Memos from the Chairman

Thesememoswerewrittenbetween1978and1995.WhilecircumstanceschangedforBearStearns,the

principlesexpressedhereremaintrue.

MEMOSFROMTHECHAIRMAN

BYALANC.GREENBERGWITHAFOREWORDBY

WARRENBUFFETT

WorkmanPublishing,NewYork

AceGreenbergdoesalmosteverythingbetterthanIdo—bridge,magictricks,dogtraining,arbitrage—alltheimportantthingsinlife.Hesoexcelsatthesethatyoumightthinkitwouldgivedeepinferioritycomplexestohiscolleagues.Butifyouthinkthat,youdon’tknowmuchabouthiscolleagues.

Inthisbookwefinallylearnwhereallthiswitandwisdom—andthere’splentyofboth—comefrom:HaimchinkelMalintzAnaynikal.(IusedtohavetroublepronouncinghislastnameuntilIlearnedthatthetrickistorhymeitwithAhaynikal.)Haimchinkelseesall,knowsall,andtellsall—butonlythroughAce,hisDesignatedOraclehereonearth.

Haimchinkelismykindofguy—cheap,smart,opinionated.IjustwishI’dmethimearlierinlife,when,inthefoolishnessofyouth,Iusedtodiscardpaperclips.Butit’snevertoolate,andInowslavishlyfollowandpreachhisprinciples.

Manyyearsago,WhereAretheCustomers’Yachts?,throughahumorouslookatWallStreet,dispensedsomeofthebestinvestmentadviceeverwritten.Inthisbook,Acehasappliedthesametreatmenttomanagerialadvicewithequalsuccess.

WARRENBUFFET

Contents

EpigraphForeword1978–19881988–19911991–1995

1978–1988

Fromthetimeofitsfoundingin1923,to1978,BearStearnschangedfromasmallcommissionhousetoanimportantfactorinthesecuritiesindustryandexpandedintomanyareas,includingthosethatriskedcapital.ThedrivingforcebehindthatgrowthandexpansionwasCyLewis,whoassumedleadershipofthefirmin1936.OnApril26,1978hesufferedamassivestrokeanddiedtwodayslater;sowestartedourfiscalyearonMay1,1978withoutthemanwhowascreditedwithhavingmadeBearStearnswhatitthenwas.ItwastheprevalentthoughtonWallStreetthat,withoutCyLewis,BearStearnswouldfadeawaylikenomadsinthenight.ThoseskepticsoverlookedoneofCy’smainattributes.Heencouragedandpromotedyoungpeopleasfastastheywarrantedit.Heleftagroupthatcouldanddidcarryon.

Asthenewchiefexecutiveofficer,IknewIneededhelptoimplementpoliciesthathadbeenrunningthroughmymindforsometime.ItwasatthispointthatImetHaimchinkelMalintzAnaynikal,thedeanofbusinessphilosophers,whoimmediatelybecamemymentorandadviser.Throughmemostomyassociates,Icommunicatedhiswisdomandideasabouthowbesttostrengthenourbottomline.

ThesememoscoverthetenyearsfromMay1978toMay1988.TheymaygiveyousomeideaofourgrowthandthefunwehadparticipatinginthefurtherbuildingofBearStearns.Althoughtheyseemtohavebeenwritteninjest,IcanassureyouthatthepointsIwastryingtomakeinthesecommunicationswerethingsIbelievedinverystronglyandstilldo.Therearemanywaystorunandbuildafirm.Iusedthosememostoexpressmyphilosophies,and,inourcaseandduringmytenure,Ithinktheyworked.

MemoFROMTHEDESKOFALANC.GREENBERG

DateOctober5,1978ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject

BearStearnsismovingforwardatanacceleratedrateandeverybodyiscontributing.Itisabsolutelyessentialforustobeabletotalktoourpartnersatalltimes.Allofusareentitledtoeatlunch,playgolfandgoonvacation.But,youmustleavewordwithyoursecretaryorassociateswhereyoucanbereachedatalltimes.Decisionshavetobemadeandyourinputcanbeimportant!

Iconductedastudyofthe200firmsthathavedisappearedfromWallStreetoverthelastfewyears,andIdiscoveredthat62.349%wentoutofbusinessbecausetheimportantpeopledidnotleavewordwheretheywentwhentheylefttheirdeskifevenfor10minutes.

Thatidiocywillnotoccurhere.

DateMarch13,1979ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject

TheExecutiveCommitteelastnightapprovedagroupofpeoplewhowillbeaskedtobecomeLimitedPartnersofBear,Stearns&Co.,subjecttotheapprovaloftheotherGeneralPartners.Youwillbereceivingthislistshortly.

CarlHolstromhasjustinformedmethatwehavesigneda$12millionlong-termloanagreementwithamajorinsurancecompany.ThiswillreplaceourloanwiththeFirstNationalBankofChicago.TheimplicationsandtheactualdollarsavingsofthisagreementareoftremendousimportancetoBear,Stearns&Co.

IalsojustreceivedthePandLresultsforFebruaryand,inmyopinion,theyweregreat.ThesethreeitemswillbecoveredindetailatthePartners’MeetingonMarch19th.

ThedevelopmentsatBearStearnscertainlyseemtobepositiveandasaresultwewill,ofcourse,intensifyoursurveillanceofallpositionsandexpenses.YouknowhowIfeelaboutthedangersofoverconfidence.

Itcertainlylookslikewehaveadynamicfutureinstoreaslongaswerememberthewordsofthefamousphilosopher,HaimchinkelMalintzAnaynikal:“thouwilldowellincommerceaslongasthoudoesnotbelievethineownodorisperfume.”

DateMarch23,1979ToAllGeneral&LimitedPartnersandOtherPotentialPerfumeLoversFromEclecticThoughtsfromtheCompleteWorksofHaimchinkelMalintz

AnaynikalCCSubject

WitterHasDeficitof$886,000TheDeanWitterReynoldsOrganizationInc.,whichoperatesaworldwidesecuritiesfirm,reported

yesterdayalossof$886,000forthesecondfiscalquarterendedFeb.28andaprofitof$2.5million,or28centsashare,forthesixmonths.

In the year-earlier quarter, net income was $713,000, or 9 cents a share, and in the six-monthperiod, netwas $3million, or 49 cents a share, on fewer shares outstanding. The company noted,however,thatthefiguresforthepreviousyear’speriodsincludedresultsforthecombinedcompaniesforonlytwomonths.

ThecompanywasformedJan.3,1978,throughtheconsolidationoftheDeanWitterOrganizationandReynoldsSecuritiesInternational,inoneofthelargestmergersinbrokeragehistory.

Revenues in the quarter increased to $114million from$81.1million,while for the sixmonthstheyjumpedto$244.2millionfrom$141.4million,againwithcombinedresultsforonlytwomonths.ResultsTermedUnsatisfactory

WilliamM.Witter, chairman, said: “We are not satisfied with the performance of DeanWitterReynoldsInc.,ourprincipalsubsidiary,duringthesecondquarterwhenitsrevenuesdeclinedbyabout$17 million from the previous first quarter. However, that unit’s performance must be measuredagainstabackgroundwherethemarketstendedtobetreacherousandactivitydeceptivelylow.”

Thefirmcontinuestomakesubstantialinvestmentsinadvertising,operationalimprovementsandinphysicalfacilities,Mr.Witterdeclared.

Directors of the organization authorized the repurchase of up to 400,000 shares of outstandingcommon stock. These shares could be used for stock options and general corporate purposes, thecompanystated.

(fromTheWallStreetJournal)

DateJune15,1979ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject

Duringthelastfewdays,thenewspapershavedevotedalotofspacetotheprofitsgeneratedbytheNewYorkStockExchangeMemberFirmsduringtheperiodofJanuary,FebruaryandMarchof1979.Ithoughtyoumightliketoknowhowwedidusingthesameyardstick.

ComparisonofFocus1stQuarterCalendar1979

($000)

BearStearns Industry BearStearnsas%ofIndustry

Revenues $51,595 $2,430,700 2.1%

Expenses 40,280 2,197,000 1.8%

IncomeBeforeTaxes 11,315 233,700 4.8%

Iwouldalsoliketoaddthatthelastthreeweekshavebeenathingofbeauty.Everydepartmentisreallyboilingandsomeofthenewpeoplethatwehavetakenonarestartingtomakerealcontributions.

Becauseofthisgoodnews,Ithinkitistimeforusonceagaintospendsometimereadingtheworksof,andreflectingonthethoughtsof,Haimchinkel

MalintzAnaynikal.

DateJanuary30,1980ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject

Severalofmypartnershavespokentomeduringthislastweekabouttheremarkablewaythingsseemtobefallinginplaceforus.Someofthethingsthathavehappenedtoushavebeenduetoourownefforts,butequally,someofourgoodfortuneoflatehasbeenduetoluck.

Ihavebeenaroundlongenoughtoknowthattheshoeusuallyfallsonyourheadwhenyouleastexpectit.AllofthesefactorshavemademereflectonthewordsofHaimchinkelMalintzAnaynikal.IhavetakenthelibertyofquotinginfullfromthelasttwoparagraphsofmymemodatedMarch13,1979.

“ThedevelopmentsatBearStearnscertainlyseemtobepositiveandasaresult,wewill,ofcourse,intensifyoursurveillanceofallpositionsandexpenses.YouknowhowIfeelaboutthedangersofoverconfidence.

Itcertainlylookslikewehaveadynamicfutureinstoreaslongaswerememberthewordsofthefamousphilosopher,HaimchinkelMalintzAnaynikal,‘thouwilldowellincommerceaslongasthoudoesnotbelievethineownodorisperfume.’”

DateMay28,1980ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject

ThemonthofMaywasthefirstmonthofournewfiscalyearandforbookkeepingpurposesitendedonMay22nd.PreliminaryindicationsarethatitappearstobethebestmonthinthehistoryofBearStearns.

Beforewegetcarriedaway,thereisonethingthatIdowanttoemphasize.Weareworkingwithmorecapitalthaneverbefore,soifeverymonthisnotarecord-breaker,weareprobablygettinglazy.Wehaveplentyofroomforimprovementandtherearestillanumberofleaksinthedike.Infact,theonlyareathatIthinkisrunningat100%efficiencyistheerroraccount.

Iimploreourpartnerswhosupervisesalesmentoincreasetheirsurveillanceofallpersonnel.IwantallpartnersinthetradingareatopayparticularattentionthatourpositionsdonotincreasedramaticallyinsizeandthatwecontinuetoassiduouslyfollowtherulesofHaimchinkelMalintzAnaynikalintheareaofloss-taking,freshnessofpositionsandbodyperfume.*

Ihave,ofcourse,askedCarlHolstromtoonceagaintightenallsurveillanceofexpenseaccountsforpartnersandourassociates.YoushouldalsobehearingshortlyfromMarvinDavidsonaboutourballooningdepartmentalexpenses.

Itisuptoallofustofightourunrelentingenemies—complacency,overconfidenceandconceit.

*ForthoseofyouwhomighthaveforgottenHaimchinkelMalintzAnaynikal’scommentsonthissubject,askPeggyMoynihanformymemodated3/13/79.

October16thwasthefifthbiggestdayinthehistoryoftheNewYorkStockExchange.ItwasthebiggestdayinBearStearns’historybyabout20%.Iamreferringtobothnumberofticketsandoverallcommissionrevenues.

Ourincreaseinmarketshareiscertainlysomethingtobeproudof,butcooperationwiththeOperationspersonnelhasbecomemorecriticalthanever.Pleasemakeitapointthatthepeoplewhoworkwithyoudoeverythingtohelpoperationalpersonnelwhenevertheycomeincontactwiththem.

IwouldalsoliketopointoutthatthephilosophyandworksofHaimchinkelMalintzAnaynikalareonceagain“must”reading.Ifyoumisplacedyourcopy,pleasecallPeggyMoynihanonextension5369.

TherehasbeenalotofpublicitylatelyaboutfirmshiringstudentswithMBAdegrees.Ithinkitisimportantthatwecontinueapolicythathashelpedusprosperwhilegrowingfrom700peopleeightyearsagotoover2,600today.

Ourfirstdesireistopromotefromwithin.IfsomebodywithanMBAdegreeappliesforajob,wewillcertainlynotholditagainstthem,butwearereallylookingforpeoplewithPSD*degrees.TheybuiltthisfirmandthereareplentyaroundbecauseourcompetitionseemstoberestrictingthemselvestoMBA’s.

Ifwearesmart,wewillendupwiththefutureCyLewises,GusLevysandBunnyLaskers.ThesemenmadetheirmarkwithahighschooldegreeandaPSD.

*PSDstandsforpoor,smartandadeepdesiretobecomerich.

DateAugust20,1982ToGeneralPartnersFromAlanC.GreenbergCCSubject

Everypartnerisentitledtoavacation,andwehaveneverbeenparticularlyfussyabouthowlongthevacationisnordowekeepscoreonhowmuchtimeistakenoverthecourseoftheyear.Idofeelthatifapartnerisnotonvacation,heshouldtreatFridaylikeanyotherdayandshowupforafullday’swork.

HaimchinkelMalintzAnaynikalnevertookoffaFridayinhisentirelife.

SeptemberlookslikeitwasthebestmonthinthehistoryofBearStearns.ThepastfourweeksappeartobeparticularlygratifyingbecauseIthinkeveryareacontributedanditdemonstratedwhatsomanyofushavebeensayingaboutourpotentialifconditionschangedforthebetter.

Afteramonthliketheonewejustexperienced,Ithinkweshouldbeonourguardagainstthenegativesthatgoalongwithgreatsuccess.Iamspeakingofcomplacency,sloppiness,relaxingonexpenses,cockinessandjustgettingcarelessingeneral.

Thisisthetimetobeonourguard.Ifthemarketdoesgoourway,Iwanttomakeeverydollarandleavenothingonthetable.Themarketmayturnsouragain,sodonotforgetforamomentwhatthegreatcoachHaimchinkelMalintzAnaynikalsaidmanyyearsago,“whenthegoinggetstough,thetoughstartselling.”

Ourfirmhasdynamicmoney-makingpotentialandwillcontinuetogrowandprosperbeyondourwildestdreamsifwedevoteallofourworkinghourstoBear,Stearns&Co.ThishasledtheExecutiveCommitteetodecidethatnoGeneralPartnersorGeneralPartners’spousescanmakeanyoutsideinvestments(otherthanpubliclytradedstocksandbondsoraresidence)withouttheapprovaloftheExecutiveCommittee.TheExecutiveCommitteedoesnotwantourpartnersworryingorthinkingaboutanybusinessotherthanBearStearns.Owninganequityinterestinourfirmisthebestinvestmentanyofuswilleversee;soletusgiveB.S.100%ofoureffort.

DateJanuary10,1983ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCC

SubjectErrorAccount

Wemusthaveagreatbusiness,becauseIthinkwebrokeevenlastweekafterpayingforahorrendousseriesoferrors.Iamwellawarethathumanswillalwaysmakeerrors.Myirritationcomesfromthefactthattheseerrorsarenotcaughtimmediately.Inmanycases,thisisbecausetheproduceristoolazytolookathisrunthefollowingday;toolazytolookattheregisteredrepresentativecopiesoftheconfirmsandtoolazytocheckthemonthlystatements.

Thefirmhasalwaysbeenveryunderstandingwhenerrorsaremade.Wewillnotbeunderstandingiftheerrorisnotcaughtbecauseofsubsequentstupidityandlaziness.

PleaseseethatthepeoplewhoworkwithandforyouunderstandtherulesbecauseIdonotwantanycryingwhenanassociateblowsayear’ssalary.

YouareawarethatIhavesaidforyearsthatcomplacencyisourgreatestenemy.Isthisthefirstsymptomofourdecadence?Ifitis,Iknowhowtocurethisformofsloppiness.

HaimchinkelMalintzAnaynikaljustcalledandremindedmeofsomethingthatIshouldhavethoughtofwithoutanyhelp.

TheyearwasoverlastFridayanditwasagoodone,butlastyearisgone.Thescorerightnowisnothingtonothing.Nobodycares(especiallyourcompetition)whatwedidlastyear.

LetusgotothewhipandmakethemonthofMayanindicationofwhatwearegoingtodoforthecomingtwelvemonths.

DateJune22,1983ToAllPersonnelFromAlanC.GreenbergCC

SubjectIncomingMail,Packages,CarrierPigeons,andothermethodsoftransportpertainingtoitemsdeliveredtothepremisesofBearStearns.

NewYorkStockExchangeRulesrequirethatweopenandexamineallincomingmailbeforeitisdistributedtotheaddressee.“Incomingmail”includesitemsandpackagesdeliveredtothefirmbyhandorpickedupbyourmessengerservice.Allpackagesdeliveredtothefirmaretobeopenedandthecontentsinspected.BearStearnshasfollowedthisdirectiveinthepastandwewillfollowitmuchmoreassiduouslyinthefuture.

Wearetriplingourinspectioncapability.Thereasonforthisisthatapackagewerecentlyopenedwasfoundtocontain“contraband.”Theitemwasconfiscatedanddestroyed.ThenexttimewefindanyonesendingorreceivinganysuchmatteratBearStearns,wewillnotifytheproperauthorities.Regardlessoftheactiontakenbythepolice,BearStearnswillshownomercy.Anexamplewillbemadeofthenextandfutureoffenders.

Ifanyonedoesnotunderstandthismemo,pleasecomeandseemeandIwillexplainitpersonally!

DateJune24,1983ToAllGeneralPartnersFromAlanC.GreenbergCCSubject

OnOctober5,1978,theattachedmemowasdistributed.Wehavebeenverysuccessfulsincethatmemowasissued,andIthinkthat93.4%ofoursuccesshasbeenduetotheinstantavailabilityofourpartnersandassociates.

Duringthepastmonth,wehavebeenverybusyandsomeofushavebeenstrayingawayfromthefundamentals,suchasleavingwordatalltimeswheretheymaybefound.Wemustnotdeviatefromthebasics.

IhavecontactedMarlinPerkinsoftheSt.LouisZooandthenextpersonthatIhavetroublefindingwillbefittedoutwitharadiocollar.Pleaseimpressourpolicyonthepeoplewhoworkwithandunderyou.Thecollarsarebulkyandnotveryattractive.

DateSeptember9,1983ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject

HaimchinkelMalintzAnaynikaljustcalledandtoldmehewasveryimpressedwiththeresultsforthemonthofAugust.Ihavenotseenthemyet,butiftheyareasgoodasHaimchinkelMalintzAnaynikalthinkstheyare,thenAugustwasprobablythebestmonthwehaveeverhadinrelativeterms.

Thebondmarketandthestockmarketdidnothing,buttheBearStearnsmachinediditsthing.Hiscall,however,remindedmeofthewarninghegaveussomeyearsago,“thouwilldowellincommerceaslongasthoudoesnotbelievethineownodorisperfume.”Iassuredhimthatdespiteoursuccess,wearestilltryingtobeascarefulandaspunctiliousasalways.

DONOTMAKEALIAROUTOFME.

DateJanuary25,1984ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject

Youhaveprobablyseenthepublishedresultsofourcompetitorsforthepastthreemonths.Youarealsoprobablyuptodateonhowwehavedoneforthepastthreemonthsandthefirsteightmonthsofthisfiscalyear.

ObservingthesefiguresmakesmemoredeterminedthanevertofollowthesimpleruleslaiddownbytheDeanofBusinessPhilosophers,HaimchinkelMalintzAnaynikal:1-Sticktothineownbusiness.

2-Watchthyshop.3-Limitthylosses.4-Watchthyexpenseslikeahawk.5-Stayhumble,humble,humble.6-Whendealingwithanewaccount,knowthycustomerandknowthycustomer’smoneyisup.

Atthepartnersmeetingtwoweeksago,itwaspointedouttomebyHaimchinkelMalintzAnaynikalthatthehorsd’oeuvreshadbeenupgradedconsiderablyfrompeanuts.Youwillbehappytoknowthatwearenowbacktopeanuts.Thismayseemlikeasmallsaving,butit’sthethoughtthatcounts.

DateApril10,1984ToAllGeneral&LimitedPartnersFromSirAlanC.GreenbergCCSubject

ThefiguresforthemonthofMarchwerejustgiventome.Wehavehadbettermonthsinabsoluteterms,butonarelativebasisIthinklastmonth’sperformancewasthebestIhaveeverseen.Ialsothinkthatourrecordforthefirstthreemonthsof1984issomethingtobeproudofbecausethemarketsweredown,difficultanddangerousatbest.

HaimchinkelMalintzAnaynikalrecentlybroughttomyattentioncertainintercompanyfeudsthathaveledtothedownfalloffirmssmarter,richerandlargerthanours.Watchingforthesesignsofdissensionwillbeahighpriorityofmine.

Wheneveryouhaveapartnershipofover80people,thereisboundtobeapersonortwowhoisnotyourexactcupofyogurt.Foryears,thepartnersofthisfirmhavegottenalongremarkablywellandthecooperationatthistimeisgreat.OneofthethingsIamgoingtobeextremelysensitiveaboutinthefuture—andcomedownveryhardonwhenIseeorhearofit—isacrimonyamongpartners.Honestmenmaydiffer,butwhenthedifferencebecomesanimosity,youcanhaveproblems.Iamnotgoingtoletpersonalconflictshaveanyeffectonthenetincomeofourgoldengoose.

Theyearisnotoveryetandwehave20dayslefttomakethisonetobeproudof.HopetoseeallofyouinpersonattheAnnualMeeting.

DateJULY23,1984ToALLREGISTEREDREPRESENTATIVESFromALANC.GREENBERGCCSubject

Thesearetoughtimes.ThemarkethasbeenextremelydifficultsincelastJuly.ItiscertainlynofuntowalkinonaMondaymorningandgethitwithatwelve-pointdecline.

IhopeallofyouknowhowimportantIthinkyouaretoBearStearnsandhowIempathizewithwhatyouaregoingthrough.

ItisimportanttomethateverydepartmentthatinterreactswiththeRegisteredRepresentativesgive100%supportnowmorethanevertotheeffortsanddesiresoftheRegisteredRepresentatives.

YouwillbedoingmeafavorifyoucallmeimmediatelyanytimeyouthinkyouaregettinglessthanTripleAtreatment.

