2 Ex-Bear Stearns Hedge Fund Managers Acquitted

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Former Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin, on trial for defrauding investors, were found not guilty on all charges today.


There's a verdict in the first big criminal trial arising out of the subprime mortgage meltdown. Ralph Cioffi and Matthew Tannin were found not guilty by jurors in a Brooklyn courtroom today. They managed two hedge funds for Bear Sterns. The funds lost more than $1.5 billion when the housing market collapsed. Prosecutors charged Cioffi and Tannin with fraud and conspiracy.

Lisa Chow reports from New York.

LISA CHOW: It took jurors less than two days to deliberate and come to their decision. When the verdict was read out loud in court, Cioffi looked stunned for a moment, then his face relaxed. Tannin eventually started to smile broadly. Both of their wives, sitting in the audience, started to cry. Family and friends embraced the wives.

If convicted of the most serious charge of securities fraud, the two men could have faced up to 20 years in prison, Cioffi's lawyer, Dane Butswinkas, told reporters he was glad the jurors listened. Tannin's lawyer, Susan Brune, outside the courtroom, made a simple statement.

Ms. SUSAN BRUNE (Matthew Tannin's lawyer): This has been a tremendous team effort. We are thrilled for that and for his family.

CHOW: Neither defendants spoke on tape, but in a written statement, Tannin said, quote, "I am grateful for the jury's hard work in weighing all the evidence, and thank them for their commitment in finding the truth."

The U.S. attorney's office said in a statement, quote, "We are disappointed by the outcome in this case. But the jurors have spoken."

Speaking outside the courtroom, jurors said there was a reasonable doubt on every charge. Serfaynes Timson(ph) is 27 and works at a school.

Ms. SERFAYNES TIMSON (Juror): It was difficult. We've sat in that room for a day and a half. And it was like the hardest decision we all have to ever made.

CHOW: She says during opening argument, she was convinced Cioffi and Tannin were guilty. But over the course of the trial, she changed her mind. She says the defendants may have misled investors but the government failed to prove their intent to defraud investors.

The U.S. government wins the majority of white-collar cases that it chooses to pursue. So analysts say that this defeat could cause federal prosecutors to hesitate in bringing a similar case against other Wall Street figures.

For NPR News, I'm Lisa Chow.

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