NEW YORK – Two senior former Bear Stearns bankers have been arrested at their homes and appeared in court, facing charges over the collapse of two of the failed bank’s hedge funds.
The funds folded with the loss of $6 billion (£3 billion) in July 2007 after their US subprime mortgage exposure became worthless. Matthew Tannin, the bank’s then asset manager, and Ralph Cioffi, who was directly responsible for the funds, are both accused of misleading investors and overstating the value of investments within the funds. They could be the first high-profile bankers prosecuted in relation to the subprime crisis.
The criminal charges are the first to be brought against Wall Street executives stemming from the subprime crisis and are likely to be followed by more as investigators continue to raise questions about the way banks and other companies communicated to investors.