Oh, so they're the ones.
Thank god we got em.

The indictment could well be followed by others, as federal officials announced today at a press conference that they are conducting 19 corporate fraud investigations of firms that had a role in the subprime debacle. "The majority of these corporate fraud investigations address accounting fraud, insider trading and, with criminal intent, the failure to disclose the proper valuation of the securitized loans and derivatives," said FBI Director Robert S. Mueller III.

John Edwards is within their sights now...........

Chelsea clinton too!

What these guys did was to talk up their funds, when they knew problems were brewing. They, their funds, and the company failed...and investors were left holding the bag. This is why most hedge fund investors use "fund of funds". Bad apples will continue to get exposed, but hedge funds ARE NOT going away. Just ask any large endowement, pension fund..or state government!

A couple of morals to this story...

1) don't lie to investors
2) if you do, don't put your concerns in an email that can never be destroyed!

Cheney and Bush seemed to have no problem destroying millions of emails so that they could not be found.
Howd they do that?

No, their computers broke, remember?

Seems to me that the whole "sub-prime" mess was brought about by the goverment (ie GWB) insisting that EVERYONE be allowed to buy a house, regardless of their credit, regardless of thier ability to pay, so they FORCED lenders to give mortgages to people who had neither the ability nor willingness to pay. Simple.

Yea that's right, they also forced people
to sign for a houses they could not afford
in the first place. The opportunity is one
thing, personal stupidity of too much debt
is another. Did some lender/agents go to far
in questioable tactics/practices YES.

"Seems to me that the whole "sub-prime" mess was brought about by the goverment (ie GWB) insisting that EVERYONE be allowed to buy a house, regardless of their credit, regardless of thier ability to pay, so they FORCED lenders to give mortgages to people who had neither the ability nor willingness to pay. Simple."

Nice try. Why not look at early to mid 1993. Oh, but then it wouldn't be GWB's fault.

They're the Lyndie England of the subprime scam. scapegoats who probably have a swiss account setup so they won't squeal on the real criminals.........

They'll probably be found guilty, but I don't believe they are. If that's the most damning evidence they have, there's not a portfolio manager on earth who couldn't be facing jail time. Fact is, we're constantly reviewing our strategies, wondering if they're right, sometimes doubling down on assets that have been written down instead of bailing out as soon as trouble started. That's just Wall Street. Godalmighty. It's not a crime just because some rich people lost money, and there's an email from one of the managers questioning whether they were leaning the wrong way in their portfolios.

It would be like if you found an email from Phil Jackson questioning whether his Lakers lineup could possibly win, given what he knew to be some trouble spots, but then he gave a press conference where he expressed complete confidence. Big deal.

Well, lesson learned. No emails, and no conference calls.

Half are on Obama's Team!

I think they are the Martha Stewarts of the meltdown, she was sacrificed after the Enron debacle to make the public feel that the government was really doing its job.

rightisright stop equating yourseld with a PM of a hedge fund. Go back to your nickel and dime clients and be happy they don't take you out dag and shoot you like a rapid dog

"They'll probably be found guilty, but I don't believe they are."


YEAH!

Just as suspected the regular crew sashays in to tell all how this is an isolated incident and that it's only a small percentage investment/financial corporations are capable of such things ------- that is until you remember that these are the same people who swear voter fraud is RAMPANT and that EVERY food stamp and government assistance recipient is "lazy" and criminal.

Yup, there goes those reversible Bush Cult "Principles again" simply flip them inside out when necessary!

The indictment alleges that the two men misled investors by offering upbeat assessments of the fiscal health of two Bear Stearns hedge funds, even as these executives harbored deep doubts about their viability. Cioffi was also charged with insider trading for allegedly moving $2 million of his personal money out of one of the funds, which were heavily invested in subprime-mortgage-backed securities, and into a better-performing fund he managed.

Yeah, of course they are innoncent.

RiR, can you please explain the process by which subprime mortgages could be "repackaged" as securities. Is this really above board?

I suspect they are guilty but that they are also just two among many and are being used by the government as "show" prosecutions.

