Indicted Bear Hedge Fund Duo May Face New Charges

Sep 29 2008 | 9:05am ET

Two former Bear Stearns hedge fund managers will learn whether they face additional charges stemming from the collapse of their funds by Dec. 5, prosecutors said Friday.

Ralph Cioffi and Matthew Tannin, who have pleaded not guilty conspiracy and securities fraud, with the former also pleading not guilty to insider trading charges, have been waiting since their June indictments to find out if federal prosecutors would add new counts against them. Cioffi, the former senior portfolio manager of the High Grade Structured Credit Fund and a levered sister fund, already faces up to 40 years in prison if convicted, with Tannin, the funds’ former chief operating officer, facing as much as 20 years. The duo also face civil fraud charges filed by the Securities and Exchange Commission.

“The government continues to consider a superseding indictment of additional charges,” prosecutor Patrick Sinclair told a Brooklyn, N.Y., court conference. Judge Frederic Block told the lawyers, “We would like to see the superseding indictment in place the next time we are here,” a hearing scheduled for Dec. 5.

Prosecutors allege that Cioffi and Tannin misled investors in the two funds about the health of the funds, which collapsed last summer, costing clients more than $1.5 billion. The men are also accused of lying about their own investments in the funds, and of “consistently misrepresenting” the funds’ portfolios.

The defendants, the first to face major criminal charges stemming from the subprime mortgage crisis, say they have done nothing wrong, with their lawyers calling them “an easy target” and “a scapegoat.”


In Depth

Change In 'Accredited Investor' Definition Could Hurt Crowdfunding Space

Jul 25 2014 | 8:14am ET

The Securities and Exchange Commission is considering changes to its 30-year-old...

Lifestyle

David Yarrow On Growing His Hedge Fund And Shooting The Animals And People Of Africa - As A Photographer

Jul 23 2014 | 6:44am ET

While he’s always been a photographer, recent expeditions to Iceland, Ethiopia...

Guest Contributor

The Truth About Track Record Portability

Jul 24 2014 | 5:55am ET

The number of private funds converting to mutual funds has increased significantly...

 

Sponsored Content

    Northern Trust Helps Hedge Funds Navigate Derivatives Regulations

    Jul 8 2014 | 10:48am ET

    The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…

Publisher's Note