Bear Stearns Case Goes To Jury

by Lisa Chow

November 10, 2009

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November 10, 2009 from WNYC

The trial of two former Bear Stearns hedge fund managers has gone to the jury. Matthew Tannin and Ralph Cioffi are charged with securities fraud, wire fraud and conspiracy. Investors lost more than $1.6 billion when the two funds managed by Cioffi and Tannin collapsed in the subprime mortgage debacle.

STEVE INSKEEP, host:

A jury is deliberating in the securities fraud trial of two hedge fund managers. They came from Bear Stearns. They invested in securities linked to subprime mortgages, and the funds collapsed in 2007. Less than a year later, the whole bank failed.

From member station WNYC, Lisa Chow has more.

LISA CHOW: Jurors have heard testimony from 24 witnesses, including former Bear Stearns employees who worked with Ralph Cioffi and Matthew Tannin. The two men are accused of misleading investors about the health of their funds, whose collapse resulted in $1.6 billion in losses.

In closing arguments last week, prosecutors pointed to this one line in an investor conference call to help prove their case.

Mr. RALPH CIOFFI (Former Hedge Fund Manager, Bear Stearns): The next big redemption date would be June 30th, and as of now, I believe we only have a couple million redemptions.

CHOW: That was defendant Ralph Cioffi, talking about how much money investors had asked to pull out of the funds. The government says a couple million was a lie, that at the time, three months before the funds collapse, one of the largest investors had already requested to take $57 million out.

The defense argued that Cioffi knew the investor was planning to pull money out, but he didnt know when. If convicted, Cioffi and Tannin could face decades in prison.

For NPR News, I'm Lisa Chow in New York.

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