Posted on 06/19/2008 9:04:06 AM PDT by 1rudeboy
Two former managers at investment bank Bear Stearns have been arrested in New York over the collapse of the bank's hedge fund last year.
Reports say Ralph Cioffi and Matthew Tannin will face charges in connection with their management of hedge funds that collapsed in June 2007.
The bank's hedge funds bet on the high-risk sub-prime mortgage market in the US before it collapsed.
Authorities in Brooklyn are due to give details about the case later.
FBI spokesman Jim Margolis told the BBC the men faced criminal charges of "securities fraud related to their management of two Bear Stearns hedge funds".
The men are due to appear in the US Federal Court in Brooklyn later this afternoon local time.
If charged, the men would become the first Wall Street executives to face criminal charges related to the US sub-prime mortgage crisis.
Sub-prime mortgages, loans issued to people with a poor credit history, were repackaged as securities and sold across the globe.
The collapse of these hedge funds preceded Bear Stearns' own demise earlier this year.
In March, JP Morgan agreed to buy Bear Stearns with backing of the US Federal Reserve. The deal was approved by Bear Stearns shareholders last month.
Bear Stearns was one of the most high-profile victims of the credit crunch, which was triggered by bank losses linked to the US housing market.
The Fed took swift action over the situation at Bear Stearns to prevent problems spreading to the rest of the international financial sector.
ping
I love goats.
The perp walk always looks good when wearing an expensive suit....
Always dress to impress your cellmates.
There will be blood
Commentary: Hedge fund managers face Enron-like backlash
My, my ...wasn’t it only a few months ago when anyone here critising the outrageously corrupting practices of the banking, mortage and fund sectors would be jeered and shouted down as a “communist”. The only way you know those guys are still with us is to check out a Pat Buchannan topic.
My experience is that, if someone is called a “communist” on FR, it’s because someone is acting like one. I suppose some National Socialists may have slipped through the cracks and are attempting to regroup on the Buchanan threads.
Barn door locked? Check.
LOL. Small-timers arrested? Check.
The two got nailed by the SEC using email as evidence. Days before they were urging on investors, they were emailing that subprimes were toast.
Cioffi a Tenafly, NJ resident who earned an 8-figure salary.
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