Thesupportareasareunderextremepressure,butthatwillneverbeanexcusefornottreatingoursalesforceinthemannertheydeserve.

DateJuly25,1984ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject

Thenewspapersarefullofthequarterlyfinancialresultsofthepubliclyownedinvestmentbankingfirms.ForthethreemonthsendedJune30th,Bear,Stearns&Co.hadalossof$3,473,000,afterinterestonpartners’capital.

ThatfigurewillnothelpyoubuymuchfromTiffany,butitdoesmeanthatwearekeepingthingsunderreasonablecontrol.Keepinmindthatthefiguresofourcorporatecompetitorsareusuallyaftertaxcredits.Forexample,thelossof$33millionbyMerrill,Lynch,reportedthismorning,wasreally$90millionbeforetaxcredits.

Wearenotpanicking;wearenotlayingoffpeople,butwearemakingarealefforttocutexpenses.Theothersideofthecoiniswehavehiredalargenumberofnumberonedraftpicksinthelastfewmonths.Thisisthetimetohiregoodpeople.Wehavefollowedthispolicyinthepast,andIamconvincedthatwewillbeprovencorrectonceagain.

Ididnotwanttowritethismemo,butHaimchinkelMalintzAnaynikalinsistedthatIcommunicatewiththetroops,evenwhenthenewsislessthanperfect.HaimchinkelMalintzAnaynikalalsomentionedthatnowisthetimenottohidefromclients.Ittakesrealcouragetomakecallswhenyouknowthereceptionmightbehostile.Buttherearetimeswhenwemustfacethemusic.Itwillpayoffwhenthemarketturns,andIpromiseyouthemarketwillturn.Ihopesoonerratherthanlater.

DateJune19,1985ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject

ThemonthofMayishistory,butitlookslikewedidgettenrunsinthefirstinning.IfranklycannotrememberanytimeinthepastwhereweeverbrokeeveninthemonthofMay,muchlessmademoney.

HaimchinkelMalintzdroppeddown,sawthefiguresandmadesomesuggestions.Weshouldnotlosesightoffundamentals,suchascuttingexpensesandbeingeveralerttothefactthatifwearenotcareful,therearesomepeoplewhowouldliketostealthewholeplaceoutfromunderus.

Hepointedouttomethatthetendencyistocutexpenseswhenthingsaretoughandhowstupidthatlineofreasoningis.Whenthingsaregood,youshouldbeevenmorecarefulofexpensesbecauseitisridiculoustoleaveanythingonthetablewhenyouholdaroyalflush.Wemustcontinuetobealert,aggressiveandnevercomplacent.Andlast,butmaybemostimportant,thepartnersofthisfirmmustcontinuetoworktogetherandlearntooverlookpettydifferences.WeareallexpendableandIhopethatyourExecutiveCommitteedoesnothavetoprovethattoanyofus.

DateAugust9,1985ToGENERAL&LIMITEDPARTNERSFromAlanC.GreenbergCC

SubjectEXPENSES

Iwasjustshowntheresultsforourfirstquarter.Theywereexcellent.Whenmortalsgothroughaprosperousperiod,itseemstobehumannatureforexpensestoballoon.Wearegoingtobetheexception.Ihavejustinformedthepurchasingdepartmentthattheyshouldnolongerpurchasepaperclips.Allofusreceivedocumentseverydaywithpaperclipsonthem.Ifwesavethesepaperclips,notonlywillwehaveenoughforourownuse,butwewillalso,inashorttime,beawashinthelittlecritters.Periodically,wewillcollectexcesspaperclipsandsellthem(sincethecosttousiszero,theArbitrageDepartmenttellsmethereturnoncapitalwillbeaboveaverage).Thisactionmayseemalittlepetty,butanythingwecandotomakeourpeopleconsciousofexpensesisworthwhile.

Inadditiontothepaperclipcaper,wealsoaregoingtocutdownonorderingtheblueenvelopesusedforinterofficemail.Theseenvelopescanbeusedoverandoveragain.Allofusaregoingtohelpourbottomlinegrow.

BearStearnsisprobablygoingtosellstocktothepublic,andthereisoneguaranteethatIwouldliketogivethepotentialbuyersofourstock—theyaregoingtogetthefairestshakefromusthatmanagementcangiveanypublicshareholder.Thisplaceisgoingtoberuntight,andthereasonsarenotallaltruistic.Wearenotgoingpublicfortheperks.Wearegoingpublicforanumberofreasons,andoneisthatwewantthestocktoappreciate.

Youhaveprobablyguessedbynowthatthesethoughtsarenotoriginal.TheycamefromoneofHaimchinkelMalintzAnaynikal’searlierworks.Histhoughtshavenotexactlysteereduswrongsofar.Let’sstickwithhistheoriestillhelets

usdown.

DateAugust15,1985ToGENERAL&LIMITEDPARTNERSFromAlanC.GreenbergCC

SubjectGETTINGRICHER

Thankyou,thankyou,thankyou!Theresponsetothememoonpaperclipsandenvelopeshasbeenoverwhelming.Itseemsthatwealreadyhaveanexcessofpaperclips.Thisexcesswillbepickedupshortlybyadesignatedpaper-clipper-picker-upperpersonand,ofcourse,willbesoldthroughcompetitivebidding.

Becauseofyourcooperation,Iwouldliketoextendourcost-cuttingeffortstoalargermatter.BearStearnswillnolongerpurchaserubberbands.Ifwecansavepaperclipsfromincomingmail,wecansaverubberbands,andmyhopeisthatwecanbecomeawashinthoselittlestretchiesalso.

Obviously,ifwecanhandletherubberbandchallenge,Ihavesomethingevenbiggerinmind.

Whenyouareaprivateenterprise,savingsonexpensesgotothebottomline.Whenyouareownedbythepublic,savingsstillgotothebottomline,buttheyareinturnmagnifiedbythemultiplethestockcarries.

Ifyouhavetroubleunderstandingthelastparagraph,eithertrustmeorcallHaimchinkelMalintzAnaynikaldirectly.

DateSeptember10,1985ToGENERAL&LIMITEDPARTNERSFromAlanC.GreenbergCC

SubjectMEMOPADS

Wehavebeensupplyingeveryonewithmemopads.Thesepadshave,atthetop,ourlogoandalsoaperson’snameandtelephonenumber.Thisisconceptuallywrong.Weareinaperson-to-personbusiness.Itwouldbemuchwarmerifthesenderofanotesigneditwithhisnameandtelephonenumberalongwithsomesweetwords,suchas“Iloveyou”or“Ineedmorebusinesstofeedmyfamily.”

Therefore,continuingourgoaloftryingtoincreasetheincomeofourassociates,padsfromnowonwillonlyhaveBear,Stearns&Co.printedacrossthetop.

Itisamazinghowonegoodideasometimesproducesunforeseenbenefits.HaimchinkelMalintzAnaynikaljustinformedmethatthissuperiorwayofcommunicatingwillsaveus$45,000ayear.Whatapleasantsurprise!!

DateDecember13,1985ToMANAGING&ASSOCIATEDIRECTORSFromAlanC.GreenbergCCSubject

Thingsaretoogood!!Itisatatimelikethisthatwemustbeparticularlycareful,wary,smart,suspiciousand,ingeneral,thankfulthatwearealive.ThoseofuswhohavebeenaroundforawhileknowwhatImean.

Whenconditionsarethisideal,weareusuallybeingsetupforamajorunpleasantry.Thistimearoundletustrytoleavenothingonthetable.Timeswillchange,anditwillbenicetohaveplentyoffatonourbones.

Letuscontinuetowatchtheshopandrealizethatnoneofusarereallyverysmart.Wearejustintherightplaceattherighttime.LetuscontinuetowatchourexpenseslikeagreenbergsoourbottomlinelookslikeacombinationofMissAmericaandHaimchinkelMalintzAnaynikal.

DateJanuary6,1986ToManaging&AssociateDirectorsFromAlanC.GreenbergCCSubject

HaimchinkelMalintzAnaynikalwasrightagain.Someofyoumayhavehaddoubtsabouthistheoryontheeffectsofexpensecutting,butthemonthofDecembershouldproveonceandforallthatthekeytoprofitabilityiscuttingdownonthewastefuluseofpaperclipsandrubberbands.

IthinkDecember1985wasthebiggestmonthinthehistoryofBearStearns.Ifwecancontinuebringinginthebusinessandcuttingexpenses,thestockmaygetto231/4.

Nowthatyouareallbelievers,Iwouldliketoseesomerealeffortandresultsintheexpense-cuttingarea.Therestofourindustrycutsexpenseswhenbusinessisbad.Wetrytocutexpensesallthetime,butparticularlywhenbusinessisgreat.

WouldwehavethoughtofthisbrilliantbitoflogicwithoutthehelpofHaimchinkelMalintzAnaynikal?Idoubtit,butletuscontinuetodothingsdifferentlythanothers.Ourrecordisprettygood.

DateFebruary25,1986ToMANAGING&ASSOCIATEDIRECTORSFromAlanC.GreenbergCCSubject

TheP&Lforthefirstthreemonthsofourpublicexistenceiscertainlysomethingtobeproudof.BeforewefallintooneofthetrapsthatHaimchinkelMalintzAnaynikalsooftenwarnedusabout,pleasekeepinmindthatwewereaidedandabettedbyagreatstockandbondmarket.Ithinkitisparticularlyimportantthatallofustakealittletimeandreviewsomefundamentals:1.Wemustcontinuedoingourbesttocontrolexpenses.Everydollarwesaveonexpensesgoesdirectlytothebottomline.Thatiswhatallofusshouldbeconcernedabout,oryouareatthewrongfirm.Expensesshouldbewatchedatalltimes,butespeciallywhenbusinessisgood.

2.Wemustcontinuetobealertforscamsandconartists.Wemustwatchforunusualbehaviorbythepeopleweworkwith.Whatisunusualbehavior?SomethingsubtlelikesomebodywhodrivesaRolls-Royceonasalarythatcanbarelysupportrollerskates.

3.Dothepeopleyouworkwithanswerphonecallsinacourteousmanner?Areallphonecallsreturned?Icouldn’tcarelesswhatapersondoesinhisownhome,butIamanutaboutreturningphonecallsthataremadetoourpersonnelduringtheworkday.Idonotcareifthecallerissellingmalaria.Callsmustbereturned!

4.Arethereceptionistsandtelephoneoperatorsinallofourofficeswarmandcourteous,andiftheyare,aretheythankedappropriately?Rememberthatinmostcasesthefirstcontactaclienthaswithusisthroughatelephoneoperatororreceptionist.

5.DoyouandyourassociatesleavewordwhereyouareatalltimessothatfindingyouisnotlikehuntingfortheAndreaDoria?

6.InSeptemberof1983,amemowasdistributedwithaquotefromtheworksofHaimchinkelMalintzAnaynikal.Itisworthrepeating.“Amanwilldowellincommerceaslongashedoesnotbelievethathisownbodyodorisperfume.”Thatstillholdstrue.Wemustnotgetcockyoroverconfident.

RememberthattheGreenBayPackerswonbecausetheyexecutedthefundamentalsbetterthantheircompetition.Trickplaysmakeheadlines,butwinnersexecutethebasics.

DateApril10,1986ToMANAGING&ASSOCIATEDIRECTORSFromALANC.GREENBERGCC

SubjectERRORACCOUNT

Itissafetosaythatourerroraccountisrunningatalmost100%efficiency.Wehavegottodosomethingtostoptheseinsanemistakes,becausethelosscomesrightoffthebottomline,andyouknowhowIfeelaboutthatparticularstatistic.

Wehavebeenrathercavalieraboutnotchargingpeopleforerrors.Thissystemobviouslyhasnotbeenworking,andwhensomethingdoesnotworkIbelieveinchange.Fromthismomenton,wereservetherighttodebitpeoplewhomakeerrors,andthisincludesmanagingdirectors.Fromthisdayon,ifIorsomeonewhoworksformedoessomethingstupid,Iamgoingtopayforit.SoIwouldsuggestthatallofusbecareful.

RememberwhatHaimchinkelMalintzAnaynikalsaid—“Thetimetostopstupidityandbetoughoncostsiswhentimesaregood.Anyschlemiel*andmostschlimazels*trytocutcostswhentimesarebad.”

*ForthosewhodonotspeakPersian,aschlemielistheonewhospillsthesoup.Hespillsitontheschlimazel.

DateApril14,1986ToMANAGING&ASSOCIATEDIRECTORSFromAlanC.GreenbergCC

SubjectFEDERALEXPRESS

Thismaycomeasasurprisetosomeofyou,butFederalExpressisnotawhollyownedsubsidiaryofBear,Stearns&Co.Inc.Imentionthisbecausewehavebeenspending$50,000amonthwiththemandthereisnoexplanationtojustifythisexpenditureunlessitwasanintercompanytransfer.

IcheckedonhowmuchIwaschargedforFederalExpressingpackagestomyclients,andthefigureforthepast11monthswas$68.32.OneofthosechargeswasforapackagesenttoHaimchinkelMalintzAnaynikal.Thatshouldbeafirmexpense,butIamnotgoingtomakeabigthingoutofit.MypointisthatFederalExpressisaluxury,andbusinesscanstillbedonebyusingtheU.S.Mail.

IcanassureyouthatfutureuseofFederalExpressisgoingtobeverycloselymonitored.Thefactthatitwasn’tuptonowismyfault,andItakefullblame.

Afterthinkingitover,IamgoingtohaveRussianreversethat$25thatwaschargedtomeforsendingourfigurestoHaimchinkelMalintzAnaynikal.Wemuststriveforaccountingperfection.

DateApril18,1986ToManaging&AssociateDirectorsFromAlanC.GreenbergCC

SubjectHOWTOGETRICHER

Itisamazinghoweasyitistosavesubstantialmoneywhenyoureallyputyourmindtoit.IwasdreamingofHaimchinkelMalintzAnaynikaltheothernightandthefollowingideacametome.

Allofususeblueenvelopesforsendingwrittenmaterialaroundtheoffice.Ourteamhasdoneagreatjobofsavingtheseenvelopesandreusingthem,butourscotchtapeexpensehasgoneup.Fromthisdayon,instructyoursecretarytolickonlytheleftsideoftheflapwhensendingtheenvelope.Thereasonforthiswillamazeyou,andmakeyouwonderwhyyoudidnotthinkofthisyourself.

Iftheenvelopeisgentlyopenedbytherecipient,itcanbeusedagainandsealed,withoutusingscotchtape,byyoursecretarylickingtherightsideoftheflapandthensealingit.

Afterallofushavebecomeaccustomedtoaccurateandpreciselicking,afurtherextensionofthiswillbetolickonlytheleftthird,andthenthemiddleforthenexttrip,andtherightsideforthepenultimatevoyage.Ifonehasasmalltongueandgoodcoordination,anenvelopecouldbeopenedandresealedtentimes.

Thebeautyofthisthoughtisthatnotonlyisitpractical,butitis100%sanitary.Ourbottomlinewillcontinuetogrowifallofuscancomeupwithbrillianciessimilartothis.

DateAugust29,1986ToMANAGING&ASSOCIATEDIRECTORSFromAlanC.GreenbergCCSubject

Augustisnowhistory,butIhatedtoseeitend.Themonthgavemeagreatdealofpleasure.Thefiguresarenotavailableyet.Theywillbeexcellentbutnotanewrecord.

AugustgavemeachargebecauseIcannotrememberatimewhenallthedepartmentsseemedtobeworkingsowell.Wearereallyhittingonallcylinders.Frankly,theonlynegativewasourcontinuingproblemoflossesduetoclericalerrors.

RememberwhatHaimchinkelMalintzAnaynikaloncesaid,“Thestrengthofthestrongestchainisdeterminedbyitsweakestschmuck.”ItisimportantthateverydepartmentofBearStearnscontinuetooperateatmaximumefficiency.

Congratulationstoallofyou!

Becausewearerolling,itisessentialthatwereviewthefundamentalsofHaimchinkelMalintzAnaynikal.

1.Reinforceonceagainwithyourassociatesthatanythingunusualshouldbebroughttotheattentionofasuperioratonce.Wewillneverbeupsetifitisafalsealarm.

2.Donotgetconceitedorcocky.3.Checkonthepeoplewhoanswertelephones.Aretheycourteous?4.Returnallcallsassoonaspossible.5.Watchexpenses—likeahawk.Nowisthetimetocutoutfat!Therestoftheworldcutsexpenseswhenbusinessturnssour.Withyourhelp,wewillbedifferent,smarterandricher.

6.Reduceexpenses.7.Cutexpenses.8.Donotspendmoneyfrivolously.Everydollarwesavewillgotothebottomline.

DateDecember9,1986ToManagingDirectorsandAssociateDirectorsFromAlanC.GreenbergCC

SubjectGettingRicher

Ourgrowthcontinuesunabated.Itisajoytobehold,butwhenyougetbusy,Iamafraidsomeleakagedoesoccur.Threeexamplesaredetailedbelow:1.Telephonesnotbeingansweredpromptlyincertainareas.Hiremorepeople!Afteryouhirethem,explaintothemhowimportantitisthattheybecourteousandattentivetoanyonewhocalls.

2.Thisisgoingtobehardforyoutobelieve,butitisactuallyafact.Icalledtheheadofoneofourmajorareasyesterday,andalthoughthemanwasin,hissecretarydidnotknowwheretofindhim!Iknowthatthistestsmycredibilitywithyou,butitistrue.YouarewellawarethatthisviolatesoneofHaimchinkelMalintzAnaynikal’scardinalrules.IhopeHMA*doesnothearaboutthisincident.

3.ItalsohurtsmetoreportthatIsawsomebodythrowawayausedenvelopebeforeitmade22tripsaroundtheoffice.Ican’tstandtoseepeopleburnmoney.ThankgoodnessIhavenotseenanyonethrowingawayrubberbands**orpaperclips.Burningmoneyaffectsourbottomline,andyourExecutiveCommitteeisjudgedmainlybyonestatistic,thebottomline.

Letusalltightenupandrereadthe98memosIhavesentoutoverthepastfewyears.

*ThisisaclevercodeforHaimchinkelMalintzAnaynikal.

**Rubberbandscanbeusedevenwhentheybreak.Taketheendsandtieasquareknot.IfyouneedtoknowhowtotieasquareknotcallBobbySteinberg.Hehasacubscouttroopconsistingonlyofhissons.

DateFebruary5,1987ToAllManagingDirectorsandAssociateDirectorsFromAlanC.GreenbergCCSubject

IhaveneverbeenmoreoptimisticaboutthefutureofBearStearnsthanIamnow.Ourthirdquarterisoverandsinceweareapubliccompany,thereisverylittleIcansayaboutit,butIthinkthatanybodywhoworksherecanmakeaverygoodguessofhowwedid.Thefigures*willbereleasedinlateFebruary.

Thatisonlyonereasonformyoptimism.Ithasbecomeperfectlycleartomethatseveralofourdepartmentshavebeenprofitableduringthepastfewyears,despitethefactthattheywerenotexactlycompetingona“levelplayingfield.”Certaincompetitorshavehadbigadvantagesoverourgroup;recenteventsmakeitclearthatthisinequityiscomingtoanend.Icongratulatethosedepartmentsforthejobtheyhavedoneagainstunethicalcompetition.

Youmayhavealsoreadthearticlesaboutalargefirmthatisdeemphasizingarbitragingactivities.WeatBearStearnsareactivelyexpandingthepersonnelandthecapitalcommitmentsofourriskarbitragedepartment.Ihaveneverbeenmorepositiveaboutriskarbitrage.Itwillamazemeifthisdecisiondoesnotprovecorrect.

Thatisthegoodnews.ThebadnewsiswearedoingsowellthatIamsure,subconsciously,wearebecomingcomplacent.ItisthejoboftheExecutiveCommitteetoonceagainstressthefundamentalsofHaimchinkelMalintzAnaynikal.Youshouldknowwhattheyarebynow,andifyoudonotknow,youareatthewrongfirm.Becauseofthetremendousactivityinallphasesofourbusiness,everyconmanisorwillbeheadingforthesecuritiesindustry.Stayalert!Andonceagainreinforcewithourassociatestheneedtoreportanythingunusualnomatterhowtrivial.

*Whateverthefiguresare,theywouldbeevenbetterifmyassociatesreadandrereadmymemosonexpenses,butnobodypaysattentiontomesincethestockisabove20.

DateMarch9,1987ToManagingDirectors&AssociateDirectorsFromAlanC.GreenbergCCSubject

Itisofficial!Wehavesignedaleasetomoveto46thandParkAvenue.IhopethatallofyouareasexcitedaboutthismoveastheExecutiveCommitteeis.Inouropinion,thismoveushersinawholenewdimensiontoourgrowth.

Iwouldliketotakethistimetoassureyouthatourbasiccultureisnotgoingtochange.Eventhoughwewillhavemorespaceandmorepeople,wecertainlywillnotaddanyadditionallayersofmanagement.Ourpointofviewonexpensesandthebottomlinewillnotchange.Ourpretaxmarginswere26.6%forthefirst9monthsofthisyearandarethehighestintheindustry.Iamsorrytoreportthatforthesameperiodourreturnonequitywas25%andranksonly2ndintheindustry.ThisrankingofourR.O.E.isdisappointingtomeandparticularlytoHaimchinkelMalintzAnaynikal.Weareobviouslydoingsomethingwrong.Letusallsetaboutcorrectingit.

TheonlystatisticIcareaboutisreturnonequity.Aftermanysessionswithsomeofourbusinessschoolgraduates(yes,wedohavesome),IthinktheyhavehelpedmeunderstandthesecrettoimprovingourR.O.E.Itseemsthatifweincreaserevenuesandcutexpenses,returnonequitygoesupandthatiswhatmakesmehappy.Pleasemakemehappy!IcanbeveryunpleasantwhenI’mnot.

DateApril30,1987ToALLEMPLOYEESFromAlanC.GreenbergCC

SubjectPHONEMANNER

Thisladymusthavereadsomeofourmemos.PleasereadwhatshehastosayandletustrytoimplementitineverynookandcrannyofBearStearns.

