Hedge Fund Managers Not Guilty
Hedge Fund Managers Found Not Guilty of FraudA jury has acquitted two Bear Stearns hedge fund managers today. The managers were accused of misleading investors about the subprime mortgage meltdown and financial crisis, supposedly costing investors $1.5 billion. The Brooklyn jury ruled in favor of the defendants, Ralph Cioffi and Matthew Tannin, in a case that could discourage the expected government prosecutions of hedge fund managers and financial professionals.
Ralph Cioffi, 53, and Matthew Tannin, 48, were acquitted of all charges on the second day of deliberations by a jury in U.S. District Court in Brooklyn, New York. Cioffi and Tannin left the courthouse with their smiling wives and relatives, some of them crying tears of relief.
Cioffi and Tannin managed two funds, crammed with subprime mortgage-backed securities, that lost institutional and individual investors a total of $1.6 billion when the funds collapsed in mid-2007 at an early phase of the Wall Street market meltdown.
The jury on Tuesday acquitted both men of conspiracy, securities fraud and wire fraud -- charges brought in a June 2008 indictment. Cioffi was acquitted of an additional charge of insider trading.
"The government clearly will need to rethink whether and when to assert criminal responsibility in connection with the financial meltdown," said Jacob Frenkel, former SEC enforcement lawyer and now a law firm partner. Source
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