Ralph Cioffi, after his arrestThe U.S. Attorney’s Office in Brooklyn, N.Y., couldn’t win a conviction of two former Bear Stearns hedge fund managers accused of lying to their clients. The Securities and Exchange Commission thinks it can do a better job.

The regulator plans to pursue its civil case against Ralph Cioffi and Matthew Tannin, despite the Tuesday acquittal of both men on fraud charges.

“We filed a case based on the evidence from our investigation,” Robert Khuzami, head of enforcement at the SEC, told Reuters TV.

He added that the SEC lawyers will try to learn from the criminal prosecutors’ mistakes. “We will study the transcript and events at trial, but I fully expect us to continue our case,” he said. “We have a different standard of proof.”

The Bear Stearns High-Grade Structured Credit Fund and a more highly-levered sister fund, managed by Cioffi with Tannin serving as chief operating officer, collapsed in the early days of the subprime mortgage crisis two-and-a-half years ago. The funds’ demise cost investors some $1.6 billion and helped precipitate the eventual collapse of Bear Stearns itself.

Had they been convicted of all charges, Cioffi would have faced up to 40 years in prison, with Tannin looking at 20 years.