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

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As you know, Bear Stearns former hedge fund managers Ralph Cioffi and Matthew Tannin were arrested this morning. The dream team was charged with securities fraud for telling clients in the pair of BSC funds created to invest in that can't miss asset class, subprime mortgages, that nothing was fucked last year when in reality, that wasn't exactly the case.
According to the indictment, in an email to a member of his team at the end of March 2007, Tannin wrote, "undefinedelieve it or not-- I've been able to convince people to add more money." Clearly, Tannin was shocked by this turn of events, as he well should have been. But what's shocking is not the fact that people didn't necessarily understand that subprime was toxic sludge, but that they didn't see Bear's "we're trying too hard" oversell of this stuff and go, "Whoa, wait just one minute." I'm not intimately familiar with the jargon used in formal pitches to investors but "we have some awesome opportunities," which is what indictment records state Cioffi instructed brokers to tell clients, strikes me as something that would be a tip-off run for your lives. Seriously, they might as well have gone with, "this shit kicks ass" or "you bitches will thank me in the morning" or "all other funds suck balls in comparison to ours." On a related noted, if forthcoming testimony doesn't reveal they did, I plan using those pitches verbatim when I open my own place in 5-10.
Ex-Bear Stearns managers charged with fraud [Reuters]
Behind The Scenes Of Bear's Fund Meltdown [DealBook]

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