Prosecutors investigating Bear fund manager: report
NEW YORK (Reuters) - Federal prosecutors are investigating whether a Bear Stearns Co Inc BSC.N fund manager improperly withdrew his own money from a fund while making rosy forecasts about the prospect of the portfolio, the Wall Street Journal reported on Tuesday.
Citing people familiar with the matter, the Journal said that in the weeks before two Bear Stearns funds collapsed Ralph Cioffi took about $2 million of his own money from the riskiest of the two funds, and moved it to another internal fund with a different investment strategy.
No other Bear executive had been invested in the fund, the Journal said.
The Journal reported that Cioffi had invested a total of $6 million in the riskier of the two funds and that he continued to leave $4 million of his money in the fund before it collapsed.
On Monday, BusinessWeek reported on its Web Site that the Securities and Exchange Commission and prosecutors were looking into insider redemptions at the two Bear Stearns funds.
The two funds -- the High Grade Structured Credit Strategies Fund and the High Grade Structured Credit Strategies Enhanced Leverage Fund -- lost some $1.6 billion due to declining values in bonds linked to subprime mortgages.
Bear Stearns representatives could not be immediately reached for comment, but on Monday declined to comment on the BusinessWeek story.
The New York Post reported earlier this month that Cioffi is currently working as a consultant for Bear as it sorts through legal issues related to the funds he managed.
(Reporting by Emily Chasan; editing by Elizabeth Fullerton)