Hedge funds value there positions by outside sources not internally. SO unless they defrauded their investors by making up their P&L this is just a witchhunt. SO why isn't the CFO in jail

It can be a crime to write a mortgage on a house, if the borrower lies or the broker lies for him. Its called fraud. To circumvent this possibility and prevent economic collapse prior to 2004, they made a new rule, NO DOCUMENTATION. This makes it impossible to lie and fatcat brokers kept collecting commissions. The ensuing Construction Boom hid serious problems in the economy. Once again we see Power makes its own rules.

It is in the reselling and packaging of these "Republican Loans" that widespread crimes were committed. No one would buy the paper if they understood what was behind it. So Wall Street bundled good and bad loans together, hiding and mischaraterizing the risk. Jeb Bush dumped $850 million worth of Lehman Brothers junk on his Employees Pension Fund. Lehman is still in trouble and recently fired several of their principals. Fraud.

The most serious damage may come in our ability to attract future investors worldwide.

A superpower transformed into third world status with the worlds largest collection of weapons of mass destruction does not bode well for the health and welfare of this planet. We shouldn't forget that all our superior weaponry did nothing in Vietnam, Iraq and Afghanistan. All the gains that have been made were done with proletariat boots on the ground.

"Jeb Bush dumped $850 million worth of Lehman Brothers junk on his Employees Pension Fund."

"Bush Crime Family" is an apt description but here in Florida you still have so many morons who think Jeb is just a great guy.

Sorry but last time I checked Governors or state do not manage pension funds. Just for the record when LB fired their CFO, it was not because of fraud allegations. Nice lie though. You would make Osama Obama proud

It doesn't appear as though there was any actual accounting fraud. The numbers were there for everyone to look at. So some hedge fund manager says "we're comfortable with where we are" to a few investors and that's enough to constitute fraud? Personally I find it hard to believe that any prudent investor would take someone who is essentially a salesperson's word at face value. Again - no evidence of fudging the numbers. Was there any information available only to the fund manager that he deliberately concealed from investors, other than his own thoughts?

Dann,

Does your governor actually have anything to do withyour Public Employees pension fund? If so, yu guys are messed up. Here in Califonia the Governor has nothing to do with our PERS.

We currently hav 240 billion in the fund. 1 Billion of which was just lost in a real estate deal, Just a blip on the radar.

So some hedge fund manager says "we're comfortable with where we are" to a few investors and that's enough to constitute fraud?

Do you consider it fraud for a hedge fund manager to have a personal idea that the fund is a bad investment, divest of his personal investment in the fund and at the same time tell investors publicly that it is a great investment?

In an e-mail written from his personal account on a Sunday in April 2007, two months before the two funds imploded, Tannin recommended to Cioffi that they either shut the funds or change their investment strategies, the indictment alleges. "[T]he subprime market looks pretty damn ugly. . . . If we believe [our internal modeling] is ANYWHERE CLOSE to accurate I think we should close the funds now. The reason for this is that if [our internal modeling] is correct then the entire subprime market is toast."

The next day, Tannin cautioned Cioffi against disclosing any information to other fund employees that would indicate the dire straits they could be in, the indictment says. Days later, the two told senior managers at Bear Stearns that the funds were in good shape and would continue to be successful. In a conference call with investors a day after that, Tannin said: "We're very comfortable with exactly where we are."

726 he is making an investment decision just like any investors. Hedge funds all have investment strategies and due to the terms of these strategies they may be restricted or limited to investing in certain products or industries. He could have just been re-allocating his assets. The point is that you are making accusations without knowing

First of all it would be impossible for only a PM to know this because his model would have been created by an analyst and it was no secret that the MBS market was in trouble in April of 2007. Any MBS trader could have told you that. It really is irrelevant because investors are could not have redeemed all of their investment in the fund anyway

I am still trying to figure out how a Governor has time to manage a pension fund. Could it be that someone made this up and it is a lie. Someone tell me the truth. I think the Dems are still pissed they could never beat Jeb down in Florida

The point is that you are making accusations without knowing

Posted by timbci


Um no. Read the article instead of being an apologist for the fraud perpetrators.