‘Phonedoctor’hasanRxfortelerudenessByCindyRichards

Thefederalbudgetdeficit,internationaltradegapandunstablestockmarketmay grab the headlines, but Nancy Friedman says the biggest problemfacingbusinesstodayisrudeness.

“The sales department just bleeds when people are treated badly,” saidFriedman,whobillsherselfastheTelephoneDoctor.

Inseminarsconductedforcompaniesacross thecountry,Friedmanteachesemployeestobenicetofolksonthephone.

“Idon’tknowthatwe’reshowinganybodyanythingterriblynew,”Friedmansaid in a telephone interview last week. But, she noted, just becauseemployeesknow theyshould treatcallerswelldoesn’tmean they’redoingit.mmTake“emotionalleakage,”forexample.That’swhentheemployeeisupsetaboutsomethingelseandtakesitoutonthecaller.Beforeansweringthephoneinabadmood,Friedmansuggestslettingitringonemoretime—long enough to dredge up a smile. “A phony smile is better than a realfrown,”theenergeticFriedmansays.

ThenthereareFriedman’s“fiveforbiddenphrases.”

•“Idon’tknow.”Itshouldbereplacedwith“Letmecheckandfindout.”

•“Wecan’tdothat.”Instead,tellcallerswhatcanbedone.

•“You’ll have to . . .” The caller doesn’t have to do much of anything,certainly not sit on hold. Instead, the employee should say, “You’ll needto...”

•“Hangonasecond,I’llberightback.” It’sa lieandshouldbereplacedwith “I’ll need to put you on hold for a fewmoments, if you are able tohold.”

•“No.” It should no longer appear at the beginning of a sentence. Thatmakespeoplethinkaboutwhatthey’resayingbeforetheystarttalking.

ToFriedman,politeuseofthetelephoneisnotjustabusiness,it’sacrusade.In her quest to stamp out phone rudeness, she is offering a supply of“telephoneviolation”and“telephonecommendation”noticesfreetoanyone.The notices are to be sent to the boss of the person to be reprimanded orcommanded.Theymaybeobtainedbywriting theTelephoneDoctor,P.O.Box777,St.Louis,Mo.63044.

(fromtheChicagoSun-Times)

DateMay26,1987ToMANAGINGDIRECTORSANDASSOCIATEDIRECTORSFromALANC.GREENBERGCCSubject

Thecoverstoryinlastweek’sTimeMagazinewasonethics.Mostofwhattheysaidwasnonsense,butthemagazinedidmakeapointofsayingthatoneoftheproblemsofdetectingfraudor“nauties”incorporationsisthatemployeesofmostcompaniesareafraidtorocktheboatbyreportingaberrationsorsuspiciousactions.

Ithinkthatitistimeonceagaintostressthatwethinkallofourpeoplearehonest,andtheyareevenmorehonestwhenthey(includingthemembersoftheExecutiveCommittee)knowtheyarebeingwatchedlikeahawkbyeveryoneinourorganization.Asyouknow,weevenrewardpeoplewithcashbonusesifasuspicionissubstantiated.

Letusrestatetoourassociatesthattheyareourfirstlineofdefenseagainstfraudandwaste.Weneedtheircooperationtostaypure,andwewillrewardthemiftheydiscoveranindiscretion.Wewillalsonevercriticizeanyoneforcalling“wolf”toooften.

Wearedifferentfromothercorporations.Letusstaythatway.

DATE:June18,1987TO:ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg

Themoreyoureadaboutourcompetitors’problems,themoreyourealizewhatajobourpeopledidinthemonthofApril.

Themediaareconsistent.TheyseemtoprintonlynegativesaboutBearStearns.OurearningsfortheyearandquarterendingApril30,1987weregiventothenewspapers,andwestressedinourreleasethatthemonthofAprilwasplentyvolatile,butwedidfine.

Itishardnottogetupsetwhenyouseeourstockbehaveasithas,butIcanassureyouthatifourrecordcontinues,ourmultiplewillincreasedramatically.Myguaranteemaynotmeanmuch,butHaimchinkelMalintzAnaynikalagrees,andthatdoesmeansomething.

Ifwecontinuetoearn50%onourequity(pre-tax),someMBAwillrecognizeus,andthenwemayevensellatninetimesearnings.

Wearedoinggreat!Justkeepitupandleavethepriceofthestocktome.

DateJuly13,1987ToALLMANAGINGDIRECTORSFromTHEEXECUTIVECOMMITTEECC

SubjectCOSTCONTROLANDOVERALLEFFICIENCY

BearStearnshasrecentlyannouncedarecordyear—aperiodduringwhichsomeofthemajorsinourindustryhadproblemsincertainareasthataffectedadverselytheirP&L.Wemaybeentitledtosomedegreeofprideinourperformance,butcertainlynotsmugself-satisfaction.

Whileourcost/revenueratiosappeartobereasonablysatisfactory,nowisthetimetopauseandremindourselvesthat:1)Wehaveexpandedrapidly,adding800employeesduringFY1987alone;

2)Themoveto245ParkAvenuewillincreasesignificantlyourfixedexpenses;3)Ourindustryiscyclical,andweareinthemidstofthelongestbullmarketinhistory;

4)Asharpdownturncouldbepainfulifwearenotleanandmean;5)Manyofusgetpaidprimarilyoutofbonuspoolprofits;and,6)Inevitablyfatcreepsinwithexpansionandprosperity.Consequently,wewantallManagingDirectorstobegincriticallyexamining

theirareas.Hereisalistofsomeofthethingsyoushouldbereviewing:A.Yourworkforce

1.Whoisnotsufficientlyproductive?2.Whoshouldbereplaced?3.Whoshouldbeeliminatedandneednotbereplaced?4.Beforehiringanyonenew,askwhetheryourexistingstaffcanbeassignedadditionalresponsibilities.

5.Doyouhaveemployeesperformingfunctionsthatareduplicatingthoseperformedinotherdepartments,suchasAccountingorDataProcessing?

B.Otheritemstowatchanddothatwillkeepusneat&clean.1.Areyoupayingforunusedoruneconomicnewsorquotationservices?2.Areyoupayingoutsidevendorsforservicesormaterialthatarenotreallyneeded,orduplicatewhatisalreadyavailablein-house?

3.Doyouhavetoomanytelephonesandunderutilizedfixedwires?4.AreyoucontrollingsuchthingsasFederalExpress,messengerservices,andpersonallong-distancecalls?

5.Doyou&yourassociatesrereaddailymymajormemosonrubberbands,paperclipsandenveloperecycling(Ifeelthatadheringtothosememoswasthemainreasonlastyearwasasuccess).

BearStearnshasgrownandprosperedbecausecapable,aggressive,money-motivatedpeopleworkedhard,weregivensubstantialresponsibility,andwatchedtheirbusinessesandeachother.Thebiggestchallengeisyettocome—startgettingreadyNOW.

Ifyoudon’tdoit—wewillhavetodoitforyouandthatwillbelesspleasantandlessefficient.Thisplaceisnotgoingtosmelllikeabureaucracy—bureaucraciesdon’tsetrecords.Weown60%ofthisplace—let’skeepitsoundandmakeitgrow.Ourcompensationisbasedonthefirm’sprofitability.Inaddition,Iamnewlymarried,andIaminnomoodtotakeapaycut.Regardlessofwhatyourexperiencehasbeen,Iamfindingthattwocannotliveascheaplyasone.

DateAugust21,1987ToMANAGINGDIRECTORSANDASSOCIATEDIRECTORSFromALANC.GREENBERGCCSubject

BearStearnsisnothavingahiringfreeze.Ourexperiencehasbeenthatthebesttimetohireproductivepeopleiswhenconditionsaredifficult.SomeareasofWallStreetarehavingproblemsandthatmeansopportunityisonceagainknockingatourdoor.Letusallbealertandcontinuetobuild!

Iwouldliketoannounceatthistimeafreezeonexpensesandcarelessness.Weprobablythrowawaymillionseveryyearwithstupiditiesandslop.Infact,Ihaveseenmoreslopinthelastthreeweeksthanintheprevioussixmonths.Stopitnow.Nobusinessisstrongenoughtowithstandconstantstupidity.

HaimchinkelMalintzAnaynikalisreallysomething.JusttakealookatmyJune13,1987memoandseeonceagainhowrighthewas.Hehatesslop,evenmorethanIdo.Infact,hepointedouttomewhereourstockcouldbeifwerananeat,tightshop.Iamtiredofcleaninguppoo-poos.Thenextassociateofminethatdoessomething“un-neat”isgoingtohavealittlemeetingwithmeandIwillnotbetheusualcharming,sweet,understanding,pleasant,entertaining,affableyokelfromOklahoma.

DateOctober16,1987ToMANAGINGDIRECTORS&ASSOCIATEDIRECTORSFromALANC.GREENBERGCCSubject

OvertheyearsHaimchinkelMalintzAnaynikalhasstressed:

1.HirePSD’s.*2.Makedecisionsbasedoncommonsenseandavoidtheherdmentality.3.Controlexpenseswithunrelentingvigil,becauseifyouturnyourbackforasecondtheywillgrowlikeweeds.

4.Helpalldepartmentstogrow,becausethisyear’sstarletcanbenextyear’sdog.

5.Bewareofcatchyphrases—suchas“MerchantBanking.”HaimchinkelMalintzAnaynikalknewIwasnotclearonwhatMerchantBankingis,sohedefineditforme.“MerchantBankingisbuyingstockinacompanywhosesharesarenotpubliclytradedandthecompanyshouldbeinabusinessverydifferentfromwhatyouarefamiliarwith.”

Imagine,allthistimeIthoughtMerchantBankingwassomeesoteric,complicatedBritishsecret.

HaimchinkelMalintzAnaynikal’sguidesmayseemsimplistic,butwhydon’twegivethematry?

*ForthoseofyouwhoarenewtoBearStearns,PSDstandsforpoor,smartandadeepdesiretobecomerich.PleasedonotinferfromthisthatHaimchinkelMalintzAnaynikalisprejudicedagainstpeoplewhopossessotheralmostworthlessdegrees.Heisnotnordoesheteachotherstobe.

DateOctober19,1987ToMANAGING&ASSOCIATEDIRECTORSFromALANC.GREENBERGCCSubject

Itisamazinghowhistorykeepsrepeatingitself.Themarketinstocksandbondshastakenaprecipitousdrop,butIamfarfromdepressed.Why?Becauseonceagainweareseeingandwewillbeseeinggreatopportunitiesinallareas,particularlyinpersonnel.Icanassureyouwearepursuingeveryleadatthisverymoment.

OurmovetoParkAvenuewillstartshortly,andItrulybelievethatthetimingisperfect.Justkeepinminditwasjustafewyearsagothattwoofourcompetitorslefttheclearingbusiness.ElevenmonthsagoseverallargefirmsclosedtheirArbitrageDepartments.*Wewillbeawinner.

Amarketlikethisdoesbringouttheworstinpeople.Theenclosedviciousrumorwassenttothemedialastweek.YourExecutiveCommitteeknewimmediatelythatitwasfalse,becauseHaimchinkelMalintzAnaynikalcertainlywouldhaveleftahugenumberofrubberbandsandoldenvelopesinhisestate.Itislogical,quickthinkinglikethisbyyourleadersthatensuresourfirm’ssuccess.

*IwishourArbitrageDepartmenthadcloseddownforatwo-weekfallvacationfourteendaysago.

HAIMCHINKELM.ANAYNIKALDIESOFACUTEOVEREXPOSURE

NewYork,N.Y.—Mr.HaimchinkelMalintzAnaynikaldiedlastnight—avictimofacuteoverexposure.

ThecontroversialBearStearnsconsultantissurvivedbyhisformerwife,fromwhomhewasdivorcedthedayafterhismarriagethirtyyearsago.“Thattightwadwantedmetopayhalfthehotelbillonourhoneymoon,”shelamented.

Mr.Anaynikalleftanestateof5,475,000paperclips,andagiganticballofstring,whichalmostcompletelyoccupiedabedroominhissparseloftapartment.

Actingasthesolehonorarypallbearer,andtheonlymournerathisfuneral,wasBearStearnschairmanAlan“Ace”Greenberg.Mr.Greenberg,sobbinguncontrollably,couldonlysay,“Ican’tbelieveHaimchinkelisdead.Whatwillbecomeofme.Idon’tknowhowIcangoonwithouthim.”

DateNovember3,1987ToALLREGISTEREDREPRESENTATIVESFromALANC.GREENBERGCCSubject

EnclosedisamemothatKathrynEsteyoftheChicagoofficesenttome.ItwasdictatedbymeanddistributedinJulyof1984.Whenyoureadit,you’llrealizehowtimeshavechanged.Theonethingthathasn’tchangedistheservicesthatIhopeallRegisteredRepresentativesgetfromthestaff.

ThesehavebeentoughtimesfortheOperationsDepartment,butthingsaregettingbacktonormalandIstillwantyoutofeelfreetocallmeanytimeyoufeeltheserviceislessthanTripleA.

Wehavecomethroughatoughperiod,butbelieveme,yourfirmisstrongernowintermsofpersonnelthanitwasonemonthago,andwearestillgrowing.

DateNovember16,1987ToManagingDirectorsandAssociateDirectorsFromALANC.GREENBERGCCSubject

Oursecondquarterjustendedandtheresultsareamatterofrecord.ThemonthofOctoberwillneverbeforgottenbyanyofusorbyhistorians.

Thepressurewastremendousoneveryonewhohadanythingtodowithequities,andinalmosteverycaseourpeoplecamethroughbeautifully.Iwouldliketothankthemallpersonally,butthatisimpossible.Butitispossibleforyoutodoitforme.PleaseletthepeopleyouworkwithknowhowIfeelaboutthem.

Thefirmweatheredthestormalmostunscathed,butourstockholderswerehurtnotonlybythe32%dropinthestockmarketbutalsobythewithdrawaloftheJardineoffer—adoubledisappointment.ItisourjobtomakethemonthofOctoberlookinretrospectlikeablessingindisguiseforBearStearns.Iknowthisappearstobeatoughassignment,butwearemakingthemovesnowthatmakethispossible.Wewilldoit!

TheJardinecancellationaffectedmeinadifferentway.HaimchinkelMalintzAnaynikalsuggestedandIagreedtodropoutofmygrouse-shootingclass.Itjustwasnotme.ItookonelessonandtheonlythingIlearnedwasthatthepluralofgrouseisgreese.HaimchinkelMalintzAnaynikalfailedtoseehowthatkindofknowledgewouldnowbeofgreataidtomycareer.

DateNovember24,1987ToManagingDirectors&AssociateDirectorsFromALANC.GREENBERGCCSubject

ThemoveoftheNewYorkOfficehasstarted!

Ifyouhavenotseentheinteriorof245ParkAvenueyet,youhavearealtreatinstore.TheCorporateFinanceandM&ADepartmentsarenowinoperationat46thandPark.Therestofuswillbemovingshortly,andItrulybelievethatourtimingisperfect.

Thenewspapershavebeenfullofnewsaboutlayoffsineveryareaofourindustry,andtherewillbeplentyofadditionalfalloutifE.F.HuttonistakenoverbyanotherWallStreetfirm.Wenowhavethespaceandtheappetitetohirepeopleiftheyhaveoutstandingability.Ournewlocationwillmakeusanevenmoredesirableplacetowork.

Whyarewehiringinsteadoffiring?MaybeitisbecausewefollowedtheteachingsofHaimchinkelMalintzAnaynikalwhenothersscoffed.Ratherthantestfate,yourExecutiveCommitteehasagreedtogoalongwithHaimchinkelMalintzAnaynikal’slatestsuggestion.Becauseofourpastgrowthandouranticipatedgrowth,wehavereluctantlydecidedtoadaptsomemodernmanagementtechniquessuggestedbyHaimchinkelMalintzAnaynikal.

WewillshortlysetupagroupdevotedonlytoBackwardPlanning.Thismaysurprisesomeofyou,butlookdeeperandyouwilldiscoverthelogicbehindthismove.Justexaminetherecordsofthosecompaniesthathadpersonneldevotedtostrategicorforwardplanning,andyouwillfigureoutthisinitialplungebyusintoamorestructuredcorporateenvironment.

Thecompositionofthisgrouphasnotbeenfinalized,butsuchthingsasnotreturningtelephonecalls,havingasecretarywhoanswerscallswiththe

enthusiasmofawetnoodle,beinglatetoclientmeetingsandjustbeing“notneatandtidy”certainlyarethethingswewillbelookingforinacandidatefortheBackwardPlanningCommittee.

DateFebruary3,1988ToAllDirectorsofBearStearns;ManagingDirectorsandAssociateDirectorsFromAlanC.GreenbergCCSubject

OurmovetoParkAvenueisalmostcomplete.AsfarasIamconcerned,itwentlikeadreamandthefirstmonth(January)wasarealpleasure.

IfJanuaryisanyindicationofthefuture,wearegoingtohavesomerealfun.

Firmsinourindustrycontinuetobeshakenbyinternalproblems*andweremainfreefromthispoison.OneofthemainjobsofyourExecutiveCommitteeistokeepitthatway.Thefirmisridinghighnowandeveryonewhoworksherecanfeelit(wearehiring—theyarefiring).HaimchinkelMalintzAnaynikalhaswarnedusonceagainthattheonlythingthatcanstopourmomentumisinternalstrife,conceitandcomplacency.WewillnotletithappenatBearStearns!Wehavecometoofartoturnstupid.

Everybody’sdoinggreat.Keepitupandmakemericher.

*ItwasjustannouncedthatsomeprominentpeopleinM&Ajustleftafirmbecauseofadifferenceofopinionoverstrategicplanning.AnissuelikethatcouldneverariseatBearStearnsbecausewehavenostrategicplanning.Onceagain,HaimchinkelMalintzAnaynikalcomesoutasonesmartdude.RememberhisAxiom1023?“Theamountofdissensionrisesgeometricallywiththemoreissuesyouhavetophilosophizeover.”

DateApril12,1988ToAllSeniorManagingDirectors,ManagingDirectors,andAssociate

DirectorsFromAlanC.GreenbergCCSubject

Intwoweeksourfiscalyearwillend,butIcanassureyouthememorywilllingeron.

Itwasayearthatmadeusrealizehowfragilethemarketscanbeandthatwecanneverlowerourguard.

Theyearalsoshowedushowexpensivelitigationcanbe—evenwhenweareright!Whatistheanswer?Wemustbecareful,suspiciousandalwaysrespectourin-houseadministratorsandcompliancepeople.Itisimpossibletomakeenoughonatradeoradealtojustifysubsequentlitigationduetocarelessnessorgreed.

Thepositivesoflastyearweremany.Weshowedremarkablecomposureandtheabilitytoreboundunderpressure.EverydepartmentusedOctober19,1987asanopportunitytoattracttoppeople.WearetheonlyinvestmentbankingfirmIknowofthatishiringandnotfiring(5,715employeesayearagoversus6,036today).Thishascausedthemoraleofourassociatestobeatanall-timehigh.Theyearalsoshowedourtremendousearningpowerevenwhenthemarkethadarecordbreak.

Idohaveonesaditemtoreport.HaimchinkelMalintzAnaynikalwillnolongerserveasaconsultantonaregularbasis.Aftertenyearsofmybadgeringhim,heisjustplaintired;butwewillnotbewhollyonourown.Hewillbeavailableforspecialproblems,andwewillbeabletotalktohisnephew,ItzhakNanook*Pumpernickanaylian,onmundanesubjects.

ThebottomlineisIhaveneverfeltmoreoptimisticaboutourfutureormoreeagertocometoworkinthemorning.Ihopeyoufeelthesame.

*Remember,HaimchinkelMalintzAnaynikal’smotherwasanEskimo.

DateApril15,1988ToAllEmployeesFromAlanC.GreenbergCCSubject

ItzhakNanookPumpernickanaylianisinharnessandrunning,andhehascomeupwithhisfirstbrilliancy.

Whilegoingthroughournewquarters(hewasonacamel),hepointedouttomethatwehave2,600piecesofreturnedmailsittinginaroomat245ParkAvenue.Whyisthis?Thesepiecesofmail,someofwhichmaybeveryimportant,werereturnedtousbecauseofwrongaddresses,butthesendersdidnotputanyidentificationintheupperleft-handcorneroftheenvelopes.Atthistimewehavebeenunabletofindthesenders.WehaveretainedSherlockSchwartz,butthiscaseistoomuchevenforhim.

Effectivetodaywehaveanewpolicy.Infact,weshouldhavehaditforthepast10years.NothinggoesoutofBearStearnswithoutthesender’sidentifyingmarkintheupperleft-handcornerofeachenvelope.Thiswillsaveustime,moneyandaggravation.Ifyouaretoobusytodothis,pleasecallme.Iwillbegladtocomedownandputtheproperidentificationonyourmail.

1988–1991

Octoberof1987wasatoughmonth,butthethreeandahalfyearsthatfollowedwerearealtestoftheviabilityofafirminthebrokerageindustry.Fourprominentfirms(L.F.Rothschild,DrexelBurnhamLambert,ThomsonMcKinnonandE.F.Hutton)disappeared,andfourequallyprominenthouseswouldhaveexitediftheirparentshadnotcometotherescuewith$3½billion.Threeandahalfbilliondollars—thefigureismind-boggling.

DuringthatperiodBearStearnscontinuedtoprosper,andwebelievewearenowinthestrongestpositioninourhistory—strongfinanciallyandstronginallareasinwhichwecompete.

Howdidweresistsomeofthewildthingsourcompetitorsweredoingthatmaderealinroadsintoourmarketshare?Howdidwekeepourassociatesinplacewhentransactionstheybroughtinwerelosttootherfirmsthatwerewillingtodothingswewerenotwillingtodo?Howandwhydidweresistthebridgeloanmania?Itwasnoteasy.Attimeswewerequestionedbyourownpeopleastowhetherwewereoutoftouchwiththerealworld.Andtherewereoccasionswhenevenwedoubtedtheprincipleswesostubbornlymaintained.Maybethesememoscangiveyousomeinsightonhowwemanagedtokeepourequilibrium,andinsodoing,howwemanagedtogreatlyimproveourpositioninourindustry.

