Six years after their hedge funds collapsed, the former Bear Stearns managers have still not done anything wrong, outside of being bad at managing a hedge fund, an offense lacking in any sort of civil (or criminal) liability. Read more »
Last November, Matthew Tannin and Ralph Cioffi’s days were made when, in a in a flash of prosecutorial incompetence, the dream team who ran the two ridiculously named Bear Stearns funds– High Grade Structured Credit Strategies Fund and High Grade Structured Credit Strategies Enhanced Leverage Fund– were acquitted on charges of conspiracy, securities and wire fraud, and dodged 20 years each in the big house. There was no problem whatsoever with the fact that they’d painted a rosy picture to their investors as the bottom fell out of the credit market and they moved their own money out of the time bomb which ultimately cost clients $1.6 billion and, in fact, the jury was so impressed with how the team conducted their business that many indicated 12 ready and willing investors await. Before he was proven innocent, however, Cioffi had to do a little unloading of assets, the most valuable ones being a house in Southampton, one in New Jersey (he and his wife are now in a rental) and his prized Ferraris. Now he tools around in his wife’s Honda and if you thought that’d be a source of depression, you thought wrong. Cioffi says it’s a great little car. Read more »
It seems we will have Ralph Cioffi and Matthew Tannin to kick around for a while longer. The two men may have escaped the long arm of the law, winning an acquittal on fraud and insider-trading charges earlier this week, but the SEC isn’t discouraged.
The regulator will proceed with its own case against the two former Bear Stearns hedge fund managers, SEC Enforcement Chief Robert Khuzami said. And why not? “We filed a case based on the evidence from our own investigation,” Khuzami noted, politely failing to mention the cock-up of an investigation run by the U.S. Attorney’s office. There’s also the “different standard of proof” for a civil trial, under which even the incompetent prosecutors could probably win a conviction. And finally, there are those incompetent prosecutors, lighting the way to failure.
“We will study the transcript and events at trial,” Khuzami said, then mumbling, “and do the exact opposite.”
US SEC expects to proceed with Bear Stearns case [Reuters]
They haven’t said anything yet but I think it’s pretty obvious it’s coming. Yesterday, when the dream team in charge of the two ridiculously named Bear Stearns funds–High Grade Structured Credit Strategies Fund and High Grade Structured Credit Strategies Enhanced Leverage Fund– emerged from a Brooklyn courthouse, Matthew Tannin had the shit-eating grin pictured at left on his face. He was happy, of course, that he and his co-conspirator, Ralph Cioffi had gotten off counts of conspiracy, securities and wire fraud, and dodged 20 years each in the big house. Because honestly, even MT didn’t see that coming (you read the e-mails). But mostly, he was psyched to learn that his career as a money manager is not over. People aren’t planning on holding this (apparently baseless) duping of investors stuff against him and his colleague and in fact? Some are pretty impressed with how the dream team conducted their business.
Aram Hong, a juror from Woodside, Queens, said the exchanges between Cioffi and Tannin shown to the jury proved to her that the two men were working “24-7″ to save the funds in the months before they collapsed. She noted a defense exhibit that showed the fund managers were working at 4 a.m.
The Wall Street trial of the century (and a horrendously botched prosecution) has led to the acquittal of two former Bear Stearns hedge fund managers accused of defrauding investors.
It took a jury less than two days to exonerate Ralph Cioffi and Matthew Tannin of securities and wire fraud. Cioffi was also accused of insider-trading. The two were accused of lying to investors in their two hedge funds, painting a rosy picture while the bottom fell out of the credit market. Both funds failed, costing investors $1.6 billion.
Their victory is a huge defeat for the Justice Dept., serving as something of a test case for similar battles against Wall Street executives.
“Didn’t [Ralph Cioffi and Matthew Tannin] have a responsibility to stop a panic by saying, ‘Look, we think things are going to be okay here’? Can’t you be scared in an internal email but still feel things are going to be okay and say that to investors?”
At the heart of the indictment of former Bear Stearns hedge fund managers Matthew Tannin and Ralph Cioffi is an email exchange in which Tannin questioned the performance of the funds. Federal prosecutors are treating those those emails as the smoking gun in the case against them, saying the men privately knew the funds were in trouble while they publicly reassured investors that the funds were healthy. At least one former prosecutors has described the email exchange between the two men as “dumbfounding.”
Of course, the exchange could also be read as exculpatory. As far as we can tell, the emails detail a discussion about fund performance and strategy and do not discuss attempts to deceive investors. The junior Tannin was nervous. His boss Cioffi instructs him to hold steady. These are the kind of frank and open discussions investors should hope occurs between those entrusted to manage their money. But this case seems likely to make those discussions too dangerous to hold.
The prosecution of these two Bear Stearns executives offers a bad lesson for Wall Street: If you have doubts about your strategy or returns, never put it in an email.
Oh hell yes, my friends. Oh hell yes. Fuck business cards (unless they belong to egret-lover Sam Israel, whose b-card criminally only sold for $61). A Bear Stearns Christmas card signed by alpha-generator extraordinaire Ralph Cioffi is being auctioned off on eBay. Bidding is up to $26. To put things in perspective, this would set you back 13 shares of BSC, at the time JPM was hilariously going to buy it for $2. Not that we don’t want this thing for ourselves, but we sense some stiff competition in Jamie Dimon, whose feelings for Cioffi, instrumental in removing one of the key Jenga pieces from this bitch, and allowing JPM to buy it on the cheap, run deep. He’ll likely also be playing dirty when it comes to scoring a signed grav-bong being auctioned by a seller who goes by the name of BigJCaCay. (Typically, these “little pieces of history” have been offered up by third parties, but in a sharp departure from his demonstrated business acumen of late, someone who once held a senior position at the firm has been tearfully parting ways with his most precious possessions. For example, a favorite roach clip is predicted to go for at least a few ten-spots, even half of which BJCC is in no position to be turning down.)
Ralph Cioffi Signed Bear Stearns Hedge Fund Xmas Card [eBay]