with the company until its demise.

In July 2007, Cayne was absent from New York during a 10-day bridge convention ("tournament") in Nashville, participating in multiple competitions, when two Bear Stearns hedge funds collapsed. Bankruptcy proceedings for the funds were initiated on his last day of competition.[1] When in New York, Kate Kelly reported for the Wall Street Journal, Cayne generally left the office on Thursday afternoon and spent Friday a golf club "out of touch for stretches".[1] In March 2008, as Bear Stearns was on the verge of bankruptcy, Cayne played bridge in a two-day competition at Detroit, Thursday and Friday March 13–14.[11]

Cayne has been the subject of various press reports since the Bear collapse, including the fact that he sold his stake in the company for $61 million after its crash.[2] On March 14, 2008, Charlie Gasparino of CNBC reported that the value of Cayne's holdings in Bear Stearns had declined from $997 million to significantly less than $200 million in the wake of Bear Stearns liquidity crisis. Just days later, Bear Stearns came to agreement with competitor JP Morgan for a full buyout at only $10 share, roughly $236 million for the entire firm. At the time, Cayne had significant exposure to the company's stock, with most of his net worth tied up in shares of the company. It is estimated that the value of Cayne's holdings had dropped to less than $15 million as a result, effectively removing him from the list of the wealthiest individuals in the country. On March 27, 2008, it was announced that Cayne sold his entire stake in Bear Stearns, over 5.61 million shares, for $10.82 a share.[12] This stake was sold prior to the vote on the renewed bid by JP Morgan for Bear Stearns.

Cayne was also named in Time Magazine's list of '25 People to Blame for the Financial Crisis'.[13]

Wall Street Journal allegations

The Wall Street Journal reported that Cayne was playing bridge and golf and was often out of touch from his firm while its hedge funds collapsed. Cayne responded to the report saying the allegations of "inappropriate conduct" are "absolutely untrue." The journal also reported that Cayne has sometimes smoked marijuana after bridge tournaments. When asked about this, he said he would respond only "to a specific allegation."[14]

Drug use

Cayne was known in the financial industry as a heavy marijuana user, a fact reported multiple times in the US media,[15] and known as a user in the bridge world.[1] According to Charles Ferguson, reviewing the world financial crisis for The Guardian in 2012, Greenberg called Cayne a "dope-smoking megalomaniac". Ferguson suspects Cayne of fraudulent business activities and suggests that the US police should arrest him for his drug use, if he cannot be prosecuted for fraud.[15] A 2009 book by financial reporter Charlie Gasparino also described him as a self-identified cocaine user.[16]

Personal life

Cayne is married[9] and has one child, Allison Cayne Schneider.[17] Allison is divorced[17] from hedge fund manager Jack Schneider[18] with whom she has five children.[17]

Cayne, himself a sound bridge player,[7] has recruited international-class professionals to form teams that have won more than a dozen North American championships. For example, he hired one American and four Italian world champions to win the Reisinger Board-a-Match Teams in November 2011, his sixth win in that competition.[19] His bridge career as a sponsor and player has resulted in attaining the ranks of ACBL Grand Life Master[20] and World Bridge Federation World Master.[21] In the biennial Bermuda Bowl world championship teams, his 1995 team USA1 —one of two that represented the United States, a unique status— finished ninth, (the lowest U.S. finish in the sixty year history of the event), while Team USA2 placed first.[22] In March 2002, a new daily newspaper, The New York Daily Sun, announced that Cayne would be contributing a bridge column.[23]

In 2005, Forbes magazine ranked him 384th among the 400 richest Americans, with an estimated net worth of $900 million.[9] By 2008 Cayne had lost nearly 95% of his fortune as a result of the collapse of Bear Stearns. On February 15, 2008, the Caynes purchased two fourteenth-floor condominium units in Plaza Hotel overlooking Central Park in New York for $27.4 million.[24]

Bridge accomplishments

Wins

North American Bridge Championships (16)

United States Bridge Championships (1)

  • Open Team Trials (1) 1995

Other notable wins:

  • Maccabiah Games (1) 1981
  • Cavendish Invitational Teams (1) 1986
  • Cavendish Invitational Pairs (1) 1982
  • Goldman Pairs (1) 1968
Runners up

North American Bridge Championships (15)

United States Bridge Championships (1)

  • Open Team Trials (1) 1998

Other notable 2nd places:

  • Now! Invitational Pairs (1) 1981
  • Cavendish Invitational Pairs (1) 1976

References

External links

  • Heidi N. Moore (March 4, 2009). House of Cards: A Tale of Hubris and Wretched Excess on Wall Street (Doubleday, March 2009).

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