AllofusatBearStearnsarelookingforwardtothefuture.Wethinkwearepoisedtomakeanevenbiggerimpactintheworldoffinance.

FROMTHEDESKOFALANC.GREENBERG

DateJune20,1988ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromALANC.GREENBERGCCSubject

ItzhakNanookPumpernickanaylian(hismothercallshimNookie**)hasobservedthatournewfiscalyeardidnotexactlystartduringaveryimpressivemonthforourindustry.

Myguessisthatwearedoingbetterthanmostofourcompetitors,butthatdoesnotmakemehappy.Nookie’sonlyadvicewastoimploreallofustoworkharder.Conditionsdochangequicklyinthisbusiness,andifwearedoingokaywhenthingsaretough,wewillbreakrecordswhenthemarketturns.

Nookiealsomadethecommentthat“theharderyouwork,theluckieryouget.”Thisthoughtisneitheroriginalnornew,butitistrueandwecanalluseluck.

Keepyourchinsup,wearegoingintherightdirection.

*HaimchinkelMalintzAnaynikaltriedtoexplaintoMrs.PumpernickanaylianthatNookiewasnotconsideredaparticularlyflatteringnicknameinsomecircles;soshestartedcallinghersonNofkee.HaimchinkelimmediatelyaskedhertoswitchbacktoNookie.

DateAugust30,1988ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject

Nookiesentamessagetousthatmaysoundtritebutstillbearsrepeating.

“Thebusinessyouareinisjustplaindifficultatthistime.Whenyouenteredtheindustry,youwerewarnedthatitwascyclicalbutbullmarketstendtocloudrealism.Youarenowinaperiodthatseparatesthemenfromtheboys.

Mrs.HaimchinkelMalintzAnaynikalsuggeststhatwhenthegoinggetstough—goshopping!

AcertainofficerofBearStearnssuggeststhatwhenthegoinggetstough—startsellingpositions!

Mysuggestionisthatwhenthegoinggetstough—thetoughgetgoing!

Youhavenooptionbuttofollowmysuggestion.Ifyoudo,youwillprosperbeyondyourwildestdreamswhenthemarketturns—anditwill.

Youradvisor,juniorgradeItzhakNanookPumpernickanaylian”

Thereisnotmuchtoadd.Wewillbeoneofthesurvivorsandthepeoplethatstickwithuswillprospermightily.Thenextbullmarketcouldstartanydayandthestrongwillstillbehereforthefun.

DateOctober4,1988ToAllSeniorManagingDirectorsFromAlanC.GreenbergCC

SubjectAFieldReportfromItzhakNanookPumpernickanaylian

HaimchinkelMalintzAnaynikalhostedafamilygatheringonOctober3rd.ThisisanannualpartycelebratingthemostimportantofallEskimoholidays(remember,HaimchinkelMalintzAnaynikal’smotherwasanEskimo).Itwas82yearsagothattheEskimoPiewasinvented,soyoucanseewhypeopleupnorthrankthisdayjustaheadofthefeastcelebratingtheinventionoftheharpoon.*

ItisreportedtomebyNookiethatHaimchinkelMalintzAnaynikalisveryoptimisticonWallStreet.Why?Becausehepointedoutthatbigmoneyisusuallymadebycontrariansandatthemomenttheworldisdownonourindustry.

Ifyouthinkback,youwilldiscoverthatourbestmovesweremadeagainstthethinkingofthemasses.Itrulybelievethatnowisthetimetoenterthesecuritiesbusiness—notthetimetoleave—butitisuptoustobeleaders.Itisnoteasytobeupwhenyourareaoftheindustryisdown50%,butitwillturnandwemustandwillhelptheweaksurvivethisperiod.

Itisincumbentuponusthatwekeepourpeoplefromthinkingthegrassisgreenersomewhereelse.Itisincumbentuponustorecognizewhoneedshelp.Itisincumbentuponustostressthatthecontrarianpointofviewistheintelligentcourse.

Thebottomlineis:thereisnosubstituteforleadership.NowisthetimetodemonstratewhatIknowwehave.

*SomeoftheyoungmaleMoes(shortforEskimos)particularlyliketheFeastofHarpoonbecausefora24-hourperiodyouareallowedtospearanythinginsight.

DateOctober26,1988ToSr.ManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject

Electricityisnotfree!Thiswillcomeasacompletesurpriseto98%ofthepeoplewhoworkatBearStearns.WhyamIsosure?Nookie*tookalittlewalkaroundourofficesoneeveningandfoundenoughlightsandmachinesontofundBangladesh’slightbillforayear.

Ihaveneverenjoyedthesmellofmoneyburning,particularlywhenitismymoney.Thecarelesswastingofelectricityisburningmoney.(Ourelectricalbillisrunningattherateoffivemillionayear.)

Fromthisdayonwehavetworevolutionarynewrules.Turnofflightswhenyouleavearoomandturnoffequipmentwhenyoucallitaday.Withconcentration,dedicationandmuscularcoordinationwecandoit!Nookie*suggestedwehireatherapisttohelpourassociateshandlethismajorjobadjustment,butIthinkheunderestimatesourpeople.Provemerightoritisofftotherapysessions.

*IfyoudonotknowwhoNookieisbynow,youareatthewrongfirm.

DateNovember9,1988ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject

Octoberwasanexcellentmonth,andNovemberisstartingoffgreat.Ithinkmymemoaboutturningofflightshadalottodowiththeprofitabilityofthelastfortydays.Ourprofitswouldhavebeenevenhigherifourpeoplehadrespondedwithmoreenthusiasmtomyrequestsaboutcuttingdownourelectricalbill.

IwilltakepartoftheblameforlackoftotalcompliancebecauseIdidnotrealizethecomplexitiesinvolved.Ourstaffdidwellinturningoffswitchesthatwereonaverticalplane,butswitchesthatwereonahorizontalplaneseemedtocausemajorproblems.

Nookie*explainedthereasonforthistome.AlthoughmostofusareP.S.D.’s,*westillliveinhomeswithelectricityandtheswitchesforroomlightsareonthewalls,notthefloors.Pleasefilethisfact.Ourassociatesperformedmiserablyinturningofftheelectronicmachines.Canyoufigureoutwhy?Nookieknewatonce.Letmehelpyou.Alltheswitchesfortheseapparatusesareonahorizontalplane.Ourgroupcouldnotadjust!Pleasehaveseminarsinyourareasexplaininghowtheseswitcheswork.Ouralternativeistohavetheswitchesonallthemachineschangedtoaverticalposition.Thiswouldcost$8,492,212.00.YourExecutiveCommitteethinkswithyourhelpourstaffcanadjust.

Icannotstandtoseeourmoneybeingburnt.Stopallwaste!

*IfyoudonotknowwhoNookieisorwhataP.S.D.is,donotreadanyfurther.Youwillneverunderstandthetextthatfollows.

DateDecember20,1988ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject

Wearegoingthroughoneofthoseperiods.Somedepartmentsarebreakingrecordsanditappearsthateverythingtheytouchturnstogold.Wehavebeenaroundlongenoughtoknowtwothings.

1.Everycathousehasitsnight.Thosedepartmentsthatarehavingproblemsatthemomentwillhavetheirdayinthesun,butuntilthenourjobistokeepmoraleupandthepeopleinplace.

2.Thoseareasthatarecoiningmoneywillhaveatendencytogetoverconfidentandalittlelooseand/orforgetfulofthefundamentalsthatbuiltthisplace.

ThatiswhereourP.S.D.degreescomeintoplay.Wearegoingtostress,reinforceandbecomejustplainobnoxiousaboutstoppingoverconfidenceandconceit.Whenthepartyendsinthesehotareas,IdonotwanttheExecutiveCommitteetohavetodoclean-upduty.Wemustkeepourassociates’feetontheground.ThepartywillendandIwanttogivebacktheabsoluteminimum.

OursecondquarterwillbeoverinaweekandIthankallofyouforalovelyChristmaspresent.Iwillsaynomore.

Hope1989isgoodtoallofus!

DateJanuary13,1989ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject

YouhaveallseentheresultsofthelastquarterandImustadmittheywerespectacularconsideringthepresentenvironment.

ThePressdoesnotknowhowsensationalthemonthofDecemberwas.Agolferwouldcallthemonth“adoubleeagle.”Wehavehadbigmonthsinthepastandtheywerealwaystheresultofalldepartmentscontributing.TheresultsofDecemberwereachievedwithmanydepartmentsnotcontributingbecauseofindustryconditionsbeyondtheircontrol.

NookiethinksthatthebusinesscouldhaveanupturnandwhenthathappensIcanonlydreamofthejoyinstoreforus.

AnegativenotethatcontinuestoshowitsuglyheadisthatourErrorAccountcontinuesonitsmerryway.Wehadonebighitlastweekandoneveryclosecallthatmissedusonlybecauseofluck—notbrains.Onceagainwehavetoemphasizetoeveryoneonourpay-rollthatsystemsandproceduresarebetterthannothingbutthereisnosubstituteforusingone’shead.

Pleasereemphasizethatwerewardonthespotpeoplewhoshowbrainswithcashand/orapromotionwhentheyusetheirheads.

OneofNookie’smaintenetsisthat“fishstinkfromthehead.”Ifthemanagementgivestheappearanceofbeingalertandsuspicious,thepeopleunderyouwillactaccordingly;soourtaskissimple.Besmart,actsmart,bealert,besuspicious,andonguard!

Theonlythingthatcanstopusfromgettingricherisstupidity.

DateApril7,1989ToSr.ManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject

WehavehadapolicyforyearswithregardtoanyofusatBearStearnstalkingtothepress.

Theruleissimple.NooneisallowedtotalkonorofftherecordwithouttheapprovalofJimCayneorJohnRosenwald.WhenIsaynooneImeanit,becauseIrespectthisruleandifIdo,youwill.Thisruleobviouslyincludeslettingyournameappearinanybusiness-relatedarticleoradvertisement.Pleasebesurethateverybodyyouworkwithunderstandsthisloudandclear.

Aslongaswearediscussingvocalcords,ItzhakNanookPumpernickanaylianpointedouttomethatIshouldalsostressourpolicyondiscussingwhatotherfirmsinourindustrydo.Wedonotknockthepricingorthestructureoftheofferingsofourcompetitors.Iamwellawarethatotherfirmshavenotbeensoconsideratetowardus,butthathasnobearingonhowweconductourselves.

Ourrecordoflatewillprobablycreatesomejealousy,soitismoreimportantthaneverthatweconductourselvesinamannerbeyondreproach.

NookiealsomadeafewcommentsingeneralaboutBearStearns.NookiefeelsthatthemoraleandspiritatBearStearnshasneverbeenbetter,andthefuturehasneverlookedbrighter.Iagreemostemphatically.Nookiedisclosedthathebasedhisconclusionsonspotinterviewsandpersonalobservations.Ifyouareveryobservant,youmayhavenoticedsomebodyinArabgarbwalkingaroundthepremisesconstantlylickinganeskimopie**andusingawalrusphallus*foratoothpick.Youkeenonesmayhaveguessedit—thatwasNookieinhisspyoutfit.

*YounewassociatesmaynotbeawareofNookie’sheritage.Onhismother’smaternalside,hisgrandmotherwasanEskimoandhisgrandfatherwasanIranian.

DateApril18,1989ToSr.ManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject

SometimeagoweinformedthepeopleatBearStearnsthatnolegalbusiness,printingbusiness,plumbingbusinessoranythingelsethatBearStearnspaysforcanbeassignedwithouttheapprovalofDavidGlaser(x3763)orRichardDeRose(x3767).

Imadeaterriblemistake.IdidnotremindyouofthiseverythreemonthsasIshouldhave;soIamremindingyounow.Ifyoubiteadogandneedalawyer,youcanhireonewithoutourpermission.IfyouexpectBearStearnstopayalegalbill,youhadbettergetthepermissionofoneofthesemenImentionedoryouwillenduppayingthebillyourself.

DateMay9,1989ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject

ThemediahavebeenfullofarticlesaboutWallStreetandtheproblemsofourindustry.Thewritersquotethesamesagestheyhaveinthepast.Thearticlesfailtomentionthepropheticalrecordoftheseluminaries—theirrecordislousy.

ItwasjustashorttimeagothatweweretoldaWallStreetfirmhadtobepartofahugefinancialcolossus(Equitable,Metropolitan,Prudential,Sears,etc.)tosurvive.Wearenowbeingtoldthatitistheboutiquesthatwillprosper.

NookiePookie*thinksthatourstructureisperfectandIagree.Firmswithanextensiveretailbranchsystemwillhaveaheadacheformanyyears,butourstyleofhavingonlysixdomesticbrancheswithin-housecapabilityinmanyareasisprovingtobethewisewaytoincorporateretailintothesystem.Wearetotallycommittedtotheretailbusiness,butinourway.Allofourofficesanddepartments,includingretail,arepoisedtomakemajorcontributionstoourprofitability.

Ourrecordoflateisnotanaccident.Whenthemarketsturnoptimisticandvolumereturns,wewillsetnewrecordsintheareaIlike—netaftertaxes.

NookiePookie*didpointoutonethingthewirehouseshavethatweshouldtrytobuy—theirP/Emultiples.

*Thisistheaffectionatewayheisaddressedbyhiswife,Pastrami.

DateJune9,1989ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject

Ihadadream.ThedreamwasthatIreturnedtothisworldasaselleroffaxmachinesandIhadBearStearnsasanaccount.Weareorderingfaxmachinesaroundhereliketheyarebeinggivenaway—andtheyarenot!

Wehadastudydoneoffaxmachinesandithasbeenprovenconclusivelythatthemachinesdonotobjecttodifferentpeopleusingthem.Thismeansthatitispossibleforpeopleanddepartmentstoshareintheuseoftheseinanimateobjects.

Beforeyouoryourassociatesrequestanothermachine,pleaseexploresharingormovingamachinewealreadyownclosertoyourarea.

ThisideaisagoodoneandIcansaythatbecauseitwasnotmine.ItcamefromNookie’swife*andsister-in-law.Commonsenseseemstoflowintheveinsofthatgroup.

*YourememberhiswifePastrami.SheishalfofthefamousMeeskeittwins—SalamiandPastrami.TheMeeskeittwinswereconsideredtheirculture’sanswertotheGabors.

DateJune15,1989ToALL245PARKAVE.,866U.N.PLAZAand2BROADWAY

EMPLOYEESFromAlanC.GreenbergCC

SubjectCALLINGTHEOPERATORINSTEADOFUSINGTHEDIRECTORY

ItzhakNanookPumpernickanaylianjustcompletedasurveytodeterminewhywecan’tanswerthemainnumber(212-272-2000)inlessthantworingsduringthepeakperiodsinaday.

Guesswhat!Nookiepointedoutthatover50%ofallcallsarecominginfromourownpeople(frominsidethebuilding).Insteadoflookingthenumberupinthedirectory,peoplesimplycalltheoperator.Letmeremindeveryonethatwhileitmayseemalittlemoreconvenienttocalltheoperator,itisalsoimpactingthewaywehandlethecustomersofthefirm.Weshouldbegivingthebestservicetopeoplewhomaygiveusbusiness.

Nookiesuggeststhatyoustartusingyourbrainandstopusingtheoperatorsasadirectory!

OuryearendedonJune30th.Iwouldsaythelastthreemonthswerebogey,par,eagle!Italwaysfeelsgoodtoendonanup-tickandJunewasapleasure.

Itwouldbeinappropriateformetocommentonthespecificprofitabilityofthequarter(smile,giggle)buttheresultswillbepublicknowledgeverysoon.Itstartedoffslow,butthenwegotlucky—thiswasour44thluckyquarterinarow!

Allofuswhoworkherecanfeeltheexcitementandspiritthatthisfirmisgenerating.Nookie*conductedaconfidentialsurveyatBearStearnsandconcludedthat,onascaleof1to10,themoraleofourpeopleisa12.

SomeofthedecisionswehavemadesinceOctober1987arereallypayingoff.Twoofthebestwere“hiringinsteadoffiring”andexpandingdepartmentsthatotherfirmswereclosingorcontracting.Thesedepartmentsareorareonthevergeofmakingmajorcontributions!

Thepastyearonanabsolutebasiswasgreat,butonarelativebasisitwasspectacular.Ifwesticktothefundamentals(mynextsixmemoswillcoverthatsubject)andkeepourmomentumgoing,wewillbreakallrecords.

IhavejustlearnedthatabankinsouthernAlabamahasbought2,200sharesofBearStearnscommonstock.Thesynergismthatthisassociationcouldgenerateismind-boggling.Howcouldyoubeanythingbutwildlyoptimisticonourfuture?

*Doyourememberbeingqueriedbyalittlemaninapolarbearcoat,galoshesandwearingapithhelmet?Youguessedit,thatwasNookieinhiscamouflageinterviewoutfit.

ToSr.ManagingDirectors,ManagingDirectors,AssociateDirectorsDateJuly17,1989FromAlanC.GreenbergCCSubject

Thein-housetelephoneoperatorsarebeingswampedbyourownassociatesdialingtheBearStearnsoperatorandaskingtobeconnectedtoanotherBearStearnsemployee.AllofushavebeengivenBearStearnsdirectoriesandweshoulddialthenumbersourselves.Thiswillfreeupouroperatorstodoconstructivethingslikeadequatelyservicingclientswhoaretryingtoreachourswitchboard.

Therearetworeasonsthatthedirectoriesarenotbeingused:1.Laziness

2.Notbeingabletoread

Nookiehassuggestedwaystohandlebothpossibilities.Thechiefoperatorwillkeeparecordofemployeeswhoneedconstanthelpfromtheoperators.Ifthosepeopleareliterate,theywillmeetwithme.

Forthoseassociateswhocannotread,wewillhavepeopleoneveryfloorwiththedesignationofH.I.*Ifsomeoneneedshelpinreadingthedirectory,alltheyhavetodoisyell“HI”andhelpwillarrive.Thiswillnotonlyimproveourservice,butcouldalsoincreasethesociallifeofthedumbbells.

Thisformatshouldkilleverycatinthealley.

*CodenameforHelperofIlliterates.

DateSEPTEMBER19,1989ToSENIORMANAGINGDIRECTORS,MANAGINGDIRECTORS,

ASSOCIATEDIRECTORSFromALANC.GREENBERGCCSubject

SometimeagoItzhakNanookPumpernickanaylianphysicallyrestrainedmefromreleasingamemoIhadwrittenabouttheincreaseofcareless,expensiveerrorsthatwerepoppingupthroughoutthefirm.Theerrorsranthegamutfromfailingtocancelgood-till-cancelorderstoenteringabuyorderwhenitshouldbeasellorder.Thepeopleinvolvedrepresentacrosssectionofthefirm—fromclerkstoseniormanagingdirectors.

Nookie’sreasoningwasthatinthepasteverytimewebroughtupthesubjectoferrorsandpenalties,ourpeoplebecamesonervousthaterrorsincreased.

Thestockmarkethasnotbeenextremelyactiveorfranticlately,buttheerrorsituationhasturnedcriticalduringthelastmonth.ThesizeandfrequencyoftheerrorswouldputadentintheU.S.Mint;soobviouslyitisaluxurywecannotafford.

Fromthisdayonwewillusenewtoolstocombatthisstupidity.Pleaseinformthepeopleyouworkwiththatrestitutionwillbethemildestpenalty.EveryerrorwillbeshowntotheExecutiveCommittee,andtheywilltakeappropriateaction.Wemuststopthisintrusionofourbottomline.

DateOCTOBER2,1989ToSENIORMANAGINGDIRECTORS,MANAGINGDIRECTORS,

ASSOCIATEDIRECTORSFromALANC.GREENBERGCCSubject

Wouldyoupay$72forsomethingyoucouldbuyfor$10?

Ourinternalauditorshavedocumented44instancesinthepastyearwheredepartmentspurchasedatotalof1,356rollsofFAXpaperdirectlyfromvendorsforpricesrangingfrom$10to$72perroll.Thepurchaseswereauthorizedby28differentpeople,includingeightSMDsandonememberoftheexecutivecommittee.

WehaveaPurchasingDepartment,delightedtodeliverFAXpapertoyoufor$7.35perroll.Whynotcallthem?

WeareofferinganincentivetoinduceyoutousePurchasing.Inthefuture,accountspayablewillnotpayanyinvoice(over$200)forequipmentorsupplieswithoutPurchasingDepartment’sapproval.IfPurchasingfindsitcouldhaveobtainedtheitematalowerprice,theSeniorManagingDirectororotherexecutivewhoauthorizedthepurchasewillbechargedpersonallyforthedifference.

YoucanobtainpromptadvancepricequotesfromPurchasingbycallingYvonneAbbott(x8774).

SomeofyoumayhavewonderedwhywehaveadepartmentcalledPurchasing.Thismemoshouldansweryourquestions.ThepurposeofthisdepartmentistopurchasesuppliesanditemsforallofusatBearStearns.Eitherusethatdepartmentorpay.Enoughisenough.

DateNovember9,1989ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject

Herewegoagain.Businessistough.TheDowJonesindexdroppedalmost200pointsamonthago.Firmsareannouncingmajorlayoffs.

Whatisourpostureatthistime?Yourexecutivecommitteefeelsweshouldbehiring,notfiring.Thisisthetimetopickupgreatpeople.Thispositionmayamazesomenewerassociates,butthoseofyouwhohavebeenexposedtoourculturewillnotbesurprisedbythismove.Beingacontrarianhasworkedforusinthepastanditwillworkagain.

Spreadtheword—wearehiring,notfiring.Theflipsideisthatourassociatesshouldberelievedandmaybethepeoplewhoworkherewillevenappreciatewhatagreatplacethisistobuildacareer.

Nookiepointsoutthatwehavebeenremissinnotblowingourownhornalittlelouder.Itamazeshimthatwehavelostpeopletofirmsthatexpandandthencontractlikeaccordions.BeingbashfulwascuteinSnowWhite;Nookieseesnothingwronginexposingourpeopletothehiringandfiringrecordsofourcompetitors.

Oneofthebiggestpayersofup-frontmoneytoregisteredrepresentativeswentoutoftheretailbusinessaftercausingusthreeyearsofgrief.Thiswasnotanisolatedincident.Wehavetohelpourpeoplelookbeyondtheirnoses.

