FBI Makes Subprime Arrests
June 19, 2008
Former Bear Stearns hedge fund managers, Ralph Cioffi and Matthew Tannin were arrested and taken to a Brooklyn Federal court today.
The charges are the first to come out of federal investigations of possible fraud on the part of banks and mortgage companies whose investments in subprime loans led to nearly $400 billion in losses for Wall Street.
Allegedly, Cioffi and Tannin discussed the state of the hedge funds and acknowledged that they were in danger via e-mail just four days before informing investors that the investments were fine.
Reportedly, the two men have stated that they believed fears about the funds were undeserved and that they did not lie to investors. Cioffi had served as a senior portfolio manager of the two funds that collapsed after investing almost entirely in subprime-related securities. Tannin was Cioffi's chief operating officer.
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