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Singer, Lawyer, Says Ex-Bear Managers Face `Strong Case': Audio
June 20 (Bloomberg) -- Bill Singer, a partner with law firm Stark & Stark, talks with Bloomberg's Ken Prewitt in New York about the government's case against former Bear Stearns Cos. hedge-fund managers Ralph Cioffi and Matthew Tanni, likely strategies of the prosecution and defense, and the failure of U.S. regulators prior to the collapse of the mortgage market. Cioffi and Tanni were charged yesterday with falsely saying their funds were thriving while knowing investments in subprime mortgages could cause their collapse. (Source: Bloomberg)
00:00 "Fairly strong case" against former managers
00:34 Likely prosecution and defense strategies
03:43 The nation was "abandoned by its regulators."
04:52 Outlook for additional prosecutions
Running time 05:39
source: Bloomberg.com
Ex-Bear Managers Face `Strong Case,' Singer Says
By Ken Prewitt and Steve Farr (Update 2)
June 20 (Bloomberg) -- U.S. prosecutors have a ``fairly strong case'' against two former Bear Stearns Cos. hedge-fund managers accused of misleading investors, said Bill Singer, a partner with law firm Stark & Stark in New York.
``They're going to put e-mails in front of the jury,'' Singer, who has more than 25 years of experience in the securities industry, said today in a Bloomberg Radio interview. Prosecutors will argue, ``We don't have to guess. This is exactly what they knew and what they were thinking,'' he said.
Ralph Cioffi, 52, and Matthew Tannin, 46, were charged yesterday with falsely saying their funds were thriving while knowing investments in subprime mortgages could cause their collapse. U.S. prosecutors claimed the men lied about liquidity, redemption requests, and their own investments before the funds shut down last June, costing investors $1 billion.
The funds invested in securities including collateralized- debt obligations, or CDOs, according to the indictment. By March 2007, Cioffi and Tannin believed the funds were ``at risk of collapse,'' prompting fraudulent statements and actions to stave off a run by investors, according to the indictment.
In one e-mail cited in the indictment, Tannin wrote to Cioffi that ``the subprime market is pretty damn ugly,'' after a report showed the CDOs were worth far less than the men had hoped.
`Close the Funds'
``If we believe the [CDO report is] ANYWHERE CLOSE to accurate I think we should close the funds now,'' Tannin said in the e-mail. ``The reason for this is that if [the CDO report] is correct then the entire subprime market is toast.''
Singer said that if he were their defense lawyer, he would argue that the two men were victims of a ``rapid and unforeseen'' collapse in the subprime market and that ``the e-mails essentially are crimes of thought that we don't prosecute in this country.''
``You have to look at what they did, not what they wrote,'' Singer said. He said he would tell jurors, ``Nothing here seems to indicate they are criminals. Please don't make these two men scapegoats for the failure of Wall Street regulators to do their jobs and sound the alarm.''
Cioffi and Tannin were each charged in federal court in Brooklyn, New York, with conspiracy, securities fraud and wire fraud. Cioffi also was charged with insider trading for his $2 million redemption from one fund. They face as long as 20 years in prison on the fraud counts.
The men also were sued yesterday by the U.S. Securities and Exchange Commission. Singer called both cases ``despicable smokescreens.''
``The unindicted co-conspirator here is the American regulatory system,'' Singer said. ``It did nothing.''
Prosecutors probably will bring more criminal cases over the subprime collapse, Singer said. ``This is but the first salvo in what we should expect will be many more prosecutions,'' he said.
source: Bloomberg.com
BILL
SINGER
Primary Phone: 917-520-2836
Fax: 720-559-2800
E-mail: rrbdlawyer@aol.com
Website: http://rrbdlaw.com
Blog: http://BrokeAndBroker.com
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