Bear Stearns Faces Indictment Over Collapsed Hedge Funds

Feb 7 2008 | 1:04pm ET

Bear Stearns may be in serious legal jeopardy over the collapse of two credit hedge funds last year.

Already facing hundreds of millions in claims from aggrieved investors, who lost $1.6 billion in the High-Grade Structured Credit Fund and a more levered sister vehicle, the Wall Street firm is now facing the prospect of a federal indictment.

Federal prosecutors are in talks with high-ranking Bear executives, CNBC’s Charlie Gasparino reports, and have already spoken with Rich Marin, the former head of Bear Stearns Asset Management. According to Gasparino, an indictment of the firm is possible.

The two Bear funds went bankrupt last year after huge losses in subprime mortgage-linked bonds and other credit assets.

In December, the Securities and Exchange Commission announced it was investigating the withdrawal of $2 million from the funds by former manager, Ralph Cioffi, who has since left the firm.

RELATED STORIES

Bear Stearns, Fortress Talked Merger
Bear Hedge Fund Manager Cioffi Out
Hedge Fund Investors File Legal Claims Against Bear Stearns
Bear Wants Manager Of Bad Hedge Funds To Stay
Mass. Sues Bear Over Collapsed Hedge Funds
Collapsed Hedge Fund Investors Seek Bear Ouster
Bear Bitten By Hedge Fund Collapses, Mortgage Crisis


In Depth

High Time For A Cannabis Hedge Fund?

Sep 30 2014 | 7:07am ET

Launching a hedge fund is always a gamble, but Leslie Bocskor's decision to launch...

Lifestyle

Griffin Donates $1M To Rauner's Illinois Gov. Campaign

Sep 22 2014 | 9:29am ET

Hedge fund billionaire Kenneth Griffin definitely has a dog in this fight. The Citadel...

Guest Contributor

Appraisal Ratio Key To Evaluating Hedge Funds And Other New Investments

Sep 29 2014 | 3:07pm ET

As a former finance professor Peter Hecht experiences heartburn every time he hears...

 

Videos

Editor's Note

    Must Attend Hedge Fund Charity Events For October

    Sep 30 2014 | 9:29am ET

    The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…

 

Futures Magazine

September 2014 Cover

High frequency market making

High frequency trading is not evil, it is not a conspiracy and it really is not new; it is the natural evolution of the professional trading community making markets, providing liquidity and hopefully...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.