A New York City grand jury is expected to return sealed indictments Wednesday against two former Bear Stearns hedge fund managers in connection with the mortgage crisis, officials close to the investigation told NPR.
Ralph Cioffi and Matthew Tannin are expected to be charged with securities fraud in indictments that are scheduled to be unsealed Thursday. They are the highest level Wall Street executives to be charged in connection with the mortgage crisis so far.
As first reported by NPR, prosecutors allege the men told investors that two of their funds were in good shape, while privately telling colleagues they were worried about the funds' prospects.
The funds had a high level of exposure to bonds backed by subprime mortgages and both eventually collapsed. Investors lost about $1.6 billion.
The collapse of the hedge funds in June 2007 — coupled with questions about Bear Stearns management and oversight — lead to a run on the firm, which was eventually rescued by J.P. Morgan Chase.The firm underwent a severe liquidity crisis and was absorbed into JPMC at firesale prices. It also led investors to question how big firms were valuing their mortgage-backed securities.
The U.S. Attorney's office in New York declined to comment on the case, as did the FBI and defense attorneys for Cioffi and Tannin. Cioffi and Tannin are expected to either surrender to the FBI or be arrested Thursday.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment