Bear Stearns Execs Absolutely Floored By Extent To Which They Were Able To Con Investors

Posted by guest, Jun 19, 2008 2:29PM

proven

Posted by guest, Jun 19, 2008 2:47PM

this is so fucked up

Posted by guest, Jun 19, 2008 2:47PM

this is so fucked up

Posted by guest, Jun 19, 2008 2:57PM

I would go with "proven."

Posted by guest, Jun 19, 2008 2:59PM

These guys are total scumbags. I worked at Bear back in 99-01, wouldnt wipe my tookas with half the slime that worked there. No wonder why the place imploded. I hope folks at Lehman are taking a hard look at these stories

Posted by guest, Jun 19, 2008 3:07PM

Talk to someone who at these honest guys touted, who lost not only their ass, but desire to trust these smooth talking bastards and tell us again...this is so fucked up. Guest...2:47 pm if you have nothing better to do.....GO STICK YOUR HEAD IN A TOILET.... and take a nap.

Posted by Clown Capital , Jun 19, 2008 3:31PM

Well, well, well. I hope the American public feels vindicated. The half-wit media is fervently seeking to cast these two nefarious characters as the bane of our economic woes. Forget that the primary issue is our own gluttonous consumption predilections and institutional greed.

Posted by guest, Jun 19, 2008 3:36PM

second the half-wit media.

Posted by guest, Jun 19, 2008 3:38PM

Perp video

http://www.cnn.com/video/#/video/us/2008/06/19/vo.bear.stearns.perp.walk.cnn

Posted by guest, Jun 19, 2008 3:39PM

This is the freaking problem with america- lynch mob mentality. When something goes wrong nothing makes you feel better than watching some poor b@$tard hanging high- we all loose money so someone goes to jail.

If you want to hand out jail sentences for loosing money- what about Chuck and Stan?

Posted by guest, Jun 19, 2008 3:45PM

Dan Bayly head of IB at ML did time for a Enron Conf call...

These guys are toast

What that old world saying: From the barn to the stars and back in one generation

Shirts sleves to shirtsleves

Maybe Vermonts local bank will take'em as a greeter

Posted by Corningstone, Jun 19, 2008 3:47PM

@3.36pm Third that!

Posted by guest, Jun 19, 2008 3:48PM

Cioffi had $6 million of his own money in the funds. He moved $2 million out, ostensibly to start a third hedge fund.
He left $4 million of his own money in the hedge funds, which was lost along with other investors' money. For what nefarious reason would he risk $4 million of his own money, other than the thought he would make money for himself?

Posted by guest, Jun 19, 2008 4:26PM

Bankers doing time for 5 min call

http://www.iht.com/articles/2005/11/21/business/enron.php

Posted by guest, Jun 19, 2008 4:28PM

hmm, i didnt even think he was talking to you, just the american public that the half-wit media caters to.

unless you consider yourself part of the half-wit media, which i'm sure most of us here would not.

but great rant nevertheless.

Posted by Lowly Assistant, Jun 19, 2008 4:46PM

To be honest, I found the atrocities concerning GS to be far more disconcerting than these regal fellas. Water and soda affects the masses; Cioffi and Tannin, only a handful of folks. (See: Cioffi's wife - shambles. See: Me - eating m&ms, parched.)

Posted by Anal_yst, Jun 19, 2008 5:00PM

re: half-wit media (great rant bess, btw) -

Unfortunely had to attend a wake earlier this week, but had the chance to speak to some friends' parents about the economy, politics, etc.

Middle/upper middle class non-finance types, but it was utterly amazing for people who live so close to nyc how ungodly uninformed most were, like the only available local paper was the bumblef&ck times or something.

Case-in-point, the 1/2 wit media and the similarly 1/2-witted populace feed off each other, to the point where its completely unclear which came first, the chicken or the egg.

