Feds poised to charge ex-Bear managers

Federal prosecutors are prepared to file criminal charges of securities fraud against two former hedge fund managers at soon-to-be-defunct The Bear Stearns Cos. Inc., The Wall Street Journal reported today. Indictments appear to be on the horizon against Ralph Cioffi and Matthew Tannin, who allegedly misled investors with a positive outlook on the two hedge funds they managed, which ultimately collapsed, according to the Journal story, which cited people familiar with the matter. The funds in question are the High-Grade Structured Credit Strategies Enhanced Leverage Fund and the High-Grade Structured Credit Strategies Fund, which New York-based Bear Stearns closed last July as the value of its mortgage-backed securities sank(InvestmentNewsJuly 18). The U.S. attorney’s office for the Eastern District of New York in Brooklyn is in the process of interviewing witnesses and could file securities fraud charges sometime in the next week, the Journal story stated. A spokesman for the U.S. attorney’s office declined to comment. Bear Stearns of New York was recently bought by New York-based JPMorgan Chase & Co. for about $2.2 billion, or $10 a share, after Bear nearly collapsed.