Charges may come against ex-Bear Stearns execs: report
NEW YORK (Reuters) - U.S. prosecutors are preparing to file criminal charges against managers of two Bear Stearns hedge funds whose collapse helped kick off the credit crisis last year, the Wall Street Journal reported on Monday.
The U.S. Attorney's office in Brooklyn, New York will conclude interviews this week and has indicated to lawyers that indictments may follow, the newspaper said, citing people familiar with the case.
Any indictments would be the first major criminal charges brought against Wall Street executives or fund managers stemming from the subprime mortgage crisis.
The meltdown of the two funds last year stoked widespread fears about investments tied to risky home loans, as well as spurring questions about the oversight and risk management operations at Bear Stearns, which is now part of JPMorgan Chase & Co after it was badly weakened by the mortgage crisis.
Former bond portfolio managers Ralph Cioffi and Matthew Tannin could be charged with securities fraud within the next week, according to one of the people familiar with the matter.
A lawyer for Tannin declined to comment when contacted by Reuters. Cioffi's lawyer could not immediately be reached.
There was no indication that charges would be filed against Bear Stearns or its top management, the newspaper said.
A JPMorgan spokesman did not immediately respond to a request for comment.
A spokesman for the U.S. Attorney for New York's Eastern District declined to comment.
The two Bear Stearns hedge funds -- the High-Grade Structured Credit Strategies Fund and the High-Grade Structured Credit Strategies Enhanced Leverage Fund -- invested heavily in collateralized debt obligations backed by risky mortgages. They plunged in value last year amid turmoil in the housing market, costing investors about $1.6 billion.
A source familiar with the matter told Reuters on Monday that investors who lost money in the funds have had face-to- face meetings with federal prosecutors probing the funds' collapse.
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