DateDecember20,1989ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject

YoumayhavereceivedanoticethatthefixedincomeareainNewYorkwasholdinganauctiononDecember19thforthebenefitofAnnCarnes’grandchildren.AnnworksforusontheflooroftheNewYorkStockExchangeandhergrandchildrenlosttheirfatherashorttimeago.Theauctionanddonationsraisedabout$150,000!EverymemberofBearStearnsshouldfeelproudofthisoutpouringforanassociate.

YouhaveprobablyalsoheardthatMoodysjustraisedtheratingofourseniordebtandpreferredstock.CallingthisapositiveinthiscurrentWallStreetatmosphereisanunderstatement.

Whenyoucouplethoseeventswiththefactthatwearehiring,notfiring,maybeyoucanunderstandwhythemoraleatBearStearnsis,andshouldbe,ashighasitis.

Thisisaroughperiod,butyourExecutiveCommitteeisdeterminedtomakeitworktoouradvantage.Wearegoingtocomeoutofthisstrongerandwewillbecompetinginasmalleruniverse.

HaveagreatholidayandIhopeyouarelookingforwardto1990asmuchasIam.Weareontherighttrackandyouareattherightplace—spreadtheword.

DateJanuary22,1990ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject

OurearningsforthequarterandfirstsixmonthsofourfiscalyearwerereleasedlastThursday.TheywouldhavebeenmuchbetterifwewerenotthebiggestbuyerofFAXmachinesinthewesternworld.MyopinionofthequarterwasthatitwasO.K.Somedepartmentsthathavebeenbigcontributorsinthepasthitsometoughtimes,butmyconfidenceinthemisunshaken.Iamconvincedthatwearegoingtohaveaquarterwheneverydepartmentisplusandthenwewillreallygivetheshareholdersaverypleasantsurprise.Ourpotentialearningpowerisawesome!

ItzhakNanookPumpernickanaylianpointedouttomethatweallreceiveinformationorcorrespondenceinBearStearnsenvelopeswithawindow.Nookieinformedmethatitisnotagainstthelawtore-usethoseenvelopes.Justputthenewsalutationtotheleftofthewindowandbesurethatthewindowisfilledbytheblanksideofthematerialbeingsent.Whenitcomestosavingmoney,thoseEskimo-Iraniancrossbreedsaresomethingspecial.

Wemustcontinuetocutexpenses.Pleasehelpmekeepmyjob!

DateFebruary20,1990ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCC

SubjectFrequentFlyerBenefits

Asyouknow,ifyou’veevertriedtoreachanyonearoundhere,manyofthepeopleatBearStearnsdoanenormousamountoftraveling.

IhavebeenadvisedbyItzhakNanookPumpernickanaylianthatallofthistravelisproducingastaggeringamountoffrequentflyerpoints.HesuggestedtomethatperhapstheFirmcouldsaveanimmenseamountofmoneybyusingmileagepointsthatBearStearnspersonnelearnontravelforBearStearns,paidforbyBearStearns.

Therefore,IhaveinstructedtheTravelDepartmenttoreclaimalloftheaccruedmileageearnedonfirm-relatedbusinesstripsandusethemtowardsallfutureBearStearnsfirm-relatedbusinesstrips.

Fromthisdayon,claimyourfrequentflyermileageandturntheawardcertificatesintotheTravelDepartment.Theywilluseyourfreetickets(notupgradecertificates)foryourfuturetravels.Thisappliesnotonlytoallfuturetravel,butalsotoallpasttravel.

TheTravelDepartmentwilluseallawardcertificatesforfreetickets.Employeesarestillresponsibleformonitoringtheirownaccounts,asthiswillbedoneonanhonorbasis(withUncleAceobservingthehonorees).

Thisadditiontoourbottomlineshouldhavebeenpickeduplongago,butevenNookiecandroptheballonoccasion.

DateMarch14,1990ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject

Doyouhaveaproblemwithcolleaguesreturningtelephonecalls?Mydefinitionofaproblemisnotreturningyourcallsoraclient’scallpromptly,ornotatall.

Ifanassociatehascommittedeitherofthoseinsults,youhaveachoice.Youcanstewandcomplaintomembersofyourimmediatefamily,oryoucancallmeatonce.Youwillnotbebotheringme—onthecontrary,youwillmakemyday.Nothingmakesmehappierthanhelping(inaverygentleandkindway)awaywardemployeerelearnbasicgoodmanners.

Imustadmitthattheseeducationalmeetings,usuallyheldatteatimewithcrumpets,dotestmyself-controlbecauseItendtodislikepeoplewhotrytoruinthemoraleatBearStearnsandtrytoindirectlybankruptthisgoldengoose.

DateMarch23,1990ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject

Today’snewspaperdevotedalotofspacetothefactthatalmosteveryWallStreetfirmisdrasticallyreducingitsadvertisingbudget.Wearenotreducingourbudgetonepercentagepoint.Infact,ourTVadvertisingmayevenincreasefromitspresentbase,butinnocasewillitbelowered.

Thisaction,byyourExecutiveCommittee,willnotbeasurprisetotheassociateswhohavebeenatBearStearnsforseveralyears.Wehavetriedtobeconsistentineveryaction.BothHaimchinkelandNookiethinkitisveryimportantthatthetroopsknowwhattoexpect.Beingconsistentmaybedull,butitleadstoapleasantenvironmentandtohappycampers.

Ienjoyworkingforafirmthatishiring—notfiring—andinadditionthefirmisnowcommittedtocontinuingitswitty,elaborateandexpensiveadcampaignwhenotherfirmsareretrenching.Ihopeyoufeelthesame.

DateApril10,1990ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectors,

DepartmentHeadsFromAlanC.GreenbergCCSubject

Wehavebuiltourbusinessoncertainprinciplesandtherearetwoaxiomsthatmustberepeatedconstantlytoourassociates.

Wewillnotemploypeoplewhohideorburytrades,evenifthedelayistwenty-fourhours.Duringthepastyear,wehavehadtoterminateseveralpeopleforthisinfraction.OnepersonhadworkedasatraderatBearStearnsforovertenyears.

Wewillnotemploypeoplewhoeverdiscloseourorourclients’tradingactivitywithanybodywhoisnotauthorizedtohavesuchinformation.Disclosingthistounauthorizedpeople,whoworkeitherinsideoroutsideBearStearns,willleadtoimmediatedismissal.

Wehaveaveryliberalpolicyofrewarding,withcashandpromotions,personnelwhohelpusimprovethisfirm.Ifyouwanttobecomealotricher,justgiveusinformationthatwillaidusindiscoveringemployeeswhoviolateeitherofthetworulesofbehaviorthatIhavejustmentioned.Callyoursupervisorormewithanyofyoursuspicions.Youwillneverbecriticizedifyourinformationprovestobeinaccurate.Thefableabouttheboywhocried“wolf”doesnotfitwiththeBearStearnsphilosophy.Cry“wolf”ateveryopportunity.Ifyourdoubtsprovetobefalse,youwillstillbethanked.

Nookieaskedmetocommentaboutaparticularlyviciousrumor.Itisnottruethatwearefiringanyofourjetpilotsorcompany-employedchauffeurs.AnypilotorchauffeurwhoiscurrentlyemployedbyBearStearnshasajobthatissaferthanmine.TheserumorsaregettingsoridiculousthatitwouldnotsurprisemeifIheardthatwearecuttingourTVadvertisingbudget.

DateMay9,1990ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject

Whensummerarrivesitseemsthatabsenteeismincreases.Weneedeveryoneonthejobeverydayifwearegoingtokeepourmomentumgoing.

Nookieheardofmyconcernandhefeltthematterofsuchimportancethatheconsultedwithhisuncle,HaimchinkelMalintzAnaynikal.Theircollectivethoughtsarelistedbelow.PleasenotethatIdonotagreewithalloftheirsuggestions:

1.Sickness

NoEXCUSE...Wewillnolongeracceptyourdoctor’sstatementornoteasproof.Itisclearthatifyouarewellenoughtogettothedoctor’soffice,youarewellenoughtocometowork.

2.LeaveofAbsence(Foranoperation)Wearenolongerallowingthispractice.Wewishtodiscourageourassociatesfromexposinganypartoftheirbodytoaknife.Knivescutandcutscausebloodandthat’sbad.

Wehiredyouasyouareandtohaveanythingremovedwouldclearlymakeyoulessthanwebargainedfor.Therefore,anyonehavinganoperationriskstermination.

3.Death(Yourown)Thiswillcontinuetobeavalidexcuse,butwewillnowrequireatwo-weeknoticesincewewillhavetoreplaceyou.

IhavetakenthelibertyofreprintingamemothatwasissuedonJuly17,1989.Itseemslikesomeofourassociatesarerevertingbacktobadhabitsthatcouldbecorrectediftheyreadthereprint.

“Thein-housetelephoneoperatorsarebeingswampedbyourownassociatesdialingtheBearStearnsoperatorandaskingtobeconnectedtoanotherBearStearnsemployee.AllofushavebeengivenBearStearnsdirectoriesandweshoulddialthenumbersourselves.Thiswillfreeupouroperatorstodoconstructivethingslikeadequatelyservicingclientswhoaretryingtoreachourswitchboard.

Therearetworeasonsthatthedirectoriesarenotbeingused:

1.Laziness

2.Notbeingabletoread

Nookiehassuggestedwaystohandlebothpossibilities.Thechiefoperatorwillkeeparecordofemployeeswhoneedconstanthelpfromtheoperators.Ifthosepeopleareliterate,theywillmeetwithme.

Forthoseassociateswhocannotread,wewillhavepeopleoneveryfloorwiththedesignationofH.I.*Ifsomeoneneedshelpinreadingthedirectory,alltheyhavetodoisyell“HI”andhelpwillarrive.Thiswillnotonlyimproveourservice,butcouldalsoincreasethesociallifeofthedumbbells.

Thisformatshouldkilleverycatinthealley.”

*CodenameforHelperofIlliterates.

DateJuly10,1990ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject

Anotheryearhasended.Ourresultswillbepublicknowledgeinafewweeksandwecanallbeproudoflastyearformanyreasons—includingthefactthatwearestillhere,strongerthanever.

Icanguaranteeverylittleaboutthefuture,butthereisonethingyoucanbeton.Yourexecutivecommitteeisgoingtospendalotofthenewyearstressingfundamentals.Idonotthinkoursuccesshasbeenduetoluck(althoughallofuswelcomeandappreciategoodluck).

Footballteamsthatareingreatconditionandcanblockandtackle,win.Wearegoingtowinbecauseweconstantlykeepinmindcertainaxiomssuchas:

1).Itisourjobtoinspirereceptionistsandsecretariestosmileandsparklewhenspeakingtoorseeingclients.ThetoppeopleatBearStearnssetanexamplebyreturningallcallspromptly.

2).Avoidtheherdmentality.3).Controlexpenses—evenmoresoingoodtimes.4).EverydepartmentshouldbestaffedwiththebestandthebrightestbecauseIcannottellyouwhichareaofourbusinesswillbe“hot”sixmonthsfromnow.

5).Reduceexpenses.6).Wearegoingtosticktothethingswethinkweknowsomethingabout.Iamtoooldtostartsellingcars,costumejewelryorlifeinsurance.

7).Conceitandcomplacencyaredangerous,particularlyinourlineofwork.IfIeverfeelthatthepeopleatBearStearnsstartthinkingtheirbodyodorisperfumeandIcannotconvincethemotherwise—Iwillsellmystock.

8).Ilikepeoplewhoconducttheirbusiness“neatandclean.”Ifyoudonotunderstandthat,callme.

9).Cutexpenses.10).Wemustalwaysbeonguardindealingwithnewrelationships,andour

associatesmustalwaysbeawarethatwearewatchingtheshopandthematalltimes.Thebestprotectionagainstin-housefraudisformanagementtohaveagreatrapportwithassociatesbigandsmall.Theywillseeaberrationalbehaviorinaco-workerfouryearsbeforeinternalauditspotsthedeception.

TheseguidelinesarenotexactlytheTenCommandments,buttheydidcomeviaHaimchinkelMalintzAnaynikal(norelationtoMoses)andwearegoingtolivebythem.Idonotbelieveinfixingsomethingthatisnotbroken.

Date:September26,1990To:SR.MANAGINGDIRECTORS,MANAGINGDIRECTORSAND

ASSOCIATEDIRECTORSFrom:ALANC.GREENBERG

ThereisnoquestioninmymindthatpeoplewithnoaffiliationwithBearStearnshavebeencallingemployeesofBearStearnsandmisrepresentingthemselvesasco-workers.Theseimpersonatorshaverequestedconfidentialinformationandhavesaid“donotcallmeback,becauseIamverybusy,butIwillcallyou.”Theydocallthelow-levelassociatesbackandidentifythemselvesasanimportantBearStearnsSr.ManagingDirectorandtrytogetinformationthatnoonebutafewBearStearnspeopleshouldpossess.

Weareofcoursegoingafterthefirmsthesecrumbsworkforwitheverylegaltoolwecanmuster,butwemustdomore.Allofusmustimpressoneverybodyweworkwithtobewareof“donotcallme,Iwillcallyou”inquiries.Iftheygetoneofthosecalls,andreportitatonce,theywillsimultaneouslybeshoweredwithmoney(cash,loot,lucre,greenstuff).Letpeopleupanddownthelineseethismemo.

Weareinourownwarwithpeoplewhodonotminddestroyingourcustomerconfidentialitytoachievetheirownpersonalgoals.HaimchinkelMalintzAnaynikalpointedouttomethathehasmetsomeRussianrouletteplayersthathavewonsixormoreboutsinarow,buthehasnevermetaone-timeloseratthatsport.Idonotlikesportswhereifyouare11for11andthenloseone,youareoutofbusiness.ThatiswhereIfeelwearenow—wemustwinthisone.

DATE:October3,1990TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.GreenbergRE:1990AnnualReport

Our1990AnnualReportisnowout,andwhilethefinancialresultshavebeenpublicforsometime,theystillmakegoodreading.Whatreallymakesthereportnoteworthy,however,iswhatwedonotmention:nolayoffs,nodiscontinuedbusinesses,nowrite-offsofbridgeloansordoubleleveragingofshort-termborrowings.Insteadweareabletostressthesafetyandstrengthofourbalancesheetandofourfirm.Inthiseraofuncertaintythisputsusinauniquepositionnotonlywithinthebrokerageindustry,butwithintheentirefinancialcommunity.

ItmayalsointerestyouthatsinceAugust2,1990wehavepurchased5,400,000sharesofBearStearnsandretiredthem.YourExecutiveCommitteebelievesinBearStearns.

Iencourageyoutogetacopyofthereport,readit,andseethatpeopleinyourareaseeit.Ifurtherencourageyoutoshareitwithyourcustomersandmakethemawarethatnow,morethanever,theycannotaffordnottodobusinesswithBearStearns.

DATE:October17,1990TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg

Youarecorrect.Thisisonetoughperiod,andinmy41½yearsinWallStreetIhaveseenafew.Infact,thingsaresobad,inalmosteveryarea,thatHaimchinkelMalintzAnaynikalmadeanunexpectedvisit(hestressedthatthiswasnoreflectionontheadvicewehavebeengettingfromhisnephew,ItzhakNanookPumpernickanaylian).UncleChinkeljustfeltthathemightpointoutsomefactorsthatonlyexperiencecanteachyou.

1.Thebearmarketwillendanditcanendquickly.2.Abellwillnotringtoprepareyouforthegoodtimes.Rememberhowgreattheworldlookedthreemonthsago?Themarketcanreverseitspresentcoursejustasdramatically.

3.Thismarketgivesallofusachancetodemonstratewhatwearemadeof.Somepeoplegoallthroughlifeandnevergetachancetodemonstratetheirabilitytolead.Youarefortunate!Youcanhelpthepeopleyouworkwithtogetthroughthisbybeingaleader.Nowisthetimeforrealleaderstostepup.

4.Ifyouaregoingtostandtall,keepafewthingsinperspective.ThisisnothingnexttoAuschwitz,BuchenwaldorVietnam.

5.YouareworkingforprobablythemostliquidfirminWallStreetandourfirm,onarelativebasis,looksstrongereverydayandwewillkeepitthatway.

6.HaimchinkelMalintzAnaynikalpointedoutthatsomepeopleforethnicreasonsmaygetthroughthisperiodeasierthanothers.Forexample,Ihaveneverfeltbetterorsleptsounder,butIdohaveanadvantageoversomeofmypeersatotherfirms—Iamthebeneficiaryof5,000yearsofpersecution.

Thismarketwillnotgetmedown.Itisjustaminorchallenge.

DATE:December6,1990TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg

Itisofficial!TheStrategicPlanningCommitteechairedbyBobbySteinbergandtheForwardPlanningCommitteechairedbyBarryCohenhaveinvestigatedtheoutlookfortheRiskArbitragebusinessandhavecometoaconclusion.Wearegoingtoexpandouractivityinriskarbitrage.ThereportbythesetwoknowledgeableandunbiasedgentlemenconfirmedwhatyourExecutiveCommitteehadfeltallthetime.

Thisinquiryintotheeconomicfeasibilityofriskarbitragewaspromptedbythefactthatseveralmajorinvestmentbankingfirmsseemtobelessthanpositiveaboutthefutureofthisactivity.YourExecutiveCommitteewouldhavebeennegligentifitdidnotthoroughlyanddeeplystudythisancient,arcaneandmysteriousart.

ThecompletereportsubmittedtoyourExecutiveCommitteeisbelow:

“AuContraire”

DATE:January10,1991TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg

HaimchinkelMalintzAnaynikaldroppedbytheotherdayandsuggestedtomethatitwasagoodtimetoreviewsomefundamentals.Pursuanttohiswish,youwillbereceivingsomesubtlememosfrommeinthefuture,butIcanassureyouthatmypresentationswillbemoredelicatethaninthepastbecausethedirectapproachdidnotseemtowork.

Manyyearsago,yourExecutiveCommitteedecidedthatallpurchasesofservicesweretobecentralizedtohelpusmaximizeourbuyingpower.Asanexample:anythingneededintheofficehadtogothroughJimLang’sarea.AnyneedforalawyerhadtobepickedbyDaveGlaserorAlanSchwartz.AnythingneededfortherepairandmaintenanceofthetoiletshadtobeclearedwithAlanGreenberg.

Thereisnosuchthingasan“approved”list.Thefactthatsomeplumberdidamarvelousjobforusinthepastdoesnotmeanthatanassociatecantakeituponhimselftoengagethatpersonfornewwork.Ifyouneedaplumber,youmustcallmeandIwilldecidewhogetsthenextassignment.

Irepeat,thereisno“approved”listthatpeopleatBearStearnscaninitiateacallto.Ifyouneedtheservicesofanaccountant,lawyer,plumber,printer,etc.,youmustspeaktothepersonthatyourExecutiveCommitteehaspicked.Youcannotmakethechoice.

Ifthismemoisnotclear,pleasecallmedirectlyandIwilltrytoclearupyourconfusion.

Youhavereceivedseveralnoticesabouttheimportantmeetingthatisbeingheldtomorrowafternoonintheauditoriumat4:15p.m.

IthinkanybodywithadropofJewishbloodshouldshowup.Yourheritagewillbetakenintoaccountifyoumakeapledge.Forexample,ifyouareonlyhalfJewish,youonlyhavetopayhalfofthepledge.IfyouareaquarterJewish,youonlyhavetopayaquarterofthepledge.

Israelisinafightforitseconomiclife,alltheywantfromusismoney.

IfyouwereintheBearStearnsauditoriumonTuesdayafternoon,youparticipatedinathrillingandexhilaratingexperience.

Inadditiontogettingpeopletopaytheiroldpledges,U.J.A.Federation’sOperationExodusreceived$650,000innewmoneyfromtheBearStearnspeople.

Thegiftsrangedfrom$25.00uptothethousands.EverygiftwasappreciatedandIhaveneverbeenprouderofmyassociatesthanIwasyesterday.Thankyouforsettinganexamplethatotherfirmscanjustdreamaboutemulating.BearStearnshasareputationofgivingtoallcausesthatiswelldeserved.

Someofthegiftshavecomefrompeopleofverydifferentreligiousandethnicbackgrounds.Iwishtogivethosepeopleaspecialthanks.Itwouldbegreatif100%ofourfellowworkersofacertainreligiouspersuasionkickedin.Theneedisurgentandthecauseisunique.

Letussetarecordthatcanonlybetied—100%participationbythosewithatouchormoreofJewishblood,frommillicarons*topurebreds.

*Nookie’sdefinitionforthosewhoare.0001%tainted:theycanpledge$1,000,000andaccordingtotherulestheyonlyhavetopay$1.00.

DATE:February8,1991TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg

Whosaidwearenotflexible?IthasbeenbroughttotheattentionofyourExecutiveCommitteethatsomeofournewhireeshavetroubleadjustingtooneaspectofourculture.Iamreferringtoourrelentlessquesttocutandwatchexpenses,exemplifiedbyourrefusaltobuypaperclipsandrubberbands.

Weshouldhaveanticipatedthiscultureshockbecausewhenapersonjoinsusfromafirmthathasbeenlosingbillions,theyshouldfeelthatwedothingsalittledifferentlythanthepack;butwedonotwantthemtogetthebends.

Fromthisdateforward,theExecutiveCommitteeismakingthefollowingconcession:allnewassociateswillreceiveagiftwhentheyjoinBearStearns.Thisgiftwillbekindofacombinationofacarepackageandawelcomewagonextravaganza.Thepersonneldepartmenthasbeentoldtogivethesenewfolksapaperbagwithaboxofpaperclipsandtwentyrubberbands.

Pleasedonotthinkforaminutethatthisrepresentsachangeinourbasicphilosophy.Infact,sincebusinessisboomingwewillonceagainemphasizecostcontrol.Rememberthatgreatpokerplayersleavenothingonthetablewhentheyholdgoodhands.

DATE:February27,1991TO:SeniorManagingDirectors,andOtherInterestedPartiesFROM:AlanC.Greenberg

AnartistinHawaiibythenameofRonKentreadaboutourcharitableactivitiesanddonatedabeautifulbowltoBearStearns.Heaskedthatwehavealotteryforthisbowl,withtheproceedsgoingdirectlytoOperationExodus.