Posted by guest, Jun 19, 2008 5:19PM

Bess,

While I was not insinuating that you were leading the lynch mob you seem to have taken it that way- so be it, the media does seem to have higher appreciation of shaudenfreuder than most.
What you non market people have failed to appreciate is that comments like
"thank god we were able to get that stupid customer to but that crap"; or
"find me someone stupid enough to pay up for this"
are shouted across dealing floors all over the world every day.

If a stupid comment about the naivety of a customer should land someone in jail then most of wall street and the city ought to be banged up.

Mensa 3:39

Posted by jerrydill, Jun 19, 2008 5:29PM

We needed a good corporate scandal. I don't think that we've had one in quite a while. I'm not surprised it is with Bear Stearns.

Posted by guest, Jun 19, 2008 5:40PM

If it's a crime to say this or that company "is a total turd", or "what idiot investor will buy into this deal"... many of us should probably be doing 35 to life at Rikers.

Investment Banking 101: Every client is a complete bucket shop and every deal sucks

That's just how we joke around, It's not fraud. Cut these guys some slack.

Posted by gdm, Jun 19, 2008 5:44PM

Generally I call BS on criminalizing failure, but I'm becoming convinced that truly doesn't apply here.

http://graphics8.nytimes.com/images/blogs/dealbook/cioffi_indictment.pdf

CIOFFI wrote an email to a colleague, stating that "I'm fearful of these markets. Matt [TANNIN] said it 's either a meltdown or the greatest buying opportunity ever, I'm leaning more towards the former. As we discussed it may not be a meltdown for the general economy but in our world it will be."

CIOFFI and TANNIN told, and caused others to tell, investors throughout March 2007 that the market presented a buying opportunity. ... CIOFFI believed the market was such that, "we have an awesome opportunity."

33. In contrast with CIOFFI and TANNIN'S representations to investors that the Funds had tremendous opportunities to buy undervalued assets, CIOFFI told TANNIN and another team member on March 15 that the Funds "have to be very light on the investment side and continue to raise cash in [the High Grade Fund] and maintain cash in [the Enhanced Fund.]," primarily to meet margin calls.

34. Despite his repeated representations to investors that he was going to add to his own investment in the Funds, TANNIN never did so.

In an email message, TANNIN advised CIOFFI..."the subprime market looks pretty damn ugly … If we believe the [CDOs report is] ANYWHERE CLOSE to accurate I think we should close the funds now. The reason for this is that if [the CDO report] is correct then the entire subprime market is toast. . . . If AAA bonds are systematically downgraded then there is simply no way for us to make money - ever. (emphasis in original)

TANNIN concluded that, "caution would lead us to conclude the [CDO Report] is right - and we're in bad bad shape."

TANNIN then asked, "Who do we talk to about this? [BSAM's president]? [Bear Stearns' co-president]? Outside counsel? (And here we have to be careful because our outside counsel is BSAM’s counsel NOT our counsel - This is another very big issue we at least need to think about." TANNIN circumvented Bear Stearns' email system by sending this email from his personal account to the personal email accounts of CIOFFI’s wife and the other Funds manager.

TANNIN, in stark contrast to the grim views expressed in his email to CIOFFI of just three days before, told investors: "So, from a structural point of view, from an asset point of view, from a surveillance point of view, we're very comfortable with exactly where we are. … The structure of the Fund has performed exactly the way it was designed to perform," and "it is really a matter of whether one believes that careful credit analysis makes a difference, or whether you think that this is just one big disaster. And there's no basis for thinking this is one big disaster.”

[Asked about redemptions ]CIOFFI answered that question by falsely claiming that, "[tlhe next big redemption date would be June 30th, and as of now, I believe we only have a couple million of redemptions for the June 30 date. . . . I believe we have about 45 million in subscription, and 25 of that is from Bear Stearns and those will be for, I believe those are all for May 1st."

47. Despite the acknowledged importance of this issue to investors, CIOFFI failed to disclose the approximately $57 million redemption submitted by Major Investor #I, with whom CIOFFI had met on April 18, 2007.

