Two Former Bear Fund Managers Are Indicted

As expected, federal prosecutors indicted Ralph Cioffi and Matthew Tannin, former managers of two bond portfolios in Bear Stearn's asset-management unit that collapsed last summer.  These are the first indictments arising from the subprime mortgage collapse and accuse the two of securities and wire fraud.  The SEC is expected to announce civil charges against the two as well.  The prosecutors charge that Cioffi and Tannin believed that the funds were in serious trouble as early as March 2007, but continued to misrepresent their financial condition to investors, hoping to avert their collapse.  In addition, they charge that Cioffi transferred $2 million of his own money out of one of the funds without telling investors.  WSJ, Bear Fund Managers Indicted.  The Wall St. Journal earlier reported that prosecutors will focus on an April 2007 email sent by Tannin to Cioffi in which he said he feared that the market for the bond securities was "toast."  Four days later they assured investors in a conference call that all was well.  Defendants are expected to counter that Tannin and Cioffi met and assured themselves that Tannin had overreacted.  WSJ, Prosecutors in Bear Case Focus In on Email.