Ralph Cioffi faces the music

July 15, 2009

We’re just three months away from the criminal trial of former Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin and federal prosecutors have just produced a witness list.

Sadly, there are no big marquee names on the list of 32 people, who are scheduled to take the stand and raise their right hands in a Brooklyn, NY federal courtroom. If you were expecting to hear from former Bear CEO James Cayne, don’t adjust your work schedule to take time off.  Warren Spector, Bear’s former president, who Cayne fired a few weeks after the Bear funds collapsed in the summer of 2007, also doesn’t make the grade.

The most notable government witness is Rich Marin, the former head of Bear Stearns Asset Management, the division that nominally oversaw the giant hedge funds that bet big on subprime-backed CDOs. Marin, you may recall, got a bit of unflattering attention after The New York Times reported about all his movie reviews on his personal blog, “Whim of Iron.

Other witness include a number of former hedge funds employees, former top Bear broker Shelley Bergman and investors. Cioffi and Tannin are charged with lying to investors about the trouble at the fund, which began in early 2007–just as the subprime housing market was blowing up. The collapse of the Bear funds in June 2007 is widely seen as the start to the now two yearlong credit crunch/worst financial crisis since the Great Depression.

A number of hedge fund managers, whose funds presumably lost money in the collapse of the $1.6 billion Bear funds, are slated to testify. Two such managers are Victor Cain of Treflie Capital Management and Benjamin Schliemann of Accumulus Capital Management.

It’s hard to believe that two years into the financial crisis, Cioffi and Tannin are the only prominent Wall Street types to face criminal charges.

3 comments

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I agree with the last line, but it makes me wonder, if they are the only ones being prosecuted, then aren’t they being scapegoated? Why those two? why not others? yet the charges against Cioffi and Tannin are the least compelling in this financial mess.

Posted by suzanne | Report as abusive

I worked for Ralph Cioffi for a few years awhile ago at Bear. He struck me as a honest nice person who worked very hard. He is now depicted as a theif, all I can say is that is not the guy I knew. I hope the best for him.

Posted by greg baer | Report as abusive

Considering this is one of the biggest court cases in history, please understand that said individuals are the cause of the fall of this great country. Take serious note – where there are billions of dollars involved, there are lives in jeopardy and being threatened. Over $341 billion dollars we’re talking about here. How this case manifests will largely determine the fate and future of this country.

Posted by Karen Metcalf | Report as abusive