Thebowlisondisplayonthesecondfloorof245ParkAvenueontheaisletotheleftofwhereIsit,andinfrontofthebellinthecenterofthetradingfloor.Thiscircularbowlishandmadeofwoodandmeasuresapproximately20˝by9˝.BecauseofthespecialHawaiianwooditismadefrom,thecolorofthebowlcontainsmanydifferentshadesofbrownwithasmoothfinishedtexture.

Ifyouwouldliketobuyalotteryticket,youcanspeaktoMaureenorLisaonextension4608.Theticketswillcost$25apiece.

Thebowlisworth$5,000andwearegoingtolimitthenumberofticketssoldto10,000(mypervertedsenseofhumorcouldnotpassupthatopportunity).Wewillsellonly100tickets.

DATE:March28,1991TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg

OurthirdquarterendedonMarch28th.Everybodywhoworkshereandisnotcomatoseknowswearerolling!

TheresolutionoftheJardinedisputeisaplusforalotofreasons.ThesettlementwasfairandalotofpeoplecannowgobacktoworkingfulltimeattheirjobsatBearStearns.

OurdisputewithJardineisoverwith.IwillneversayabadwordaboutJardineoritsofficers.IfIhearofaBearStearnsassociatespeakingillofJardine,Iwillbedisappointed.Infact,mydisappointmentwillonlybetemperedbyapersonalmeetingwiththeloudmouth.WehadadifferencewithJardineanditishistory.Thereisnoupsideinknockinganyone.

Wheneverthingsgotoowell,Ibecomeverysuspicious.Thisisoneofthoseperiods.Keepyourguardup!Nowisthetimetobecareful.Nowisthetimethedopesgetknockedoff.

Remembertherulesandrememberourculture.Whenbusinessisgood,webecomecarefulwithourcapitalandtrytocutexpenses.

1991–1995

Weenteredthedecadeofthe’90swithacertaindegreeofapprehension.Althoughwehadsuccessfullyemergedfromthreeverydifficultyearsinthestrongestfinancialpositioninourhistory,noonecouldbesurewhatthenewdecadewouldbring.Webelievedwewerewellpositionedtoflourishifthe-marketscontinuedtheirupwardcourse,whichtheydid.BearStearns’momentumsurgedbeyondanyofourexpectations.Wereportedtwoconsecutiverecordyearsinfiscal1992and1993.Todayourreturnonequityisthehighestintheindustry.

Thesememosreflectanimportantperiodinthehistoryofthefirm.Overthepastthreeyears,BearStearnshasgrowndramatically.Ouremployeecounthassurpassed7,500andourcapitalbasestandsat$7.1billion.Attheendoffiscal1991thefirmemployed5,600peopleandthecapitalbasewas$1.8billion.

TheseniormanagementofBearStearnshasbeenverycarefultocontrolthegrowththroughacontinuedfocusoncertainfundamentalprinciples.Weareallveryproudthatthoseprincipleshaveenabledustocreateoneofthemostprofitableandentrepreneurialfirmsinthesecuritiesindustry.

DATE:April17,1991TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg

TheearningsforthequarterendingMarch31,1991arenowhistory,buttheydonotcomeclosetodescribingthepastthreemonths.Ihavebeenhere42yearsandIcannotrecallanyperiodthatcomesclosetotheexcitementandpleasurethatthose90dayshavegivenme.Ihopethatyouhaveexperiencedthesamefeelingofexhilaration.

Itisuptoeveryoneofustokeepourmomentumgoing,butwemustalsokeepallofourcollectivefeetfirmlyontheground.

DuringtheJardinetrial,amemoofminedatedJuly1987wasreadintotherecord.Thesummerof1987wasanothertimeofeuphoriaforBearStearns(butnothinglikethis).Thegistofthememowasthatwhenthingsaretoogoodsomethingusuallyhitsyourightinthehead.

ThedifferencebetweenusandtherestoftheworldisthatwehadthebenefitofexposuretoHaimchinkelMalintzAnaynikalin1987andnowItzhakNanookPumpernickanaylian.Thesetwoluminarieshavedonetheirbesttoremindusoftheimportanceofneverconfusingbodyodorwithperfume.

WemuststicktotheaxiomsthathaveguidedBearStearnsthroughsomeplentytoughyears.Ifyouknowofsomebetterrules,pleaseletmeknow.Ifnot,yourExecutiveCommitteeisgoingtoenforcetheteachingswithavengeance.Welikethingsthatwork—THEYWORK.

DATE:June21,1991TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg

Ourfiscalyeariscomingtoacloseandtosaytheleastitwasexciting.Westartedoffslow,butthelastsixmonthsshowedourpotentialearningpower.

YourexecutivecommitteehasnosurprisesinstorefortheNewYear.TheprosperityinWallSt.hascausedsomeofourcompetitorstostartreachingforbusiness,andonceagainwewilldeclinetoparticipate.Thoseofyouwhohavebeenhereforawhileknowthatwewilltaketremendousrisksifthefeejustifiestheexposure.

Wehaveareputationforwatchingexpensesandthatwillnotchange.NookiePookiepointedoutwhathappenedtoEgypt.*ThatwillnothappenatBearStearns.

OnJuly1,ourNewYearstarts.Thescoreiszerotozero.Iwouldlovetoseeusscorchthefrontnine.Historicallythefirstsixmonthsofourfiscalyeararedifficult.Letusmakethisyeardifferent.IamanoldmanandIdonotlikepressure.

*7,000yearsagotheEgyptianswerebuildingpyramidsandtheirwomenwereridinginchariots,andgettingmanicuresandpedicures(weknowthatfromthepaintingsinthetombs).Atthatsametime,therestoftheworldwaslivingincavesandchasingtheirnextmeal.TheEgyptiancivilizationcontinuedtoadvancefor5,000yearsandthentheystartedgettingcarelesswithexpenses.Theiroverheadgotoutofcontrolandthatwasthat.Theyhavebeentryingtorecoverfor2,000years.

DATE:August13,1991TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFrom:AlanC.Greenberg

Wehavebeenlucky!

During the roaring carefree period ofWall Street’s latest excesses not one ofBearStearns’seniormanagingdirectorshasevenreceivedasubpoenamuchlessbeenchargedoraccusedofinfractionsrelatingtoinsidertrading,stockparking,manipulationorotherviolationsofthistype.Yes,wehavestressedtherulesofconduct andbehavior as codifiedbyHaimchinkelMalintzAnaynikal.Yes,wehavehadthebenefitsofNookie’son-spotinspectionssinceUncleChaimretired,butwehavealsobeenlucky.

Someof our associates below the seniormanagingdirector level have strayedandtheyhavepaiddearly,butthusfartopmanagementhasbeensqueakyclean.

Wemustmakeaconcertedefforttokeepitthatway.Idonotwanttocountonbeinglucky.Allofusmusttalktoourco-workersaboutourrespectfortherules.Allofusmustemphasizetoourco-workershowtheyarebeingwatchedbyusatalltimes(fortheirowngood)andhowsevereourpenaltiesareforinfractions.Ithink it was Mark Twain who said, “fish stink from the head.” The seniormanaging directorsmust set examples that leave no doubt about howwe feelaboutmoralityandobservanceofrules—bigorsmall.

I do not know of a firm of our size that comes close to our record of seniormanagement compliance. We can all be proud, but we must not becomecomplacent.Wemustnotcountonluck.

DATE:August14,1991TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg

Two important milestones were reached last week. McDonald’s sold their70thbillionhamburgerandBearStearnsboughttheir10,000thFAXmachine.

Idohavesomesadnews to report.TheFAXmachinesalespersonwhohasserviced theBearStearns account has retired.He is burnt out—he is 33yearsold. He has purchased Donald Trump’s yacht, and the overworked soul justwantstocruiseandtakeiteasyforawhile.

Nookiereadthisandthinksthereisamoralhiddensomewherebetweenthelines.Canyoufindit?

Whenwe cut expenseswe have a direct, equal and positive impact on ourbottomline.Ifweforgetthisfactwewillbeamemberofthe“LosersClub”andstupid.Thatisoneclubthatwearenotjoining.

Wearehavingaproblemgettingapointacross.Nobodybelowthe levelofSeniorManagingDirectorisallowedtosendanylettersorsignedmaterialoutofBear Stearns unless the sender has shown the epistle to a Senior ManagingDirectorandreceivedhisapproval.

Fromthisdateforwardanypersonwhoviolatesthissimplerulewillreceiveaveryquicksimplefine.Enoughisenough—wehavetriedbeingMr.NiceGuy—itdidnotwork.

Allofus receivevariousprintouts andotherprintedmatter everyday fromBearStearns.Ifyoudonotneedtheinformationoriftheinformationshouldnotbeforyou,callPatRipley212-272-3271.Patwillthendotwothings.Shewillstop the useless flow and also target you for a reward. If you do not cut offinformationyoushouldnotbeexposedto,youwillbefined.

Readthismemocarefully,andbesurethepeopleyouworkwithunderstandourpolicy.

DATE:NOVEMBER11,1991TO:SENIORMANAGINGDIRECTORS,MANAGINGDIRECTORS,

ASSOCIATEDIRECTORSFROM:ALANC.GREENBERG

Ourbusinessisgreat!AlmosteverydepartmentiscontributingandmaybethepredictionImadeattheannualmeetingiswithinsight.

TherearethreethingsIknowforsurewhenweareinoneofthesecycles:

1)Thisperiodofeuphoriawillnotlastforever(neitherIoranyotherhumancanaccuratelypredicttheend).

2)Humanstendtogetsloppywhenmakingmoneyiseasy.

3)BearStearnswillnotgetcaughtupinthehystericaloptimismandthepeopleatBearStearnswillnotgetcarelessorconceited.

Itisthejobofyourexecutivecommitteetokeepallofourfeetonthefloor.ItisthejobofyourExecutiveCommitteetoseethatwemaximizetheopportunitiesthatwearebeinghanded.

Remember,winningpokerplayerssqueezeeverynickeloutofgoodhands,andtheydonottipcocktailwaitresses$100—foolsdo!

Rememberthesimpleaxiomsthathavehelpedusingoodtimesandbad.Havingagreatyearisnotgoingtochangeourculture!

–Ifwecontrolexpenses.–Ifwediligentlyevaluaterisks.–Ifwehirecarefully.–Ifwerunourbusinessaccordingtothehighestlevelofmorality.–Ifwetreatourassociatesthewaywewouldliketobetreated.

–Ifwereturnalltelephonecallsquicklyandseethatthepeoplearoundustreattheclientswithcare.–Ifwejustusegoodcommonsensewecanturnagreatyearintoafabulousone.

DATE:November14,1991TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg

Theunsignedletterstapledtothismemowasreceivedbymeafewdaysago.

Thepageabout“travelrestrictions”seemsalittletough,butIambynatureasoftie.Iwillbemakingsomerandomcallsinthenextfewdaystotrytogetaconsensusaboutwhetherweshouldincorporateanyofthesesuggestionsintoourculture.

November7,1991

Mr.AlanC.GreenbergChairmanandChiefExecutiveOfficerBear,Stearns&Co.Inc.245ParkAvenueNewYork,N.Y.10167

DearMr.Greenberg:

WhilecallingonyourWhippanyofficelastmonth,Icameacrossacopyofyourbooklet,“MemosfromtheChairmanVolumeII,”whichisgreat!

Havingbeenforcedtoacceptearlyretirementfromanailinginvestmentbankingfirmlastyear,yourprescriptionsforcost-consciousnessaremostappropriateregardlessoftheeconomicclimate.MyformerfirmwasguiltyofmostoftheabusesNookieistryingtoeliminate.

IthoughtthatyoumaywanttopassalongtheenclosedmemotoNookieasitmaygivehimfoodforthoughtinhisongoingquesttoreduceexpensesandcontributetoBearStearns’viability.

Keepupthegoodwork!

Sincerely,

AnadmirerofyourmanagementstylewhodidnothavethegoodfortunetoworkatB.S.andisnowselling“smallplasticroses.”

TO:ALLEMPLOYEES

RE:TRAVELRESTRICTIONS

Due to budget constraints, the following corporate policies are announcedregarding employees traveling on official business. These policies areeffectiveimmediately.

TRANSPORTATION

Hitchhiking in lieu of commercial transport is strictly encouraged.Luminescent safety vests will be issued to all employees prior to theirdeparture on company business trips. Bus transportation will be usedwhenever possible.Airline ticketswill be authorized for purchase only inextremecircumstances,andthelowestfareswillbeused.If,forexample,ameetingisscheduledinSeattle,butalowerfarecanbeobtainedbytravelingtoDetroit,thentraveltoDetroitwillbesubstitutedfortraveltoSeattle.

LODGING

All employees are encouraged to stay with relatives or friends while oncompany business. If weather permits, public areas such as parks andparking lots should be used for temporary lodging sites. Bridges mayprovideshelterinperiodsofinclementweather.

Expendituresformealswillbelimitedtotheabsoluteminimum.Itshouldbenoted that certain grocery chains, such as General Nutrition Centers andPiggly Wiggly stores, often provide free samples of promotional items.Entire meals can often be obtained in this manner. Travelers should also

become familiar with indigenous roots, berries and other protein sourcesavailableattheirdestination.Ifrestaurantsmustbeutilized,travelersshouldseek establishments offering “all you can eat” salad bars. This will beespecially cost-effective to employees traveling together, as a single platecanbeusedtofeedtheentiregroup.Employeesarealsoencouragedtobringtheir own foodwhile on company business. Cans of tuna fish, Spam andBeefaroni can be conveniently consumed at your leisure, without thenecessarybotherofheatingorothercostlypreparation.

ENTERTAINMENT

Entertainmentwhileontravelisstrictlydiscouraged.Ifsuchextravagancesare required on customer contacts, the customer should be encouraged to“pick up the tab.” Such action will save the company money, and alsoconvince the customer that we are concerned about spending money onprovidingagoodproduct,notonuselessfrivolities.Thehospitalityprovidedto our customers who visit our facility shall also be tasteful, yet cost-effective.Inlieuofextravagantdinners,apicnicbenchwillbeplacedintheparkinglotsnearthedumpsterandagardenhosewillbemadeavailablesothatliquidrefreshmentscanbeprovidedforourguests.

MISCELLANEOUS

Allemployeesareencouragedtoemployinnovativetechniquesinourteameffort to save corporate dollars. One enterprising individual has alreadysuggestedthatmoneycouldberaisedduringairport layoverperiodswhichcouldbeusedtodefraytravelcosts.Insupportofthisidea,RedCapswillbeissued to all employees prior to departure so that they may earn tips byhelpingothertravelerswiththeirluggageduringsuchperiods.Smallplasticroseswillalsobemadeavailabletoemployeessothatsalesmaybemadeastimepermits.

DATE:November21,1991TO:AllTradersFROM:AlanC.GreenbergCC:

In thepast I havewrittenyouabouthiding tradesormismarkingpositions.Unfortunately,it’snecessarytorepeatthememo.

We were recently forced to fire a trader for mismarking positions in histrading account to conceal a loss. Let there be no misunderstanding: this isstealingandwillnotbetolerated.Ifyouhaveaproblemposition,discussitwiththeheadofyourdesk.Absolutioncanbegrantedforlosingmoneybutneverforlyingaboutit.

Allmanagersareresponsibleformakingsurethatthisisunderstoodbyalloftheirtradersandfordeliveringthemessagetoallfutureemployees.

DATE:December5,1991TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg

Nookie remindedmeof something that shouldbeautomatic,butwhenwegetbusypeopletendtogetsloppy.Sinceahugepercentofourbusinessisdoneoverthetelephone,telephoneetiquetteisveryimportant.

When a phone rings, it should be answered promptly—if you keep clientswaiting,theywillandprobablyshouldcallourcompetition.Ifyouansweracallanditisnotforyou,besurethatyourassociateacknowledgesyourbringingthecalltotheirattentionbyraisingtheirhand—eyecontactmeansnothing.

Ifyouseeacallonholdthatseemstobeblinkingforaperiodoftime,jumponandseeifyoucanhelpthepersonorremindyourco-workerthatheorshehasacallwaiting.

There is nothing revolutionary about these suggestions; suggestions made byHaimchinkelMalintzAnaynikal and his nephewNookie always seem simple,but so isgravity.LookhowmuchpublicityHymieNewtonmilkedoutof thatapplething.

DATE:January15,1992TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg

BearStearns just announced themostprofitablequarter in itshistory. Industryconditions during the last three months were excellent, but my guess is weoutperformedourpeers.

HaimchinkelMalintzAnaynikalandNookieovertheyearshaveencourageduswhenthingslookedbleakand,conversely,theyhavewarneduswhenthingstendtogetgiddy.Weareinaperiodnowthatwillcausethestupidtogetcarelessandoverconfident,andtheresultsaretotallypredictable—financialcatastrophe.

TheExecutiveCommitteeofBearStearns iscommitted to running the firm inthe samedull, conservative, boringmanner that seems towork. It is our hopethatthepeoplewhoworkwithuskeeptheirfeetonthegroundandtheirheadslevel.

Almosteveryindustryinthiscountryishavingfinancialproblems.Itistruewepaid our dues by surviving and even prospering during some tough years forWallStreet,butdonotconfuseluckwithbrains.Wemust,asafirmandIhopeindividually, make the most of this euphoric period but give very little backwhenthecurtainfalls.Icanpromiseyouonething—thispicnicwillnotlast.

BECAREFUL,BESMART,BEASURVIVOR!

DATE:January21,1992TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg

IjustcheckedwithHaimchinkelMalintzAnaynikalonaphilosophicalissuethathasbeenbotheringme.Thequestionistwo-pronged:“Shouldreallyrichpeopleanswer theirowntelephonesand, if theyareoccupiedwhen thecallcomes in,does an immediate return of the call by the millionaire show weakness or adearthofcommitteemeetingsoralackofattentiontostrategicplanning?”

HaimchinkelMalintzAnaynikalhadNookiedosome research.The resultsareconclusiveandirrefutable.ThereisnothingintheBible,KoranorTalmudthatprohibitsorencouragestheslowansweringofadistantyodelorthemelodioussquawkofaram’shorn(therewerenotelephonesatthetimethosebooksweregivenorwritten).Inaddition,therearenogovernmentallawsthatNookiecouldfind (except for some new and old countries in Eastern Europe) that prohibitansweringyourowntelephoneorquicklyreturningacall.Justthoughtthatthesequestionsmayhavecrossedyourmindastheydidmine.

Thereisonemoreitemthatbearsthinkingabout.Thisisthetimetoreallykeepaneyeonexpenses.Whenyouareinvolvedinamonthlikethecurrentone,itiseasy togetsloppy.That iswhatmakesusdifferent—wewatchexpenseswhenbusinessisgreat!Ifyouturnoutthelightswhenyouleaveyouroffice,youwillsave a few pennies, but the example can save the firm bigmoney. Fish stinkfromthehead!Thetoppeoplesetthetonefortherankandfile.Setanexamplethatwillmakemegiggleandgurgle.

DATE:March17,1992TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg

It ismy sad duty to report the death ofChristianK.Nelson at the age of 98.ChristianNelson,seventy-oneyearsago,dippedaslaboficecreaminchocolateandcalleditaneskimopie.

ThislosswastakenparticularlyhardbyHaimchinkelMalintzAnaynikalandhisnephew,Nookie.Becauseasyouknow,theirmostreveredholidayisEskimoPieDay.*Itis,tothem,thecombinationofChristmasandYomKippur.

Mr.ChristianNelsonwasnotonlyaninventor;hewasalsomanyyearsaheadofhistimeintheareaofhumanrelations.Despitehisname,heallowedpeopleofallfaithstobuyandeathisproduct.HewasatruevisionaryandtheholidaythathehelpedcreatewillbeobservedforeverbypeopleofIrakimoheritage.**

*SeememodatedOctober4,1988.

**TheissueofanIranianandEskimounion.

DATE:March30,1992TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg

Afewdaysago,theNewYorkassociatesofBearStearnsat245ParkweregiventhechancetohavetheireyesexaminedbytheGlaucomaFoundation.

Herearetheresults.563peopleparticipated.Twenty-sixhadpotentialproblems,two had serious problems and seven had glaucoma requiring immediateattention. These statistics are scary.We are going to see that every person ineveryofficeofBearStearnshasachancetogetthisexamination.Glaucomaisaterrifyingdisease.Pleaseseethatthepeopleinyourareatakeadvantageofthisopportunity.

Good health is important to all of us and to the bottom line of Bear Stearns.Illnessisexpensive!

Itisworthrepeatingthatourpolicyonsmokingisclear.NosmokinganywhereatBearStearnsexceptinyourownofficewiththedoorclosed.Therewillbenoexceptions—unlessyouhaveworkedatBearStearnsmorethan43years.

The front page of the Business section of Sunday’s NewYork Times had anarticleaboutbrokerage stocks.Thearticle states, “thehistoryofWallStreet isthat surprisingly little filters through to the shareholderswhen times aregood.Thebossesraisetheirpay,perksseemtomultiply,andlotsofpeoplearehired.Itwassupposedtobedifferentthistime,butifthenewSalomonisactingthisway,whataboutbrokersnotinthespotlight?”

Obviously,thewriterisnotfamiliarwithBearStearns!

DATE:April23,1992TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg

Bear Stearns is now being billed directly for electricity. Leaving lights ormachinesonwhennotnecessaryisburningmoney.

It will probably surprise you that I think burning money is stupid, and inaddition,itisadirecthittoourbottomline.Someexpensesaretoughtocutbutsaving on electricity is easy, although it does require a little muscularcoordination.Somenon-athletesmayhave troublemakingcontactwitha lightswitchwhilewalking,butitcanbedonebyalmostanyoneifyouconcentrate.Infact,afteralittlepracticeyouwillbeabletothrowaswitchwhilewalkingfast.Makeagameoutoftheritual—seehowmanyconsecutivetimesyoucanfliptheswitchwithoutmissing.

Cuttingexpensesisthesurestwaytoincreaseourearnings.Ifweallcooperate,maybethisconcernforourprofitswillgetourP/Emultipletoseven.

