March 17 (Bloomberg) -- Bear Stearns Cos., after agreeing to be purchased by JPMorgan Chase & Co. for less than a 10th of its value as of last week, was sued by shareholders claiming the bank misled investors about its finances and by an employee who said it breached its duty to workers.

Shareholder Eastside Holding Inc., based in New York, filed a complaint today in Manhattan federal court seeking unspecified damages and class-action status so the case would represent every buyer of Bear Stearns stock from Dec. 14, 2006, through March 14.

Bear Stearns failed ``to inform the market of the problems in the company's hedge funds due to the deteriorating subprime mortgage market,'' the San Diego-based law firm filing the suit, Coughlin Stoia Geller Rudman & Robbins, said in a statement.

The suit was the first since the Federal Reserve backed a takeover of the New York-based investment bank by JPMorgan last week for $2 a share. Clients of Bear Stearns, once the biggest underwriter of U.S. mortgage bonds, withdrew $17 billion in two days, alarmed by speculation about a cash shortage. Faced with the prospect of bankruptcy, Bear Stearns agreed to be purchased.

The employee who sued also asked for class-action status, on behalf of participants in Bear Stearns' retirement plan, plus unspecified damages.

Aaron Howard said Bear Stearns breached its fiduciary duty to members of the plan by offering company stock to its employees when it was ``imprudent to do so'' and invested too heavily in the stock.

Warning of Risk

Howard accused the firm of failing to provide workers with accurate information about the risk of investing in Bear Stearns.

Two individual investors sued bank officers and directors in state court in New York, claiming it breached its duty by unlawfully preventing them from maximizing the value of their holdings.

David Shaev and Richard Kurtz asked for class-action status and an unspecified amount of damages from the drop in value of their stock. Ronen Saraff, a partner at Saraff Gentile in New York representing the men, didn't return a voice-mail message seeking comment.

Today's shareholder suits followed a Dec. 21 federal court complaint over claims that investors lost $1.6 billion in the collapse of two Bear Stearns hedge funds.

That suit, brought by investor FIC LP, a San Francisco- based partnership, followed the firm's first-ever loss, writedowns for mortgage holdings and declines in trading and investment banking.

Officers, Directors

Named in today's complaints were Bear Stearns executives including Chairman James Cayne, Chief Executive Officer Alan Schwartz and former CEO Alan ``Ace'' Greenberg.

Russell Sherman, a bank spokesman, didn't immediately return a phone call seeking comment on the lawsuit.

Joseph Lewis, Bear Stearns Cos.' second-biggest shareholder, told CNBC today that the investment bank's planned purchase by JPMorgan for $2 a share represents a ``derisory offer.''

``I think it's a derisory offer and I don't think they will get it,'' CNBC cited Lewis as saying in a telephone interview.

According to the federal complaint, Bear Stearns issued a misleading press release on Aug. 3, 2007, when it disputed the decision of Standard & Poor's to change its outlook on the firm, and on other dates. The suit alleges securities fraud.

``By misrepresenting Bear Stearns's business, the defendants presented a misleading picture of the company's business and prospects,'' according to the complaint.

Attorney David Rosenfeld, who filed the suit on behalf of Eastside, said JPMorgan will assume the liability of Bear Stearns in the event of a settlement or verdict in the investors' favor. Individual defendants may be liable for themselves, he said.

Other claims against Bear Stearns are likely to be filed, Rosenfeld said. ``I assume there will be a lot of copycat complaints,'' he said.

The case is Eastside v. Bear Stearns, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: David Glovin in Manhattan federal court at dglovin@bloomberg.net.

Last Updated: March 17, 2008 21:51 EDT