Bonus, Redemption Bases For SEC Deal With Ex-Bear Hedge Fund Managers

Feb 23 2012 | 5:01am ET

The Securities and Exchange Commission yesterday explained how it arrived at the disgorgements to be paid by two former Bear Stearns hedge fund managers.

The regulator earlier this month announced that it had reached a deal with Ralph Cioffi and Matthew Tannin, who oversaw two Bear hedge funds that collapsed in 2007, costing investors $1.6 billion. Under that agreement, Cioffi will pay $700,000 in disgorgement and a $100,000 fine, and Tannin $200,000 in disgorgement and a $50,000 fine.

The disgorgement figures were based on Cioffi's 2007 redemption of $2 million from his hedge funds, and Tannin's $750,000 bonus from that year, the SEC's John Worland and Richard Hong wrote to U.S. District Judge Frederic Block. Cioffi's redemption allowed him to avoid the disgorged amount in losses, they explained.

Block must approve the settlement, which comes more than two years after the two men were acquitted of criminal charges that they misled investors in the two hedge funds. The judge has called the settlement "chump change" but indicated that he would likely approve the deal.

"The proposed settlements here are fair, adequate and reasonable," the SEC wrote, sentiments echoed by lawyers for Cioffi and Tannin.


In Depth

Malik: The Science of Deal Sourcing 201

Aug 27 2015 | 5:35pm ET

Deal sourcing is understandably a hot topic among private equity firms because it...

Lifestyle

Rolling Art Advisors Marketing Collectible Car Fund As Uncorrelated Alternative

Aug 27 2015 | 6:47pm ET

A new fund is trying to provide investors with greater access to an emerging asset...

Guest Contributor

Agecroft Partners: Hedge Fund Industry Assets to increase $250B by Summer 2016

Aug 11 2015 | 11:29am ET

Assets will continue to flow into the hedge fund industry despite long-standing...

 

Editor's Note