2 Former Bear Stearns Executives Arrested

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Plus2 Former Bear Stearns Executives Arrested2 Former Bear Stearns Executives ArrestedThe Associated Press2 former Bear Stearns hedge fund managers were hauled into jail Thursday and charged with lying to investors about the collapse of the subprime mortgage market. (June 19)[Notes:ANCHOR VOICE] ((New York)) A white collar crime case in New York. Prosecutors say these two former Bear Stearns executives pretended to investors their billion-dollar hedge funds were doing well -- encouraging others to put money in the portfolios, saying they would be profitable, long-term investments. But meanwhile, the government alleges Ralph Cioffi and Matthew Tannin knew the funds were failing as the subprime mortgage market collapsed - pulling their own personal money out, while telling others to stay vested. ((Mark Mershon, FBI)) "This is not about mismanagement of a hedge fund investment strategy. It is not about reckless subprime lending practices. It is about premeditated lies to investors and lenders. It's about the defendants prostituting their client trust in order to salvage their personal wealth." But lawyers for the two men say their clients are being made scapegoats for the subprime meltdown. ((Ed Little, Defense Attorney)) "Perhaps this ought to be called Operation Malicious Prosecution. I'm not going to say that, I'll leave it to the jury. The only good news today is that there will be a trial in this case and hopefully at the end of the trial we'll get a jury verdict that says not only Ralph Cioffi is innocent that his reputation is restored." In Washington DC, the Department of Justice says Thursday's New York arrests are part of a nationwide investigation of bad securities and lending practices. ((Mark Filip, Department of Justice)) "'Operation Malicious Mortgage' and the Bear Stearns case demonstrate that the Department of Justice is determined to detect and to punish mortgage fraud and to help restore stability and confidence in our housing and credit markets." Soon after the two funds run by Cioffi and Tannin collapsed, Bear Stearns itself ultimately fell to the subprime crisis. The government had to step in to save the financial firm, and it was taken over by JP MorganChase. Ted Shaffrey, The Associated Press, New York

Category: News
Uploaded: June 19th, 2008 @ 6:07 pm
Author: AssociatedPress

Length: 02:05
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