Ex-Bear Stearns Fund Managers In $1M Settlement With SEC

Posted by Orb Staff on February 14, 2012 No Comments
Categories : Residential Mortgage

10925_embezzle Ex-Bear Stearns Fund Managers In $1M Settlement With SEC Two former Bear Stearns fund managers who were acquitted in 2009 of criminal charges relating to the $1.8 billion failure of two hedge funds packed with problematic mortgage-backed securities have agreed to resolve a civil lawsuit brought by the U.S. Securities and Exchange Commission (SEC) with a $1 million settlement.

Reuters reports that Ralph Cioffi and Matthew Tannin agreed to the settlement on the day their trial was scheduled to begin. Under the settlement, Cioffi will pay a $100,000 civil penalty, forfeit $700,000 of earned profits and be barred from working in the securities industry for three years. Tannin will pay a $50,000 civil penalty, forfeit $200,000 of earned profits and be barred from securities work for two years. Neither man has acknowledged or denied wrongdoing in relation to the lawsuit charges.

U.S. District Judge Frederic Block, who is required to approve the proposed settlement with the SEC, criticized the penalties as being ‘chump change’ in comparison to the $1.8 billion that was lost in the hedge funds' failure and berated the parties for waiting until trial day to reach a deal. However, Block is expected to approve the settlement.

Cioffi and Tannin were found not guilty of all charges in a 2009 criminal case brought by the U.S. Department of Justice (DOJ). The case, which centered on the collapse of two Bear Stearns hedge funds in 2007, was the first federal criminal prosecution of Wall Street executives following the 2008 economic crash and was widely seen as a major failure by the DOJ.

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