Bear Stearns Hedge Fund Managers Not Guilty Of Fraud

Photograph of Matthew Tannin, after his acquittal, by Louis Lanzano/AP

Today, a federal jury found two Bear Stearns hedge fund managers not guilty of fraud related to subprime mortgages. Portfolio manager Ralph Cioffi and the funds' COO Matthew Tannin were accused of misleading investors—and losing $1.6 billion—were acquitted after a jury took less than a day to deliberate on charges.

The NY Times reports, "The case was the first against high-profile Wall Street executives charged with fraud stemming from the financial crisis. And in many ways, it was a test of whether the government can successfully prosecute financial fraud in an era when complex investments like collateralized loan obligations and subprime mortgages can confuse jurors with little background in finance." So, we guess the government failed that test!

The two men allegedly told clients that the funds were doing great: According to Bloomberg News, prosecutors said "The men claimed in e-mails and conversations to be adding their own money to the funds in the months immediately prior to their collapse, according to the government. Neither man added any money to the funds, once valued at $20 billion, the U.S. alleged." The defense said the men were optimistic.

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By Jen Chung in News on November 10, 2009 5:10 PM

Comments [rss]

sid

This is the example of corporate america's grip over everything in this nation. They can get what they want with power of money and influence.

Sid

Manufactured mortgage

zodak

this is what happens when intelligent people do everything in their power to get out of jury duty.

Mr Mel

When you have a lot of money you can hire lawyers that can get you out of almost anything, provided the publicity calms down.

joshuadog

These two bozos knew exactly what was happening. They took their own money out of the funds and used their wives' email addresses on hotmail and gmail to communicate about how they were "toast", yet did not disseminate that to investors. Unfortunately, the only people more inept than them at managing is our US Government, who was not able to successfully prove the case. The Bear Fraudsters' legal time was able to argue amongst other things that the case was in the wrong jurisdiction. One idiotic juror even said after the trial they would invest with these guys if they could. If that is an accurate representation of the intelligence of the jury as a whole than it comes as no surprise that these guys are going to walk.

Mordicai

This is criminal court, right? I sure hope a civil court nails them. Maybe they don't meet the burden of proof for your court case but uh...yeah, they are totally fraudulent.