New York Times: Two former managers of hedge funds at Bear Stearns were arrested and charged with securities fraud on Thursday, a year after the collapse of the funds signaled the onset of a credit crunch that shows little sign of abating.
The indictments, which will be detailed this afternoon by federal prosecutors in Brooklyn, are the first to be brought against senior Wall Street executives linked to a tight credit market that has rattled global markets, led to more than $350 billion in write-offs, cost numerous executives their jobs and culminated in the demise of Bear Stearns.
The two funds had names as abstruse as the complex subprime securities in their portfolios — High Grade Structured Credit Strategies Fund, and its riskier sister offering, the High Grade Structured Credit Strategies Enhanced Leverage Fund.
[For what it’s worth, we at the Business Sheet haven’t seen any evidence that persuades us that Cioffi and Tanin committed fraud. The now infamous “toast” email–as in “subprime is toast”–proves that the managers were concerned about the market, debated it, and then decided to stick with their positions, but that’s business as usual as investment companies. Perhaps the prosecutors have more ammo?]
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