Prosecutors have already charged Ralph Cioffi and Matthew Tannin of Bear Stearns for misleading investors about the health of two Bear hedge funds that failed in 2007.
The “awesome opportunity” cost investors some $1.4 billion and percipitated the financial crisis and firesale of Bear Stearns to JPMorgan.
Now, it looks like Cioffi, who is also charged with insider trading, got plenty of warnings.
Reuters: A former Bear Stearns Cos hedge fund manager facing an insider trading charge routinely ignored warnings of potential conflicts of interest, and was rebuffed when he tried to pledge some money toward a loan to build a luxury Florida condominium, prosecutors said.
…In its motion, the government said it wants to show Cioffi was “repeatedly counseled” but “rarely adhered” to guidance by his compliance staff about conflicts of interest involving trades his High Grade Structured Credit Strategies Enhanced Master Fund made with Bear Stearns itself.
The government said hundreds of transactions lacked needed approvals, with the percentage not approved by the fund’s directors rising to 79 per cent in 2006 from 18 per cent in 2003. It said this led to a moratorium on in-house trades.
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