19 Jun 08 
Wall Street Hedge Fund Managers Surrender to FBI
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Former Bear Stearns hedge fund managers, Ralph Cioffi and Matthew Tannin, turned themselves in to the FBI Thursday. The FBI intends to charge the two men with intentionally misleading investors in two hedge funds, which reportedly caused investors to lose ninety cents on every dollar they invested.
The Bear Stearns funds were created in 2006, with the intent of taking advantage of the credit boom during its peak. The funds generated money for several months during the remainder of the year; however, in early 2007 the funds experienced troubles as the ABX indexes reversed and began to rise.
Issues arose when Cioffi moved $2 million of his own money out of one of the troubled funds - and placed it into a third Bear Stearns hedge fund – a month before reassuring investors that he was “cautiously optimistic” about the ability to hedge its subprime holdings.
Furthermore, in April of 2007, the funds experienced a loss of 19 percent of its value; but Cioffi apparently reported to investors that the fund only lost 6 percent of its value during the same month.
Cioffi and Tannin’s lawyers issued a joint statement stating that the subprime mess “took everyone by surprise, including the Fed and Treasury,” and led to more than $300 billion of losses at financial firms.
The two men are planning on fighting the claims that they did anything wrong, and have suggested that they too have been victimized by the whole subprime mortgage crisis.
Read this story in its entirety from CNN by clicking here.
Photo Credit: Associated Press & CNN
Tags: abx indexes, bear stearns, cioffi, cnn, fbi, fed, hedge fund managers, matthew tannin, ralph cioffi, subprime mortgage crisis, tannin, treasury, wall street
