Beazer Homes cans chief accounting officer for ethics violations

Beazer Homes, already under a Securities and Exchange Commission informal investigation, has fired Chief Accounting Officer Michael Rand "due to violations of the company's ethics policy stemming from attempts to destroy documents." The move comes four months after the company fired General Counsel Kenneth Gary "for a pattern of personal conduct which includes violations of company policies." In a filing with the SEC, the Atlanta-based homebuilder said Rand's termination followed a briefing by independent legal counsel retained by the company's audit committee, which is conducting an internal investigation of the company's mortgage origination business and related matters. Beazer said it recently became aware of Rand's actions during that investigation.

You have to think that the news in the housing sector is even worse than we think if accounting officers are destroying documents to hide the facts.

Blackstone Down 7.5%

Shares of Blackstone Group fell in their second day of trading as doubts set in about the valuation of the private equity firm. Blackstone shares were down 7.5% to $32.44 on the NYSE.

It could be that Friday was the high point of the market for the foreseeable future. A lot of smart people are wondering about that when the smart money (i.e., Blackstone) starts selling.

Bear Stearns Bails Out Hedge Fund

Bear Stearns said it would provide up to $3.2 billion in financing for a struggling hedge fund it manages, raising concern about other funds that invested in bonds linked to subprime mortgages. The biggest bailout since Wall Street's 1998 rescue of Long-Term Capital Management signaled that the funds' main investments -- a type of bond known as a collateralized debt obligation (CDO) -- may be riskier than previously reckoned. Bear Stearns, the fifth-largest U.S. investment bank, said it would provide secured financing to its High-Grade Structured Credit Strategies Fund so the fund can sell assets in an orderly fashion. Bear also said a second fund (High-Grade Structured Credit Strategies Enhanced Leverage Fund) that took greater risk is still working out a restructuring plan with creditors. The two funds melted down after rising U.S. subprime mortgage defaults earlier this year depressed prices of CDOs, which were essentially repackaged portfolios of subprime home loans and were among the funds' main investments. Bear Stearns' High-Grade Structured Credit Strategies Fund was down about 5% so far this year through the end of April. The High-Grade Structured Credit Strategies Enhanced Leverage Fund, meanwhile, which borrowed more to magnify potential returns and potential risk, was down 23% over the same period.

Another story that provides more of the numbers and paints a much clearer -- and much bleaker -- picture than above...

Merrill Lynch seized $850 million of bonds held as collateral for loans it had made to the funds. Lehman Brothers, JPMorgan Chase and Cantor Fitzgerald also pulled out, leaving Bear Stearns to sort through the wreckage of bad bets on subprime mortgage bonds and collateralized debt obligations. Without assistance from his Wall Street peers, Bear Stearns was forced to salvage the healthier of the two funds, putting $3.2 billion of the firm's capital at risk in the biggest bailout since LTCM. Bear Stearns may dissolve the second fund after more than $600 million of investors' money dwindled to less than $200 million.

First Lucent, Then Agere, And Now Finally Avaya

Avaya announced that it has entered into a definitive merger agreement with Silver Lake, the leading investment firm focused on large-scale investments in technology-driven growth industries, and TPG Capital, a leading private investment partnership, for approximately $8.2 billion or $17.50 (cash!) per common share.