Ex-Bear fund managers are innocent: attorneys

NEW YORK (Reuters) - Attorneys for the two former hedge fund managers at failed investment bank Bear Stearns who were arrested earlier in the morning said in a statement on Thursday that their clients were innocent.

The former managers, Ralph Cioffi and Matthew Tannin, are expected to be arraigned on securities fraud charges later in the day, following a federal criminal probe into the collapse of funds they oversaw.

"The subprime crisis took everyone by surprise, including the Fed and Treasury, and dozens of the largest financial institutions have lost over $300 billion to date on the same investments," Ed Little, an attorney for Cioffi, said in a statement.

"Ralph Cioffi's funds lost money in exactly the same way. Because his funds were the first to lose might make him an easy target but doesn't mean he did anything wrong. Indeed, Mr. Cioffi had no motive to do anything wrong. He did not and could not have profited by doing anything the government now claims he did."

Susan Brune, an attorney for Tannin, echoed his sentiments.

"Matt Tannin is innocent," Brune said in a statement. "He is being made a scapegoat for a widespread market crisis. He looks forward to his acquittal."

(Reporting by Emily Chasan, editing by Gerald E. McCormick)