Hopes that James Cayne and Joe Lewis, the billionaire investor, may succeed in eliciting a counter offer for Bear Stearns were quashed last night, after it emerged that the chairman of the stricken bank had sold all his shares.

In a regulatory filing yesterday Mr Cayne admitted that he had sold 5.66 million shares which had belonged to him and his wife.

Between them, Mr Cayne and Mr Lewis controlled about 13 per cent of the group’s stock, with about 3 per cent held by the Bear executive.

Yesterday the filing revealed that Mr Cayne had sold his shares at $10.84, valuing the sale at $61.3 million.

Last year Mr Cayne’s 3 per cent stake was valued at almost $1 billion when shares in the bank peaked at $171.50. In after hours trading, Bear shares sank 5 per cent to $10.70 as traders concluded that JP Morgan Chase’s revised offer of $10 per share for the bank would succeed.

Shares of Bear have traded above the prices offered since the deal was announced as some investors felt a rival bid might be in the offing. There was also speculation that Mr Cayne might try to muster a competitive offer with Mr Lewis.

Last week Mr Cayne and Mr Lewis were understood to be trying to encourage other banks and sovereign funds to counter the initial $240 million offer made by JP Morgan Chase for Bear Stearns. That deal had valued Bear stock at $2 each – 6 per cent of their closing price the day before the offer had been made public.

On Monday JP Morgan Chase raised its offer to $10 a share, or $1.4 billion for the group altogether. Mr Cayne sold his shares the following day – March 25.

By raising its offer price and agreeing a highly unusual side-deal, JP Morgan Chase sought to prevent a revolt by leading shareholders in Bear, who had vowed to reject the original $2-a-share offer, threatening a “no” vote and litigation.

In the side-deal, Bear’s board immediately authorised a sale of a 39.5 per cent stake in itself to JP Morgan through a separate transaction in which Bear will issue new stock, also at about $10 a share that JP Morgan will buy. The law of Delaware, where JP Morgan and Bear are incorporated, allows up to 40 per cent of a company be sold without shareholder approval.

The revised deal was agreed a week after some Bear staff wept as they realised that the just-agreed $2-a-share firesale to JP Morgan would wipe out most of their savings.

Mr Cayne was chief executive of Bear Stearns for 15 years, until he was forced to step aside assuming the single role of chairman in January. The move was prompted by investor anger that the bank had reported its first loss in its 85-year history.

Mr Cayne's shareholding was the biggest among all executives at Bear Stearns. His successor, Alan Schwartz, the new chief executive, has about one million shares. Bear Stearns declined to comment on the share sale last night.

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