Spreadthewordtothepeopleinyourareaandthenenforcethediscipline.

DATE:June23,1992TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg

Our yearwill be over in a few days. Itwas a record breaker and all of usshouldfeelproud.

BearStearnshasneverbeenstrongerorpositionedasbeautifullyasweareatthismoment.The teamwork that all ofyoudemonstratedover thepast twelvemonthswassensationalandIthinkthatfactorwasabigreasonthatwehadsuchmammothresults.

IhavebeenassociatedwithBearStearns formanyyearsand Ican tellyouthatIhaveneverbeenasoptimisticaboutourfutureasIamatthistime.Takealookat thepeoplewhohave joinedus recently.Takea lookat theenthusiasmthatradiatesthrougheveryoffice.Takealookatthemoraleofthepeoplearoundyou—itisalmostoffthechart.

Thisplaceisrockingandourjobistokeepitrolling.Everythingisgoingourway.OnJuly1,1992thescoreisnothingtonothing.Joinmeinseeingthatweset new records. If we have another record breaker, maybe we can get themultipletosix.

DATE:August13,1992TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg

Youarecorrect!ItisexcitingtobeassociatedwithBearStearns.

The first sixweeks of our new fiscal year have been a continuation of lastyear’srecord-breakingperformance.ToptalentcontinuestojoinusanditlookslikeourheadcountwillsoonexceedthenumberweemployedinOctober,1987.

Theonlythingsthatcanstopourtrulyfabulousfuturearearrogance,egoandconceit. Bigger and more promising companies than Bear Stearns have beenreducedtorubblebythoseeasilyacquireddiseases.

Thejobofmanagementistospotthesestupoveteers*andstepalloverthem.Wejustcannotmissifwestickbytherules**andconduct**thatgotustothisparty.

Ourbalancesheethasgrown.

Ourprofitshavegrown.

Ouremployeenumbershavegrown.

Wearegoingtobedifferent—ourhatsizesaregoingtoremainthesame.

*AclevernewadditiontotheEnglishlanguage.Thewordisacombinationofstupid,povertyandthethreemusketeers(arrogance,egoandconceit).

**IfyoudonotknowtheworksofHaimchinkelMalintzAnaynikal&Nookie,youareworkingforthewrongfirm.

DATE:October9,1992TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg

The first twoweeks ofOctober have come andgone. Imayhave had amoredifficult14days,butfranklyIcannotrememberwhen.

Anassociateofmanyyearshas resigned,we settled a lawsuit for a ridiculousamountofmoney, themarketshavebeendifficultandasa resultwehavehadsometradinglossesthathavenotbeenfun.

IamnotdiscouragedbecauseluckilyperiodslikethisarecoveredbyasayingofHaimchinkelMalintzAnaynikal,andIquote:

“Youcannotflywiththeeaglesandpooplikeacanary.”

Our losses have been taken, ourminds are clearer and our job now is to getrollingintherightdirection.Thequarterisonlyfourteendaysold!

DATE:November19,1992TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg

ThesearetoughtimesformanyAmericansandIamsureyoureceiveasmanyresumesasIdo.

I thinkweshouldall followsomesimple rules.Whenwegeta resume,eitheryouoroneofyourassociatesshouldcallthepersonwhosentittoyouandsaythatitwasreceivedandthatitwillbeprocessed.Ifaresumeispassedontoyouforafinaldetermination,itisessentialthatwenotifytheapplicantthatheorshehasbeenacceptedorrejected.

Willtheseprocedurestakealittletime?Theanswerisyes.Butifamemberofyour family was applying for a job wouldn’t they appreciate these commoncourtesies?Rememberonething,today’sapplicantcouldbenextyear’sclient.

Using these simple considerationswillmakeus standout evenmore from therestofthepack.NobodyeversaidweweretraditionalandIamproudofit!

DATE:February5,1993TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg

We need your help. Please help us get amessage out to every associate. It isessential thatonceagainwestress thatwewelcomeeverysuspicionor feelingthatourco-workersmighthaveaboutsomethingtheyseeorhearthatisgoingonat Bear Stearns that might not measure up to our standards of honesty andintegrity.ThisshouldbeaH.M.A.*crisis-controlyellowwarning.

WewantpeopleatBearStearnstocrywolf.Ifthedoubtisjustified,thereporterwill be handsomely rewarded. If the suspicion proves unfounded, the personwhobroughtittoourattentionwillbethankedforhisorhervigilanceandtoldtokeepitup.

Forgetthechainofcommand!ThatisnotthewayBearStearnswasbuilt.Ifyouthink somebody is doing something off the wall or his/her decision-makingstinks,goaroundtheperson,**andthatincludesme.

HaimchinkelMalintzAnaynikaloncesaidthatasuccessfultransactionhasmanyfathersbutadumbdecision isanorphan.Wewantourpeople to tellusof theboneheadsorpotential improprietiesquickly!Get thesemessagesout loudandclear.

*AbbreviationforHaimchinkelMalintzAnaynikal.

**Wehavehadsomeseniorpeoplewhoresented“endruns.”Theyquicklybecameassociatedwithmoreconventionalfirms—youcandrawyourownconclusionsaboutwhethertheircareerchangeworkedoutforthebest.

DATE:February12,1993TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg

Haimchinkel Malintz Anaynikal just finished speaking at an importantsymposium held at Harvard for the CEOs of major U.S. corporations. Hisappearance created such a huge demand that Harvard had to restrict theattendancetoofficersfromAmericancompaniesthatlostatleast$3billionlastyear. We did not meet the tough entrance requirements, but I did hear somethingsabouthisspeechthatIthinkbearrepeating:

1.Heisastrongbelieverthatpeoplewhotalktoomuchseemtohavebadluck.2.Peoplewhodonotreturnphonecallspromptlydonotseemtomakethegradeatahighlyprofitablefirm.

3.Peoplewhoobjecttoendrunswillnevermakeitinfootball,orwithsuccessfulinvestmentbankingfirms.Certaingroupsdoneedtoobservea“chainofcommand”atmosphere,buthighlymotivated,intelligentpeopledonotneedthishandcuff.

4.Afirmthathasenthusiasticreceptionistsandtelephoneoperatorsstartsoffwithatremendousadvantageoverthedummiesoftheworld.KeepinmindthatthefirstimpressionpeoplereceivefromBearStearnsiswiththoseassociates.

5.Ifabusinesspersonhastoaskhisaccountingdepartmentifheismakingaprofit,hewillnotbeinbusinessverylong.

These five statements created an atmosphere of confusion and incoherenceamong the attendees.As a result, Harvard is being forced to invite the groupback for workshops. These workshops will be led by Haim’s nephew, ItzhakNanookPumpernickanaylian,andbyHaim’stwinnieces,theMeeskeitsisters—

SalamiandPastrami.

Haimchinkel Malintz Anaynikal is not optimistic about his message gettingthrough.

DATE:April7,1993TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectors,All

DepartmentHeadsFROM:TheExecutiveCommitteeRE:DennisHom

DennisHomstartedtoworkatBearStearnsinMay1987at theageof22.Heprogressedrapidly inElliotWolk’sdepartmentandmademanyfriendsatBearStearns.Lastweek,Denniswaskilledbyanautomobileashewaswalkinghomefromthetrainstation.Dennisleavesawifeandtwolittlegirls.

TheHomfamilyboughtahomeseveralmonthsagoandthereisamortgageof$181,000 outstanding. The Executive Committee feels very strongly that thisyoungfamilyshouldnothavetofacetheburdenofthismortgage.

Manypeople have askeduswhat they coulddo forDennis’ family.Let us allparticipate in an old-fashionedmortgage-burning ceremony. Bear Stearns willpay$150,000towardsretiringthisobligationandwethinkitshouldbeeasytoraisethebalancefromhisassociatesatBearStearns.AllchecksshouldbemadepayabletotheDennisHomFundandsenttoElliotWolk.

OurearningsforthethreemonthsthatendedMarch31,1993werespectacular.

FifteenyearsagotheEquityCapitalofBearStearnswasabout40million(andwewererollingabigtaxdeferral).Weearned$110,000,000.00aftertaxesinthelastquarter!Thatisamazing.

Our earning power has changedmaterially, but some things have not changedonebit:

1.Wehavenomorelayersofmanagementnowthanwehadin1978.2.Westillrealizetheimportanceoftryingtocutexpenses.3.Westillrealizehowimportantitistobeonguardagainstconceitandarrogance.

4.Westillaredeeplyconcernedaboutthewell-beingofeverypersonassociatedwithBearStearns.

We have momentum and our morale has never been higher. Our future isunlimited as long aswe rememberwherewe came fromandhowwegot thismachine to its present level. Remember, Haimchinkel Malintz Anaynikal iswatching.Stepoutoflineordisregardhisteachingsandyouwillmakethatoldman’sday(andmine).

I had a call lastweek fromNookie congratulating the firm on our “best everquarter.”However,Nookie remindedme that “Pridegoethbefore a rapon thesnout.”Hesaidthatdespiteourrevenueswestillneedtowatchexpenseslikeahawk.

He told me, as an example, that those using laser printers and fax machinescouldget5%to10%morelifeoutofthetonercartridgesjustbyfollowingthemanufacturer’s directions. When the toner is low, just take the cartridge out,shakeitandgiveitanothertry.Ifwecouldgetjust5%moreuseoutofourtonercartridges,itwouldsavethecompany$15,000ayear.

Nookiealsomentionedthatthefolkswhodon’twanttoworkforalivinghavecomeupwithanewwaytosteal.Apparently,theycallyouandsaytheyhaveareportofsomekindofproblemwithyourPCorFaxorsomeotherkindofofficeequipment. They then ask for the serial number of the equipment. Shortlythereafter,theyshowupdressedinsomekindofuniformandeitherwanttotaketheequipmentwiththemorworkoniton-site.Youknowwhathappensnext.

Shouldyouexperiencesomethinglikethis,callSecurity(x4333atParkAvenueor x1147 atMetroTech) and alert them of the contact. Theywill take it fromthere.Needlesstosay,neverletanyoneworkonyourPCunlesstheycanshowyouavalidBearStearnsvendorID.

LookslikeNookie isstillat the topofhisform.Pleasesee that these thoughtsgettoeveryassociate.

DateMay12,1993ToAllEmployeesFromSteveLacoffCCSubject

The attached letter was sent to Ace by Lisa Hom to be distributed to allemployees.Pleasetakeafewminutestoreadthisbeautifulthankyou.TO:AllEmployeesFROM:LisaAnnHom

Iwish toextendmygratitude to theExecutiveCommittee for theopportunity toaddressallof theemployeesofBearStearns.

Asyoumaybeaware,DennisHom,myhusband,wasavictimofatragicautomobileaccidentontheeveningofMarch24.HeregrettablypassedawayonMarch30asa resultofsevere injuries fromtheaccident.

Dennis,myselfandourdaughters,Jessica-6andLauren-4,hadjustmovedfromanapartmentinAstoria,Queens intoanewhousewebought inAlbertson,LongIslandonMarch6. Iamsure ifyouhaveevermoved fromonehome toanother,youareawareof theheadachesandconfusionyouhavewiththelogisticsofmoving.Itseemedthatalltheproblemsthatcouldhavearisenhappenedtous.

Consequently,withsuchashortperiodgoneby(approximately2weeks)fromthetimeofourmoveuptothetimeofDennis’accident,hedidn’tevenhavethechancetoreallyconsiderobtainingmortgagelifeinsuranceforhimselfonthehouse.ForthepeoplewhoknewDenniswell,I’msureyou’llagreethatthis was something he would definitely have purchased very soon after our move. However,unfortunatelyformyfamily,hedidn’thavetheopportunitytodoso.

Therefore,IwishtoofferaspecialthankyounotetoAlanGreenbergandtheExecutiveCommitteefor their initiativeand leadershipefforton thedrive tohelpuspayoff themortgagenoteon thenewhouse.ButequalthanksalsogoestoalloftheemployeesofBearStearns.

Andagain,onbehalfofmydaughtersandmyentirefamily,wewishtoexpressourdeepestandmostsincere“Thankyou”andappreciationfor thelove,careandsupportyouhaveshowntousduringthismostdifficultandsorrowfulperiod.

Wecannotadequatelyexpressourheartfeltgratitudetoeachandeveryoneofyou,butpleaseacceptourmost sincere feelings of appreciation and love. The concern and devotion provided to us by theemployeesofBearStearnsisoverwhelmingandverycomforting.

Yourkindnessandgenerositywillneverbeforgottenbythisfamily.Weareeternallygratefulforthegenuinecareandconcernyouhaveexpressedtous.Iknowmyfamily’slovingfeelingsandmemoriesofDenniswillendure the testof timeandwill last forever inourheartsandminds. IhopeyouwillalsocherishyourfondestmemoriesofDennis.

Finally, I amverygrateful thatDennishad theopportunity toworkwith suchwonderful,kindandcaringpeople.WewillalwaysconsiderthepeopleofBearStearns-notjustasDennis’fellowemployeesbutverygoodanddearfriendsofourfamily.

DATE:July1,1993TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg

Anotheryearhascomeandgone.ItwasprobablythebesttwelvemonthsinthehistoryofBearStearns.

Therearemany thingsabout1993 thatweregratifying,but themomentumwedeveloped throughout the year and the way it seemed to reach a crescendoduringthelastquarterwasthrilling.Thisplaceisjumping!

Oneofthebasiclawsofphysicsisthatobjectsinmotiontendtostayinmotion.Your Executive Committee believes in physics, but it also believes inHaimchinkel Malintz Anaynikal. All of us have to work to keep this placerolling.Clientsarenot interested inourpast triumphs(that iswhy90%ofourcompetitionhasdisappearedoverthepast20years).Clientswantservice,ideasandtenderlovingcare.

Thenewyearishereandrememberthatrecordsaremadetobebroken.Letusgettenrunsinthefirstinningandthenknockthecoverofftheball!

DATE:August9,1993TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg

Aboutamonthago I congratulatedallofyouon the fiscalyear that endedonJune30,1993.

IpointedoutthatIwouldlovetoseeusstartfiscal1994withabangandgetalotofrunsinthefirstinning.Julyhascomeandgone;soitispossibletogaugeyourresponsetomyrequest.Youreffortsexceededmywildestdreams!

In fact ItzhakNanook Pumpernickanaylian (Nookie) expressed a fear that wemight be peaking too early. Haimchinkel Malintz Anaynikal stepped in andexplained that due to Nookie’s inexperience he was confusing peaking withmomentum.

Keepitup!

DATE:September23,1993TO:SeniorManagingDirectors,InstitutionalEquityDepartmentFROM:AlanC.Greenberg

DickFaywasadearfriendandcolleague.Dickdiedashorttimeago,andsomeof his friends and family are establishing the Richard J. Fay ScholarshipEndowmentFundatFordhamUniversity.

Thegoalistoraise$100,000andtheyhavesofarreceivedthreepledgestotaling$30,000.

Ifyouwouldliketoparticipateinperpetuatingthenameofarealfriend,andatthesametimehelpingqualifiedyoungpeople,pleasegiveLisaD’Amoreacallonx4608.

DearEmployee,

Infurtheranceofitspolicyofencouragingcharitablegiving,Bear,Stearns&Co.Inc.isallowingtheuseofitsofficefortheenclosedcharitablesolicitation.TheFirmpasses no judgement on the request or the organization involved. Participation isentirelyvoluntary.Youshouldnotfeelanyobligationorpressuretocontribute.Ifyouarenotinterested,simplyignoretherequest.

TheCompensationCommittee

DATE:September24,1993TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg

Duringthelastfewmonthsthebusinesscommunityhasbeenexposedtosomenewmanagement tools. They are known by the cognoscenti as Total QualityManagement (TQM), Continuous Improvement (CI), Business ProcessReengineering (BPR) and Other Trading and Organizational DevelopmentInitiatives(OTAODI).YourExecutiveCommitteeisalwayslookingforwaystoimproveourperformance,andthosetitlesintriguedus.

We appointed a committee (C) consisting of Haimchinkel Malintz Anaynikal(HMA) and ItzhakNanook Pumpernickanaylian (INP) to do a comprehensivestudy.Wethoughtyoumightbeinterestedintheresults.Fromnowonwewillusethejargonofadvancedmanagement.

The“C”discovered thatwehave lost90%ofourcompetitorsover the last20years. Most of those managements were precocious; they were using thosecatchytechniquesyearsago.

35%usedTQM25%usedCI20%usedBPR10%usedOTAODI

Theremaining10%didnotuseanysophisticatedmanagementtools,theywerejustextraspecialstupid.

The“C”suggestedthatwesticktocommonsense(CS)becausecatchytitleswillneversupplant“CS.”Ifyoudisagree,youareworkingatthewrongplace.

DATE:September30,1993TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:ExecutiveCommittee

Investment Banking Firms have been plagued over the years by tradersmismarking positions, and we have not been spared. My guess is that themiscreantsarehidingaloss theyhopewillgoaway,butasyouknow,thelossusuallygetsbiggerandtheresultisbad.Itisatributetotheoverridingstrengthofourbusinessthatwehavebeenabletoabsorbthesecrimesandstillprosper,butthisnegativevigorishmustbestopped.

ForthepastmonthstheheadsofeverydepartmentonMondayshavewarnedthetroopsofthedangerofmismarking.Wearenowaddinganadditionalrefinementto the process. Consistent with our goal of trying to help everybody at BearStearnstobecomericher,wewillgivefivepercentonthespottoanypersoninthetradingareaswhoalertsustoapotentialnegativemismark.Ifthemismarkshows a loss of one million dollars, the cooperating person will get $50,000immediately.

Allsuspicionswillbetreatedconfidentially.IfonewishestocallMarkLehman(ext.2549),insteadofsomeoneinhis/herownarea,thatisfine.Noonewilleverbecriticizedforfalsealarms.

Wewouldfrownuponthetattlersharingtherewardwiththemismarkerbasedonsomeprearrangedplot.

DATE:October25,1993TO:SeniorManagingDirectors,ManagingDirectorsandAssociateDirectorsFROM:AlanC.Greenberg

On June 12, 1983, theNewYork Times had a rather large article about BearStearns.Therewereacoupleofquotesinthepiecefromourcompetitorsthatwetookumbragewithandtold theminwritingwhatwethought.Belowisoneofthequotes.

“‘BearStearnshasdoneanintelligentjobofseekingsegmentsthatmostpeoplefoundtobetoosmall,specializedorevenvaguelyrepellent,’saidGeorgeL.Ball,presidentandchiefexecutiveofficerofPrudential-BacheSecurities. ‘Most firms will, at times, forgo profits for reasons ofperception.ButBearStearnshastheideathata legitimatetransactionisone that earns a dollar—even if it’s something youdon’twant to bringhomefordinnerwithmother.’”

As Haimchinkel Malintz Anaynikal has mentioned so often, “what comesaround goes around.” Nookie added something that was particularly poignant—“youmeetthesamepeopleonthewaydownthatyoumetonthewayup.”

We have constantly stressed that people at Bear Stearns do not denigrate ourcompetition.YourExecutiveCommitteewants to reemphasize thatposition. Ifyoucannotsaysomethingniceaboutsomebody,donotsayit!

DATEDecember15,1993TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg

According to thepress, it is gettingharder andharder to run a largebusiness.Your Executive Committee was making every effort to understand the newmanagementtools.Iamspeakingof:

1.Reengineering2.TotalQualityManagement

3.EconomicValueAdded

Itnowappearsthat,andIquotefromaprominentbusinessweekly,“Hierarchyisdying.Inthenewcorporatemodel,youmanageacross—notupanddown.”

Thisstatementseemstometohavemanyramifications,includingseveralnewmodelsforthecorporatechart.Becausethingsarechangingsoquicklyincorporatemanagement,wehavedecidedtodelayourstudyofthenewtechniques,standbackandwaitforthingstosortthemselvesout.Maybethebusinessschoolguruswillcometotheconclusionthatthebestbusinessmanagementtooliscommonsenseandlookatallthetimewewillhavesaved.

Ihavealwaysthoughtthatbecauseofourmanagementstylewehaveachanceinlife,andafterreadingthecurrentnonsenseIamconvincedthatwewillcontinuetobeevenbiggerwinners,ifwecontinueto:

1.Watchexpenses

2.Workforourclients

3.Keepourfeetonthegroundandourheadsonstraight.

Ourresultswillcontinuetoamazethebusinessschoolsandmaybetheywilltrytofigureoutourrevolutionarymethods(theywillnotbeableto).

DATE:March11,1994TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg

IfyouansweratelephoneatBearStearns,youareveryimportanttoourpresentandtoourfuture.YourvoiceandenthusiasmrepresentthefirstimpressionmanypeoplegetofBearStearns.ThisisnotthefirstmemoIhavewrittenabouttheimportanceofthesepeople,butIgetthefeelingthatacertainslippagehasdeveloped.

LastweekNookieunfortunatelygotinvolvedwithsomebodywiththepersonalityofawetnoodlewhousedtheexpression“thatisnotmyarea”anddroppedhim.Wearelookingforenthusiastic,helpful,short-holdtimes,quicktransfers,inotherwords,peoplewhotry.

Attachedisabrochurethatmademeonceagainthinkofthesubject.ItwasnotwrittenbyHaimchinkelMalintzAnaynikal,butitcouldhavebeen.Pleaseseethateverybodyinyourareareads*thispamphlet.

WEAREGOINGTOPROJECTAPOSITIVETELEPHONEIMAGE!

*Ifsomeofyourhighlypaidkeypeoplecannotread,pleasereadittothem—itisaveryshortdocument.

DATE:April19,1994TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg

Itisworking!AttachedisamemowhichisdatedSeptember30,1993.Pleaserereaditandyouwillgetmypoint.Therehasbeenonerefinement.Innocasewilltherewardexceed$1,000,000.Thiswilldiscourageslowreportingbasedonthefreeoptionprinciple.

Duringthelasttwomonths,wehavedistributedtwocheckstopeoplewhoreportedmismarkings;thelastonewasfor$65,000.00.Inbothcasestherecipientswerereportingcertainlapsesoftheirbosses,sonotonlydidtheygetacheck,buttheyreceivedanimmediatepromotionbecausetheirbossesnolongerworkforus.

