MSNBC News at 8:05 AM Central time:
Two Bear Stearns employees surrender to face criminal charges in NY
By TOM HAYS, Associated Press Writer
25 minutes ago
NEW YORK - Two former Bear Stearns managers have surrendered to face criminal charges linked to the collapse of a hedge fund that bet heavily into subprime mortgages before the market collapsed, federal authorities said Thursday.
Authorities in Brooklyn are expected to give details later Thursday on the case against Ralph Cioffi and Matthew Tanin, who would become the first executives to be charged criminally in the wake of the subprime market debacle.
A law enforcement official told The Associated Press on Wednesday that an indictment naming the men was the result of a yearlong federal securities fraud investigation.
The former executives are suspected of misleading investors about the risky subprime mortgage market, the official said, speaking on condition of anonymity because the outcome of the investigation is pending.
Attorneys for Tannin and Cioffi declined comment on Thursday and the U.S. attorney's office did not return a call for comment.
The fallout from defaults on U.S. mortgages has rattled the global economy and the American housing market.
Subprime mortgages, those issued to people with shaky credit, were repackaged as securities and sold across the globe.
The implosion of the hedge funds foreshadowed Bear Stearns' own demise, with the Federal Reserve having to intervene earlier this year to bail out the beleaguered bank. Their collapse revealed how much damage had been done to the companies that bought, repackaged and sold the loans.
Despite positive assessments by Cioffi and Tannin, the Bear Stearns hedge funds failed in June 2007. The funds had more than $20 billion in assets before crashing.
Cioffi, 52, and Tannin, 46, already have been named in lawsuits brought last year by hedge fund investors, including Barclays Bank PLC, who allege they were purposely misled.
Barclays accused Bear Stearns of knowing for months that certain assets in the Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Master Fund were worth "far less" than their stated values.
The bank alleged Bear Stearns managers "hatched a plan to make more money for themselves and further to use the Enhanced Fund as a repository for risky, poor-quality investments."
The complaint said Bear Stearns told Barclays that the enhanced fund was up almost 6 percent through June 2007 — when "in reality, the portfolio's asset values were plummeting."
Last month, Bear Stearns shareholders approved JPMorgan Chase & Co.'s $2.2 billion buyout at about $10 a share. Back in January 2007, before mortgage defaults began clobbering banks and draining demand from the debt markets, Bear Stearns had traded at $171 a share."
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I intend to further contact the authorities regarding arch mortgage fraud criminal Greg Fedler of EMC with my well documented examples of his and EMC's criminal acts.
Respectfully submitted by
1804 Cross Bend
Plano Texas 75023