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Bear Stearns & Ralph Cioffi: They're Still Friends

Ralph Cioffi still seems to be getting along with Bear Stearns, according to forms the bank filed in connection with his termination. The former money manager was forced out of the bank after the two hedge funds he managed crashed and burned after making a series of wrong-way bets on subprime linked assets. Bear Stearns is now under investigation by federal prosecutors and investors in the hedge fund are suing, but in the termination form filed with security industry regulators Bear Stearns had nothing negative to say about Cioffi.
The NASD requires member firms to fill out a termination form, called Form U-5, whenever a registered employee is let go, explaining the reason for the termination. Wall Street firms have been known to use Form U-5s to smear departing employees who leave on acrimonious terms. Partial immunity to lawsuits for the contents of the Form U-5 encourages nastiness. But Bear's filing on Cioffi is very polite, which is raising some eyebrows.
"Bear Stearns clearly wanted an amicable departure," Jake Zamansky writes. "Often when firms are under investigation they look to scapegoat others. In this instance, Bear Stearns has a strong interest in keeping Cioffi 'on-the-reservation' given the firm's exposure to allegations of fraud in criminal and civil proceedings. The firm stands to benefit so long as their interest and Cioffi's are aligned. Therefore Bear Stearns doesn't have any incentive to include 'negative' disclosures which could shed light into how the hedge funds collapsed."
Bear Stearns & Ralph Cioffi: Breaking Up is Hard to Do [Jake Zamansky]