SEC reaches settlement in Bear Stearns hedge fund managers case

Thu Feb 9, 2012 11:15pm EST

Feb 9 (Reuters) - Two former Bear Stearns hedge fund managers who were acquitted of criminal charges in 2009 are prepared to settle a civil case with U.S. market regulators over subprime mortgage-backed securities, according to a person familiar with the case.

If a settlement between the U.S. Securities and Exchange Commission (SEC) and the two defendants is approved by a Brooklyn, New York federal judge, the case will not go to trial as planned on Monday.

The SEC was slated to vote on a settlement in the case on Thursday, a person familiar with the matter confirmed to Reuters.

News of the settlement was first reported by the New York Times, which said the deal could be announced on Monday. The deal is subject to court approval.

The Justice Department and the SEC brought parallel criminal and civil charges against former Bear Stearns executives Ralph Cioffi and Matthew Tannin in 2008.

Cioffi and Tannin were accused of lying to investors about the health of their hedge funds, which were laden with complex securities backed by subprime mortgages, the paper said.

However, a jury acquitted both men from criminal charges in November 2009.

Despite the setback, the SEC maintained that it would continue to pursue its case, the NY Times said.

SEC officials and a lawyer representing Tannin declined to comment to Reuters. The attorney representing Cioffi was not immediately available for comment outside of regular U.S. business hours.

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