Thursday, June 19, 2008

Two Bear Stearns Managers Arrested

Reuters reports the Feds nabbed them this morning for their roles in the mortgage crisis.

Update: The Wall Street Journal posts a copy of the indictment. Pages 7-8 have the meat:
Starting at least by March 2007, CIOFFI, TANNIN and others believed that the Funds were in grave condition and at risk of collapse. Rather than disclosing the true state of the Funds to investors and lenders, thus allowing an orderly wind-down of the Funds, CIOFFI and TANNIN agreed to make misrepresentations in the ultimately futile hope that the Funds' bleak prospects would change and that their incomes and reputations would remain intact.
On June 9, 2007, when the Funds' collapse was imminent, CIOFFI stated that, "[ilf I can't [turn the Funds around] I've effectively washed a 30 year career down the drain."
25. In executing their scheme, as detailed below, CIOFFI and TANNIN, together with others, misrepresented or omitted material facts in communications with investors and lenders about a variety of topics, including the financial prospects of the Funds, their opinions regarding the financial prospects of the Funds, their personal investments in the Funds, the Funds' investor redemption requests, the Funds' liquidity picture, and the Funds' exposure to the subprime mortgage market.

Second Update: Reuters says almost 300 other people have also been arrested.

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