ThiswasacollateralfeaturethatIdidnotthinkofinmyoriginalmemo,butIthinkeveryassociateofoursshouldnowrealizetheyhaveanaddedincentiveforwatchingtheconductofthepeopletheyworkfor.

Inmyparticularcase,Ihavenoticedarecentamountoftremendouscuriosity,attentivenessandattentionlavishedonmebyLisaandMaureen.

DATE:May9,1994TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg

Themarketsareratherturbulentandwedoalotofbusinessinsecuritiesthatarenotlistedonnationalexchanges,suchasover-the-countersecurities,somebonds,mortgagesandderivatives.Itisveryimportantthatclientswhoownthesesecuritiesandcallusforanindicationofthemarketbegiventhemostaccuratepricesthatwecandetermine.

Somerecentpublicityhassuggestedthatsalespeopleatanotherfirmwereafraidtorevealtoaclientthedropinvalueofasecurity.Ifweeverfeelthatoneofoursalespeople,becauseofpressurefromtheclientorhisorherownstupidity,givesaclientamarketindicationthatmasksthetruepicture,wewilltakethefollowingaction.Wewillaskthesalespersonpersonallytobuy$1,000,000worthofsecuritiesattheoverlyoptimisticprice.*Therewillbenofines,justthissimpletransactionfollowedbyadisciplinarymeetingwithveryseniorpeople.

IfIwereasalesperson,IwouldbeverysurethattheindicationthatIgavetotheclientcamefromanauthorizedpersononthetradingdesk.Ifthatprocedureisfollowedandthepriceindicationiswrong,thesalespersonisabsolved.

*Ifthemarketatthetimeofdiscoveryishigherthanwhenthefictitiousquotewasgiven,thesalespersonwilljusthavethepleasureofthemeeting.

TwoBearStearnsemployeeshavecalledmewithinthelast24hourscomplainingaboutthefailureofotherBearStearnspeopletoreturnphonecallspromptly.Theshy,littlecomplainerswouldnotgivemethenamesofthemiscreants,whichofcoursedeniedmethejoyofspeakingtotheculprits.

Therearealotofthingsaboutourbusinessthataredifficultandsomethingsareoutofourcontrol,butreturningphonecallsissomethingwecancontrol.Wehavehadalotofnewpeoplejoinourorganizationduringthepastyearandmaybetheyarenotawareofhowstronglywefeelaboutreturningphonecallsfromclientsandassociates.Duringthebusinessdayeveryphonecallshouldbereturnedpromptly,evenifthepersonissellingmalaria.Whatpeopledoaboutreturningphonecallsthatcometotheirhomeissomethingoutofourcontrol(IreturnallphonecallsassoonasIcanregardlessofwhereIamdomiciled).

IcanonlyrepeatwhatIhavesaidbefore.IfyouwanttoreallymakemydayandgivemepleasurewhichIamprobablynotentitledto,justletmeknowwhensomebodyatBearStearnsdoesnotreturnaphonecallpromptly.Youwillalsobehelpingusstayaheadofourcompetition.Theyaretooinvolvedinlong-termstrategicplanningtoworryaboutsomethingassillyasreturningcalls.

DATE:July20,1994TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg

Today’sNewYorkTimesdisclosedthatamajorcompanyhasdeclared“matrixmanagementinourcompanyisdead.”Thepresidentofthatcompanysaid“thatstatementismonumental.”Imustadmitthatthecompanyinvolvedwiththatstyleofmanagementcannotbefaultedfornotgivingitafairtrialbecauseoverthelastfouryearsthistoolhashelpedthemlosefourbilliontwohundredmilliondollars.

Thecompanyisnowgoingtotryputtinginplace“asystemthatmakesitstopexecutivesmoreclearlyaccountableforthesuccessorfailureoftheirdivisions.Nomoreinterminablemeetingsbeforemakingdecisions.Nomoredelaysinreplyingtoacustomer’scallforhelp.”ThisarticlemademerealizehowstupidIambecauseIdidnotknowtherewasanyotherwaytorunabusinessbuttomakepeopleaccountable,maketimelydecisionsandservicetheclient.

Anotheryearhascomeandgone.Itwasexcitingandcertainlyoneofourbetterefforts.Wehadmajordisappointmentsfromcertainassociates,butmaybeitwillhelpusrunatightershop.Ourgoalstillremains—ahighreturnonequitywithintegrity.

IhopeyouarelookingforwardtothenewyearwithasmuchenthusiasmasIam.

DATE:July28,1994TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg

TheBearStearnsfiguresfortheyearendingJune30tharenowhistory.Thefactthatourearningsfortheyearsetanewrecordwasratherhiddenbythepressbecauseourfourthquarterwasdownversuslastyear.Allofuswouldhavepreferredthatourfourthquarterwouldhavebeenthefirstquartersowecouldhaveshowedaniceprogression,butwehavetoplaythecardsthatweweredealtanditcertainlywasatremendousyear.

Afewyearsagoindexarbitragewasaccusedofeverythingfromthebearmarkettotornadoes.Itwasaconclusionbasedonignoranceandwetookadefinitestandforwhatwethoughtwasaverylegitimatepartofthebusiness.Whenwasthelasttimeyouheardacriticismofindexarbitrage?Wearehearingthesamenegativethingsnowaboutderivatives.

Thereisariskineverythingyoudoandthatcertainlyincludesderivativesandpersonalrelationships.Ithinkoneshouldalwaysbecarefulinwhateverthepersonisinvolvedwith.Mypersonalpointofviewisthatpeopleshouldcertainlystayinvolvedinboth—derivativesandpersonalrelationships.

Overtheyearswehavetriedtostressthatthebestsecuritysystemisalertassociates.InternalAuditwillprobablycatchthemiscreantsinthelongrun,butthatcouldtakeyears.Aperfectexampleofwhatwehopeforhappenedlastweek.

MargaretKellyandEvelynHallareadministrativeassistantsworkingintheFuturesDepartment.Oneoftheirresponsibilitiesistomonitorthedepartment’susageoftaxicabvouchers.Incheckinglastmonth’sinvoices,theydiscoveredseveralvoucherssignedbypersonsnotemployedintheirarea.AftercheckingthenameswithPersonnel,itwasdeterminedthatthenamesonthevouchersweretotallyfictitious!

MargaretandEvelyntooktheinitiativetocontactthetaxicompanytodeterminefromwhichtelephoneextensionsthequestionablecartransportationwasordered.Usingthisinformation,theywereabletoidentifyasuspectedemployee.Theythenarrangedforataxidriverassociatedwithaquestionablevouchertocomeuptotheofficeandpositivelyidentifythesuspectashispassenger.OncethiswasaccomplishedalldetailswereprovidedtoSecurity,resultingintheterminationoftheemployee.MargaretandEvelynreceivedacashawardonthespot.

Pleaseseethatthepeopleinyourareashearaboutthis.Youcanalsoreiterateourrewardpolicyregardingreportingacolleague’smismarkingofaposition.ThereareallkindsofwaystomakemoneyatBearStearns.

DATE:September29,1994TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg

TherewasanarticleintheNewYorkTimesthismorningaboutamanlivinginAtlantawhorippedoffeverybrokeragefirmthathadanofficeinthatareatothetuneofabout$15million.BearStearnsisconspicuousbyitsabsence.WewerenotamongthosewhogothitbyMr.Morse.

Itisnotacaseofbeinglucky;itisacaseofMikeMargolis,FrankCox(thebroker)andFloydBerger(compliance)decliningtodobusinesswithMr.Morseafterhisfirsttradewithus.EventhoughMr.Morsefulfilledhisobligationsonthattransaction,theboysdeclinedtoparticipateinanyfurtherdealingswithMr.Morse—somethingdidnotpassthesmelltest.Ourpeopledemonstratedthetypeofsuspicion,skepticismandcynicismwewanttoseeinthepeopleatBearStearns.

Whenactingasabrokerweareworkingforaverysmallcommissionsoourupsideislimited.Inallcasesthereishugeriskifourjudgmentiswrong.Nicegoingguys!

ThefollowingisanexcerptofanarticlethatappearedintheAmericanBankeronOctober6,1994.

“Thegovernmentisdenyingareportthatitisinvestigatingsomeofthebiggestbrokeragefirmsinthecountryformoney-launderingviolations.

TheWallStreetJournalreportedonSeptember21thatMerrillLynch&Co.,DeanWitterDiscover,Inc.,PrudentialSecuritiesInc.,PaineWebberGroupInc.,andBear,Stearns&Co.arebeinginvestigatedbytheU.S.CustomsServiceandtheInternalRevenueServiceforillegalactivityinvolvingwiretransfers.

‘Thereisnoinvestigation’ofthesecompanies,saidMarvinSmilon,spokesmanfortheU.S.Attorney’sOfficefortheSouthernDistrictofNewYork.WhileMr.Smilonsaidheusuallywouldtellareporter‘nocomment’insuchacase,hesaidhewasafraiditwouldbeconstruedasanaffirmationofthestory.”

IamsurewhenyoureadtheWallStreetJournalarticleonSeptember21st,youwereasupsetasIwas.Wewerenevercalledtocommentontheallegationspriortothepublication.ThefactsarethatBearStearnsdoesnottakeinsizableamountsofcashforanyaccount.Thegovernmentdidexaminesomeaccountsseveralmonthsagothathadmoneywiredintothemviacommercialbanks.WehadneverheardanotherworduntilthearticlewaspublishedonSeptember21st.

ItisashamethatthearticleinAmericanBankerdidnotgetthesamecoveragethatthenegativearticledid,butIguessthatislifeinthebigcity.

ItisimportantthatthemanagementofBearStearnskeepup-to-dateonthelatestbuzzwords.IfyoulookatmymemodatedSeptember24,1993,itdiscussed:

•TotalQualityManagement(TQM)•ContinuousImprovement(CI)•BusinessProcessReengineering(BPR)•OtherTradingandOrganizationalDevelopmentInitiatives(OTAODI)

IjustreceivedapamphletdescribingValueMigrationandhowtoprofitfromit.AtfirstglanceIthoughtthearticlereferredtobirdwatching,butsinceIknowofnobirdnamedvalue,mycuriositywasaroused.

Iamnotgoingintohowstupidthethoughtsare,butIdidwantyoutoknowaboutthislatestmanagementtechniquesoifthephraseiseverbroughtupinyourpresence,youcannodandsaythatyoucertainlyheardofthislatestinnovation.Youcanrefertoitinthefuturebyusingitscodename:

•ValueMigration(DUM)

ThetimingofthememowithregardtoValueMigrationdated10/25/94wasperfect!

IhavejustreceivedaninvitationfromCorporateDecisionsInc.ofBostontoattendaone-daySeniorExecutiveForumonNovember29,1994.Thesubjectoftheconferenceis:ValueMigration:AStrategicFrameworkforSucceedinginthe1990s.

Ifanyofourseniormanagingdirectorswouldliketoparticipate,pleaseletmeknow.Theywillnotbeallowedtoattend,butIwouldliketodiscusswiththeinterestedpartieswhytheywanttoattend,theirphilosophyofmanagingandwhytheyareatBearStearns.Mydirectnumberisx4605.

Itseemslikewereceiveatleastoneinvitationaweektoattendaconferenceregardingthebuzzwordsdescribedinthe10/25/94memo.Ifinditamazingthatweneverhearofaconferencedevotedtoapplyingcommonsensetothesecuritiesindustry.Wecannotmiss.

ThecurrentBusinessweek,datedJanuary30th,hasanarticleaboutabookpublishedtwoyearsagothathassoldtwomillioncopiesin14languages.ThetitleisReengineeringtheCorporation.Ifyoufollowedmyadvice,youdidnotreadthebookandyousavedyourselftimeandmoneybecausetheauthorisnowputtingoutanewbookstatingthatreengineeringisintrouble!

Thewriterconcludesthatthemainreasonreengineeringisnotworkingisbecauseoftheshortcomingsofmanagement.Theauthorgoesontosaythatunlessmanagersknowhowto“organize,inspire,deplore,enable,measureandrewardvalue-addingoperationalwork,reengineeringwillnotwork.”Whatasurprise.HaimchinkelMalintzAnaynikallearnedthatinGoatHerding101(kindergarteninhiscountry).

Thesearetoughtimesandthereisnoeasyfix.Wehavefollowedcertainrulesandpoliciesovertheyearsandweknowtheywork.Theywillworkinthisenvironment,andwewillcomethroughstrongerthanever.

Anumberofsalespeople,inallareas,haveaskedustohireamarkettechnician.IhavediscoveredsomebodythatIthinkwillsatisfyeverybodyincludingthoseinchargeofourlong-standingausterityprogram.Thismanwillworkliterallyforpeanuts.

AllwehavetosupplyhimwithispaperandpencilandDoodlesDanenbergwilldohisjob.Wewillthendistributehisgraphs,whichIpromiseyouwillbeasgoodasanytechnicalworkdoneonWallStreet.

Doodleswillnotbehousedat245ParkAvenue,butwillbeavailableforpersonalconsultationifyouwish.Hisresidenceisafewblocksaway.HeisachimpanzeeresidingattheCentralParkZoo.

IamsureallofyouwishDoodlesthebestofluck.HewillreporttoMarkKurland.*

*MarkmentionedtomethatthusfarDoodleshasbeenlessdemandingthananyadditionhehasmadeinthelastfiveyears.Thereisamoralhere.Allofusshouldthinkofbroadeningournew-hirehorizons.

Weareveryfortunate,allofusareworkinginafascinating,dynamicorganization.Wehavehiredsomeexcitingnewpeoplethroughoutthefirmandtheyhavebecomeacclimatizedinrecordtime.

Somedepartmentsthatthepresshadwrittenoffarecomingonlikegangbustersandweareclosetorunningonallcylinders.Ourbusinessisgreat!

Idohaveawish—myhopeisthatouroverallbusinessgrowsatthesamepercentageasourerroraccount,whichisacceleratingatarecordrate.Theerrorsareverydemocratic;theyarecommittedbypeopleupanddowntheline.Ifyoudidanautopsy,youwillfindthatinalmosteverycasepeoplearejustplaincareless.Puttinginbuysinsteadofsellsorentering5optioncontractsinsteadof50.Wehavegottodosomethingaboutthisexpensebecauseitcomesrightoffourbottomline.Ifyouhaveanysuggestions,pleaseletmeknow.Youmustmakeapointofdiscussingthisproblemwiththepeopleinyourarea.

Iexpecttoseeamajorimprovement(thelasttimeIbroachedthissubjecttheerrorswentup,butIthoughtIwouldtryagain)withinhoursofthisepistlereachingourco-workers.

DATE:June12,1995TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg

Agreatnumberofourassociateshavedroppedmenotestellingmeofexcessreportsandstatisticalmaterialthattheyhavereceivedandthattheyfeelareunnecessary.Insomecases,peopleat245ParkAvenuehavereceiveddocumentsfromBearStearnsthroughtheregularU.S.mail.Iamsurethatalotofmoneycanbesavedifwestopthiswastefulness.

Wearegoingtotrytocentralizeandinvestigateeveryincidentofsurpluspaperthatisreportedtous.ThepersontocallisSteveWexmanonx2-6060.

ThanksforyourpastconsiderationandletusseeifStevecanbringorderoutofthischaos.

DATE:July31,1995TO:AllEmployeesFROM:AlanC.Greenberg

Ibelievethereisadirectcorrelationbetweentelephoneetiquetteandearnings.Werecentlyhiredaconsultingfirmtoinvestigatehowquicklyweanswerourtelephonesandhowwetreatcallerswhodialournumbersbymistake.

Thegoodnewsisthatmostemployeesareaccessibleandanswertheirowntelephonewithintworings.Thebadnewsisthatsomeofourcallsgounanswered,thatmanyemployees’telephonegreetingseithersoundrudeorareunintelligibleandthat26%ofallemployeesareunabletoproperlytransferacall.

Wehaveneverhiredpeoplebasedonmuscularcoordination,butmaybeweshouldchangeourpolicysincetransferringacallseemstorequiremoreathleticabilitythansomeofourassociatespossess.Bepreparedforspotchecksonyourtelephonetransferringcapabilities;youwillbejudged10%onspeedand90%onaccuracy.Thosewhoflunkwillgetprivatelessonsfromme.

Itappearsthatinalloftherecentexcitement,someofyouhaveforgottenthatthewayyouansweryourtelephonemaybethefirst—andlast—impressionthecallergetsofBearStearns.Pleasedon’tforgetagain.Fromthisdayforward,Iexpectyoutoknowhowtotransferacallandalsotobepleasantwhenansweringyourtelephoneeverytimeitrings.

Duringthesummer,Fridaysareusuallyquiet—lonelyintheoffice—butquiet.Todaywasanexception.

Anassociateofourswhoretiredin1990hadaskedourpersonneldepartmentforsomeinformationandshewrotemealetterandtoldmethattheydidnotanswerhermanyinquiries.AformerregisteredrepinSanFranciscosaidthatthecompliancedepartmentofBearStearnsinSanFranciscodidnotreturnhiscalls.AregisteredrepinLosAngelescalledmeandtoldmeaclientofhishadcalledthemortgageoperationsinDallasandayoungladytheredidnotreturnhiscalls.Itishardtobelievethatwithalltheemphasiswehaveputontheimportanceofreturningphonecallsthesethreeincidentsshouldsurfaceononeday.

Thereareusuallythreesidestoeverystory,butitwashardformetofindthesidethatputsourpeopleintheright.IspokewiththeareasinBearStearnsthatseemtobelessthanperfectandIhopeIruinedtheirweekendbecauseItriedveryhardto.

Doyourealizewhatanegativeeffectnotreturningacallhasonanassociateoraclient?

UsingtheEnglishlanguageasaprodhasnotworked.Fromnowon,fineswillbeleviedonlazy,inconsideratenon-phonecallreturnees.Pleaseinformthepeoplewhoworkwithyouofthenewpolicy.

Ifyouoryourclientssufferany“telephoneindignities,”pleasecallme.Itwillmakemyday.

DATE:September1,1995TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:TheExecutiveCommittee

Priortotheendofourfiscalyear,wehad256SeniorManagingDirectors.Wealwayshavesomeattritionatthistimeofyearandlosingeightmanagingdirectors(3%)wouldnothavecausedmuchdiscussion,butsixwhoretiredworkedinapproximatelythesamearea.Becauseofthis,therehasbeenalotofcommentandpublicityaboutthesechanges,andtherewillprobablybemore.

TheExecutiveCommitteewouldliketopointoutthatthemortgageareaiscertainlynotwhatitwasintermsofprofitability.Theprofitsofthedepartment,andthereforethebonusesinthatarea,aredownconsiderablyversusseveralyearsago.

Noneofthesixindividualswholeftdidsotogotoacompetitor.Infact,noneofthemhadimmediateplanstogoanywhere.

Mostofthepeoplewholeftfeltthatthefutureofthatareawasratherlimited—ouropinionistheopposite.Afewyearsagopeopleingeneralhadwrittenofftheprospectsofhigh-yieldbondsandtheywerewrong.Afewyearsagothatworldhadwrittenoffbankstocksandwedonothavetotellyouwhatthese“interest-sensitivecompanies”havedone.Rememberthatcliche?Whileothershavereducedtheircommitmenttothemortgagebusiness,weremaindedicatedtoit,andourcompetitivepositionhasneverbeenstronger.Thebigprofitsinthemortgageareawillbeback.

Wesuggestthatyouusethesethoughtsifpeoplequestionyouaboutrecentevents.

DATE:September27,1995TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg

AprominentconsultinggroupjustsentmeaninvitationtoattendtheirfifthNorthAmericanFinancialServicesConference.Oneofthetopicsthattheyareusingtoenticeattendanceis“ReintermediationMayPoseAsBigAChallengeInTheNinetiesAsWasDisintermediationInTheEighties.”IthinkIamgoingtoresistparticipatinginthatget-togetherbecauseIdonothaveanyideawhattheyaretalkingabout.

IcouldnotwaittogettotheofficethismorningandtalktotheheadofourInternalAuditdepartment.IwantallbankbalancesandsecuritypositionsthatareheldawayfromBearStearnstobespot-checkedonasurprisebasismanytimesaquarter.Ifwedothis,itishardformetoseehowabilliondollarscandisappear.

Whenaconsultinggroupsponsorsasymposiumthatdiscussesmundanesubjectslikehowtostopmoneyfromflyingoutthefrontdoororhowtogetassociatestocutexpensesandreturntelephonecalls,thenIwillbeoneofthefirsttosignup.

DATE:November13,1995TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg

ThemediahasbeenhavingafielddaywiththeproblemsofDaiwaBank.Quot-ingfromNEWSWEEK,“Itwasn’tthattheDaiwadummieslost$1.1billion;itisthattheyliedaboutitanddissedtheFed.Itdoesn’tpaytogettooarrogant.”

Thiswasnotthefirsttimenorwillitbethelastthatwehaveseenwhatarro-gancecanleadto.ThisdangerhasbeenpointedoutmanytimestoallofusbyHaimchinkelMalintzAnaynikal;itshouldbebroughttotheattentionofouras-sociatesonaregularbasis.Ourjobistolookoutforarroganceandstomponiteverytimeweseeitsuglyheadrearingup.

mechanically,electronically,orbyanyothermeans,includingphotocopying—withoutthewritten

permissionofthepublisher.PublishedsimultaneouslyinCanadabyThomasAllen&SonLimited.

LibraryofCongressCataloging-in-PublicationDataisavailableWorkmanbooksareavailableatspecial

discountswhenpurchasedinbulkforpremiums

andsalespromotionsaswellasforfund-raisingoreducationaluse.Specialeditionsorbookexcerptsalso

canbecreatedtospecification.Fordetails,contacttheSpecialSalesDirectorattheaddressbelow,orsend

anemailtospecialmarkets@workman.com.

Theauthor’sproceedsfromthesaleofthisbookwillbenefittheAlanC.GreenbergScholarshipFund.

WorkmanPublishing

225VarickStreet

NewYork,NewYork10014-4381

workman.com

eISBN:978-0-76115351-1

Memos from the Chairman

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