Former investment bank Bear Stearns hedge fund managersI guess that you heard the news about the two former Bear Stearns hedge fund managers who are among the first to take the perp-walk to court for the huge sub-prime collapse. Cioffi and Tannin (pictured above) were indicted by a federal grand jury in Brooklyn on Thursday. At 7AM Thursday morning, Cioffi was arrested at his suburban home in Tenafly, NJ, while Tannin was given the cuffs at his Manhattan apartment. These men face charges of conspiracy, wire fraud, and securities fraud in trying to cover up the collapse of two major Bear Stearns hedge-funds back in the summer of 2007.
Many people feel their collapse was the first sign of the sub-prime crisis that would ravage Wall Street and the economy for months. According to a Bloomberg article which broke the news, justice is on the way:
The two men were charged with misleading investors about the health of two Bear Stearns hedge funds whose implosion ignited the subprime mortgage crisis. Cioffi was also charged with insider trading in the indictment, which cites a series of e-mails between the two men. They face as much as 20 years in prison if convicted of the most serious charges.
I'd be seriously surprised if they got 20 years, but who knows, maybe they'll get hyped up as scapegoats for all the country's economic woes?
The U.S. Justice Department is on a roll today though, as they've also announced they have, to date, charged 400 people with crimes relating to mortgage fraud in the sub-prime crisis. These charges are a result of victims being scammed out of over $1 billion in predatory lending and foreclosure rip-offs. No one is safe today as the lucky 400 include real estate agents, lawyers, lenders, appraisers and even some speculative borrowers.Bloomberg news sure is busy today with the big arrest reports:
FBI Director Robert Mueller and Deputy Attorney General Mark Filip will announce the national crackdown, dubbed Operation Malicious Mortgage, this afternoon in Washington. Nearly 300 people have been arrested thus far in cities ranging from Chicago to Dallas to Miami, department officials said.
Don't you think that "Operation Malicious Mortgage" is a cool name? We've waited a long time for some action from the government, but it's still too early to tell if this is an adequate response to make up for everything that went down in sub-prime. It seems like a decent start, anyway.
