Trial of Former Bear Stearns Money Managers Goes to Jury
The fate of two former Bear Stearns hedge fund managers accused of fraud in the offering of subprime mortgage-backed securities at the onset of the nation’s financial crisis is now in the hands of a New York City jury.
Ralph Cioffi and Matthew Tannin are the first Wall Street defendants to face criminal charges of fraud for their alleged roles in the world’s financial disaster. The men are accused of lying to investors about the health of the investment accounts in 2007, just as what would become known as “the Great Recession” was beginning.
Behind closed doors and in private emails later made public, the money managers admitted the investments were in deep trouble, but their investors were kept in the dark, prosecutors said.
Cioffi and Tannin have pleaded not guilty to charges of conspiracy, securities fraud, and wire fraud. Cioffi is charged with insider trading, according to a Reuters news report. Jury deliberations began today after the month-long trial in a Brooklyn federal courtroom.
The men could face up to 20 years in prison if convicted on the charges.
Other Cases Could Follow the Same Track
The criminal charges stem from the 2007 collapse of two hedge funds managed by the men, costing investors as much as $1.6 billion. The funds were the High Grade Fund and the Enhanced Leveraged Fund, officials said.
The trial of the two former Bear Stearns hedge fund managers is being closely watched by other prosecutors around the country, who could decide to bring their own fraud cases relating to the global financial crisis.
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