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Bear Sterns Fund Managers Indicted
By Jon Menaster | June 19, 2008
As reported by just about every media outlet under the sun, two high profile executives from now disgraces brokerage house Bear Sterns, Ralph Cioffi and Matthew Tannin, have been indicted on federal securities fraud charges. The two of them were running two hedge funds for Bear Sterns which completely collapsed. What exactly did they do that was so wrong? This article in the Business Week mentioned:
The indictment also alleges the two men concealed the fact that one of the largest investors in the hedge funds wanted out and sought to withdraw some $57 million in April. Authorities say the pair repeatedly told investors to put more money into the fund and withheld information about redemption requests. Tannin allegedly told investors on more than occasion that he was putting more of his own money into the funds, even though he never did. On May 3, Tannin told one of the hedge funds’ bank lenders he doesn’t anticipate any large redemptions.
Ouch. Sounds pretty bad. Lied, manipulated people, all that jazz. Not a nice person - but then again I wonder if this sort of thing happens more than we’d think. I’ll leave you with this quote from the end of the article, which I often find contains the article writer’s true feelings about what happened (and in this case my feelings are mirrored with the authors)
Ross Intelisano, an attorney who represents a number of hedge fund investors, says: “These are the first criminal indictments related to the subprime debacle and it’s fitting that Cioffi and Tannin who helped trigger the crisis are the first ones indicted.”
Topics: Business, Finance, Investing |