Deliberations began today in the trial of two former Bear Stearns hedge fund managers.
Matthew Tannin and Ralph R. Cioffi are charged with conspiracy and fraud in connection with the failure of two funds that repackaged subprime mortgage debt.
Theirs were the first criminal charges filed against Wall street employees after the financial meltdown of late 2007.
Yet in her closing statement last week, assistant U.S. attorney Ilene Jaroslaw told jurors, “This case is not about hedge fund strategy or what happened in the market in 2007. What it is about, is the two defendants lied to their investors.”
Damning email played a major part in the prosecution’s case. Messages revealed that the two were withdrawing their own money from the funds, while reassuring investors about their personal involvement.
“This case will be viewed by many as a test of where the boundary lies between acceptable, positive spin and outright fraud,” defense lawyer and former prosecutor David Siegal told the Wall Street Journal.
Investors lost $1.6 billion in the collapse, triggering a series of losses that led to the end of Bear Stearns. The firm was acquired by JPMorgan in May 2008.
Update: Both men were acquitted of all charges on Nov. 10, 2009.
See Muckety post from June 20, 2008.
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