Bear Sterns is accused of market manipulation

Hedge funds accused Bear Sterns of maniuplating mortage market by buying underlying risky subprime loans to prop up its price. -Bear Sterns is the large mortgage backed security holder and is also one of the largest CDS players. Ususally as a protection seller, betting the credit condition will improve. If credit defaults increase, it will lose money. -As ABX dropped near the lowest level on Feb, its head Mortgage trader talked about propping up ABX index by longing some shakey mortage loans. New it has recovered a lot. Hedge funds suffer a loss because they are bearish on ABX. That is why they are accusing... -Legally it is ok. But it brings market ethic issue introduce language to give cover to market manipulation...