48. While noting the May 1 subscriptions, CIOFFI also omitted any reference to $67 million in redemptions scheduled for April 30 and May 31, 2007. As for the "June 30" redemptions, while CIOFFI stated that there were only "a couple million," in fact, there were a total of approximately $47 million, which included a portion of Major Investor #l’s $57 million redemption.

While gathering the documents and materials, Bear Stearns learned that TANNIN'S tablet computer, which he had used to take notes during 2007, and one of CIOFFI’s notebooks, in which he had taken handwritten notes for the period January 1, 2007 to June 17, 2007, were both missing.

Posted by mrpink, Jun 19, 2008 5:59PM

All hail Bess Levin!

The Great Dr. BL!

(that was really serious, not a sarcastic remark)

(whispers: Free Cioffi!) :-)

We at DB love you Bess!
-mrp

Posted by guest, Jun 19, 2008 6:11PM

Dear Bess,

Thanks for letting me hang around DB....I take your point about breaking up the lynch mob. I am just as guilty as the next person for passing comment from the peanut gallery without something more proactive so mia culpa.

As far as these particular guys- who knows. There are no shortage of guys who lost a boat load of cash at UBS, MER and C who also probably mislead their management about their positions. Lots of people should be going down no question but are these guys the ones who brought down bear sterns? I think that responsibility gets shared by a lot more people but only two of them seem to be going to jail.....

Thanks for taking the time to rain down righteous indignation on my ass

Mr Mensa

Posted by guest, Jun 19, 2008 6:32PM

I used to work at BSAM and the things that Cioffi and Tannin did, lying to investors about riskiness of investments, amount of their own assets invested in the fund, risk controls (there were none).....was common to most BSAM hedge funds. They were just unlucky that their market was the one that blew up. These funds supposedly had positive returns every month (until they lost everything) which should have set off alarm bells since even the best fund managers have down months (and these guys were not in that category)The CIO and CEO, who are as responsible as the fund managers, knowingly overlooked all sorts of shady activity among the successful funds because they wanted them to continue generating revenues to pay their bonuses.

Posted by guest, Jun 19, 2008 6:45PM

I thought the whole point of hedge funds being unregulated was that when you got fucked, you were already rich and thus, you can afford to be fucked.

Posted by Cincinnatus C, Jun 19, 2008 6:53PM

Bess, get over yourself. there are other media reporting on this besides DB. (not that I don't think you would look sweet naked)

Posted by guest, Jun 19, 2008 7:13PM

@CC, yes but those other people aren't reporting it on dealbreaker.

Posted by guest, Jun 19, 2008 8:31PM

Ditto to 6:32. I worked at an MBS fund in flyover country and our managers dialed in returns every month. They were even a Bloomberg top fund of 2005. Wanna know how? If they didn't like the return one month when they did the "preliminary" calculation, they'd change the assumption on their model et viola!, better return for that month. Pretty awesome to be able to "estimate" your returns. Must be nice to have a book that's that fungible--a lot of traders would kill for the ability to mark up or down their portfolio on a whim.

Posted by guest, Jun 20, 2008 2:26AM

These are the guys who created the collapse of Bear Stearns. They need to get at least 25-30 years behind bars.

This is the height of white-collar crimes. Did anybody read how these wise-cracks were exchanging e-mails using their wife's personal e-mail accounts.

Posted by guest, Jun 21, 2008 9:11PM

If Bear had bailed out these funds last summer...Jimmy and Warren that is...the firm would probably still be around.

Posted by guest, Jun 28, 2008 12:35PM

For those guest posters who say "I worked at Bear" or "I used to work at BSAM" or "I worked at an MBS fund," you might want to take a look at Solomon Wisenberg's piece entitled "How to Avoid Going to Jail under 18 U.S.C. Section 1001 for Lying to Government Agents."

The prosecutors have said these are "just the most high profile arrests in their ongoing investigation." That clearly suggests they are working their way down the ladder. If you tell a couple of federal investigators who are "just looking to confirm a few details" that you "think it was a Tuesday," you had better hope it was not actually a Wednesday.