Bear Stearns investors drop legal action to stop buyout

Investors in Bear Stearns Cos. dropped their request for a court order that would stop a proposed buyout by JPMorgan Chase & Co., less than two days before a scheduled hearing in the case.

The request was withdrawn in a letter sent Tuesday night to New York State Supreme Court Justice Herman Cahn, said Alex Gershon, a lawyer for the Louisiana Municipal Police Employees’ Retirement System.

Shareholders will continue to seek damages, arguing that Bear Stearns should be valued at more than JPMorgan’s offer of about $10 a share, he said.

Cahn is presiding over lawsuits filed by Bear Stearns investors in New York and Delaware after JPMorgan agreed March 16 to buy it in a deal brokered by the Federal Reserve. A two-day, $15-billion run on Bear Stearns had prompted the Fed to step in with emergency funding in the biggest government bailout of a U.S. securities firm.

Greg Markel, a lawyer for Bear Stearns, didn’t return calls seeking comment. Brian Marchiony, a JPMorgan spokesman, declined to comment.

Shares of Bear Stearns fell 57 cents, or 5.3%, to $10.27 on Wednesday. JPMorgan declined $1.63, or 3.4%, to $46.57.