Jury Acquits Bears-Sterns Hedge Fund Managers

Update: One of the jurors says she'd invest with the defendants if she had the money. Also,

[Juror]Stimpson said she came into the trial thinking both Cioffi and Tannin were guilty of the fraud, insider-trading and conspiracy charges. She said she began to have second thoughts as the testimony progressed and defense lawyers “tore the government witnesses apart.”
What's troubling is the juror's admission she was not providing them with the presumption of innocence at the start.

A federal jury today acquitted Ralph Cioffi and Matthew Tannin, former Bear Stearns hedge fund managers, of fraud and insider trading charges. It's a big loss for the Government.

They were the first Wall St. executives to go on trial for actions that allegedly brought the collapse of the financial market two years ago.[More...]

A jury of mostly working-class Americans dealt the government a stinging blow Tuesday, acquitting two former Bear Stearns hedge fund managers of fraud charges and proving that while popular anger still prevails, pinning the blame for the financial crisis on any one person will be difficult.

The fund managers had been accused of lying to investors about the performance of their funds, which were plummeting in value, by presenting an upbeat financial picture and by not disclosing that Cioffi had already pulled money out of one of them. The two funds collapsed in June 2007 under the weight of collateralized debt obligations chock full of disintegrating subprime mortgage loans.

The Washington Post reports:

Prosecutors claimed Cioffi and Tannin were telling investors that their money was safe while privately deriding the investments. But defense lawyers argued that prosecutors took e-mails out of context and Cioffi and Tannin were truthful in their discussions with investors.

More here.

The White Collar Crime Blog says:

Clearly honesty in the market is important. But one also has to wonder if the use of criminal charges is appropriate in cases that would not have occurred but for the poor economy. It is also a concern that the government is using overly broad statutes to criminalize an alleged lack of honesty.

U.S. Attorney Benton Campbell (EDNY) issued this press release after the verdict.

Of course, we are disappointed by the outcome in this case, but the jurors have spoken, and we accept their verdict. Honesty and integrity are the principles upon which our financial markets function. Enforcing and protecting those principles will continue to be one of the principal efforts of this Office.

It goes on to thank the agencies that worked on the case -- and to congratulate its prosecutors for the "extraordinary" job they did investigating and prosecuting the case. Kind of odd, no?

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  • Display: Sort:
    Those federal investigators and (none / 0) (#1)
    by oculus on Tue Nov 10, 2009 at 07:45:36 PM EST
    prosecutors probably had nada personal life for many months preparing and prosecuting this case. Kudos to the boss for recognizing their efforts.

    Not insider trading, I gather.

    If you ask me.... (none / 0) (#5)
    by kdog on Wed Nov 11, 2009 at 08:37:49 AM EST
    its all insider trading...good for the jury for not allowing the govt. to selectiveley enforce it...like they did to poor Martha.

    We can try and pin it all on these two guys, or a couple hundred guys at Bear Stearns and the other shady outfits...but really the rap is on everybody who gives these outfits money.


    You said it! (none / 0) (#2)
    by Spamlet on Tue Nov 10, 2009 at 08:42:01 PM EST
    What's troubling is the juror's admission she was not providing them with the presumption of innocence at the start.

    Sounds to me (none / 0) (#4)
    by Steve M on Wed Nov 11, 2009 at 01:52:32 AM EST
    like a garden-variety civil case.  Never heard of criminal charges in this context, though.  At most, a regulatory matter for the SEC or FINRA.

    You wanna press charges... (none / 0) (#6)
    by Dadler on Wed Nov 11, 2009 at 08:53:56 AM EST
    ...against someone? Press them against those who, during the Clinton Admin. (most of them now Obama financial officials) were clearly warned by Brooksley Born, who was legally tasked with regulating the derivatives market, that they were going to bring down the world economy, and who chose not only not to listen but to further the madness that resulted for another decade. Try Alan Greenspan first, who, as head of the Federal Reserved, did not even BELIEVE in laws against fraud. Tell me how you can hold that deep belief and still legally carry out your duties?

    And, as we speak (none / 0) (#7)
    by NYShooter on Wed Nov 11, 2009 at 01:01:03 PM EST
    Alchemy is alive and well.

    Every day a "highly skilled, irreplaceable clerk" at Goldman Sachs presses a button and borrows millions of dollars from the Fed at 0-.5% interest, then presses another button and buys bonds somewhere in the world paying 3 ½%. A few hours later said clerk presses another button selling said bonds and books $100,000,000 to GS's  personal account.

    Why use the Taxpayer's money to lend to business, and help the economy, and put some of our unemployed back to work when Bernake has handed them a no-risk, money machine?

    The system works, all is well, the recession's over, God bless America.