Funny, but when these guys were hot, writing big checks to the party (either)and posing for pictures at the charity events, they were shitting rainbows. Now the market goes against them and they do the perp walk. Risk is the price you pay if you want returns better than a treasury bond.

Last time I checked consultants and board members are not portfolio managers. Danni answer a basic question. What does a portfoolio manager do ?
I suspect you know nothing about finance.

726 that is not securies fraud. Show me the P&L baby. Bear Stearns had every right to fire them for lying to clients but that is hardly securites fraud. The feds lost a similar case against Quattrone

"What does a portfoolio manager do ?"

That's easy TIMBICILE a "portfoolio" manager is your boss. They manage the fools. You dope.

Danni. For the first time in your life you are actually correct. My boss is a portfolio manager but I noticed that you never answered the question. Instead you chose to throw a third grade insult at me. It shows your character faults. You are like a little child.

TIMBCI & JOE make a valid point that these managers have strong defenses. Though it does not hold when taking advantage of little old ladies, there is a tradition of buyer beware. If it can be shown that that it was "possible" to see the risk, they can beat the rap. They have lotsa money, so there chances are good. Remember Keating did two years and got out on appeal. The system is rigged in favor of the rich. All they have to do is get to one Judge.

TIMBICILE I would think that the answer to your question is so obvious that it seems foolish to bother answering. Why don't you instead ask George Bush to define "sovereign."

Little old ladies don't directly invest in hedge funds. Most hedge fund investors are very sophisicated investors. The Pension fund managers regularly visit hedge funds they have invested in and review their P&L and speak with the PM about future and past performance. It did not take a genius to figure out that the MBS market was in trouble. Investors good do very little about it because most hedge funds have time locks on investment capital amd redemption ceilings

726 . I suggest you close the Webster's dictionary because securities fraud is very hard to prove. The legal definition of securities fraud is not in the dictionary son. Quattrone was guilty as hell and he got off. Most people that go to jail end up reaching a plea bargain with the federal gov't and the case rarely goes to trial.

726. I don't need to do checking. The Board members will not be involved with the daily trading activities, investment focus of a fund.

They would have to sign off on any investment strategy changes but that has nothing to do with an analyst doing research on any MBS offered by LB and a PM deciding to purchase and allocate it to certain funds

TIMBICILE I would think that the answer to your question is so obvious that it seems foolish to bother answering. Why don't you instead ask George Bush to define "sovereign."

Danni answer the question. Oh well I guess you really do live in a trailer park

TIMBCI,

Lehman Brothers firings were profit related, no one will buy their junk notes anymore. But no one will buy them because there has been widespread fraud. I never said they were fired on account of that fraud. I'm sure the Board could give a shit less as long as fraud brought more profits.

Using his credibility as former Governor of Florida, Jeb peddled LB's $850 million subprime junk to the Florida State Pension Fund for a fee of course. Not that it can be proved aginst a rich man in a Court of Law, but LB and Jeb knew damn well what kind of junk they were dumping. Why else would LB need to hire Jeb of all people.

Call it a lie if you want, but truth hardly sees the light of day in our Courts.

I don't see any fraud and neither does the SEC. Maybe you should hire a lawyer and sue if you know first hand of any fraud. YOu know you could make some money. Go get a lawyer son

Ahh danni tuning on where she knows NOTHING as usual, what a dufus!

How you go from bear sterns to lehman is comical. ANYONE who got sucked into guarenteed 8.5% florida fixed rate programs, should have KNOWN they where getting way above market, and there was risk associated with it. The fact that State governments across the country use hedge funds is nothing new, and there are risks associated with investing.

Blaming others is typical of the dr left. They know nothing, and talk out of both sides of their mouth and prove their stupidity DAILY here!!!!!!!

If you care/dare to get into an argument with me about investing,danni, knock yourself out. But you won't win...ever!

As usual rcade saves your fat butt by DKing the link into oblivion...