The Problem With Running a MBS Hedge Fund...
Is that you might become the whipping boy for an entire bubble's sins...
Bear Managers May Face Charges
Corbis CioffiTwo former Bear Stearns managers, Ralph Cioffi and Matthew Tannin, may face criminal charges related to hedge funds that collapsed, helping to start the credit crisis. Federal prosecutors are slated to complete interviews of witnesses and other key people this week.
Of course, if you're telling everyone that your highly-leveraged junk-securities fund is the cat's meow while simultaneously telling colleagues that you're worried about the dog-food diet, you might just be committing securities fraud.
At issue is whether the managers intentionally misled investors by presenting a rosy picture of the funds at a time when they were privately communicating with colleagues about their worries over how the investment vehicles would ride out weakness in the mortgage market. Any indictments would be the first criminal charges against Wall Street executives arising from the credit crisis that swept the financial world last year.