By Martha Graybow
NEW YORK, Dec 5 (Reuters) - Two former Bear Stearns hedge fund managers are set to go on trial next September on criminal charges they defrauded investors at two mortgage-linked funds that later collapsed, a court official said on Friday.
The trial is scheduled to begin on Sept. 28, 2009 with jury selection, said Mike Innelli, case manager for Judge Frederic Block in U.S. District Court in the Eastern District of New York in Brooklyn. The date was set at a pretrial conference before the judge.
The case against former fund managers Ralph Cioffi and Matthew Tannin has become the highest-profile criminal prosecution stemming from the mortgage market meltdown.
The two men, who were indicted by a federal grand jury in June, have pleaded not guilty to charges of conspiracy, securities fraud and wire fraud.
At Friday's court hearing, federal prosecutors told the judge they had no plans at this time to seek new charges in a superseding indictment against Cioffi and Tannin.
In September, Assistant U.S. Attorney Patrick Sean Sinclair said in court the government was considering bringing a new indictment that would include additional charges against the men. Judge Block said at the time that he wanted any superseding indictment to be in place by Friday.
After Friday's hearing, Sinclair told Reuters that prosecutors 'didn't anticipate' a new indictment at this point, but he declined further comment.
A lawyer for Tannin, Susan Brune, had no comment. An attorney for Cioffi could not immediately be reached.
Another Cioffi defense attorney previously said his client may be 'an easy target' for the government because the Bear Stearns funds were among the first big blow-ups of the mortgage crisis. Tannin's attorney has called her client 'a scapegoat for a widespread market crisis.'
The collapse last year of the High Grade Structured Credit Strategies Master Fund and the Enhanced Master Fund, which invested in mortgage-linked securities, was one of the first signs of major financial trouble at Bear Stearns, which was sold to JPMorgan Chase & Co in an emergency deal brokered by the U.S. Federal Reserve this past March.
The indictment contends that, despite expressing concern among themselves that the funds were in grave health and at risk of collapse, Cioffi and Tannin committed fraud by continuing to encourage investors to put money in the funds and telling them market conditions were creating a great buying opportunity.
Cioffi faces an additional charge of insider trading. Prosecutors contend he transferred a portion of his own holdings from one of the funds without telling investors.
The Securities and Exchange Commission also has filed civil securities fraud charges against the two men.
(Editing by Andre Grenon) Keywords: BEARSTEARNS/HEDGEFUND (martha.graybow@thomsonreuters.com +1-646-223-6133; Reuters Messaging: martha.graybow.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, Dec 5 (Reuters) - Two former Bear Stearns hedge fund managers are set to go on trial next September on criminal charges they defrauded investors at two mortgage-linked funds that later collapsed, a court official said on Friday.
The trial is scheduled to begin on Sept. 28, 2009 with jury selection, said Mike Innelli, case manager for Judge Frederic Block in U.S. District Court in the Eastern District of New York in Brooklyn. The date was set at a pretrial conference before the judge.
The case against former fund managers Ralph Cioffi and Matthew Tannin has become the highest-profile criminal prosecution stemming from the mortgage market meltdown.
The two men, who were indicted by a federal grand jury in June, have pleaded not guilty to charges of conspiracy, securities fraud and wire fraud.
At Friday's court hearing, federal prosecutors told the judge they had no plans at this time to seek new charges in a superseding indictment against Cioffi and Tannin.
In September, Assistant U.S. Attorney Patrick Sean Sinclair said in court the government was considering bringing a new indictment that would include additional charges against the men. Judge Block said at the time that he wanted any superseding indictment to be in place by Friday.
After Friday's hearing, Sinclair told Reuters that prosecutors 'didn't anticipate' a new indictment at this point, but he declined further comment.
A lawyer for Tannin, Susan Brune, had no comment. An attorney for Cioffi could not immediately be reached.
Another Cioffi defense attorney previously said his client may be 'an easy target' for the government because the Bear Stearns funds were among the first big blow-ups of the mortgage crisis. Tannin's attorney has called her client 'a scapegoat for a widespread market crisis.'
The collapse last year of the High Grade Structured Credit Strategies Master Fund and the Enhanced Master Fund, which invested in mortgage-linked securities, was one of the first signs of major financial trouble at Bear Stearns, which was sold to JPMorgan Chase & Co in an emergency deal brokered by the U.S. Federal Reserve this past March.
The indictment contends that, despite expressing concern among themselves that the funds were in grave health and at risk of collapse, Cioffi and Tannin committed fraud by continuing to encourage investors to put money in the funds and telling them market conditions were creating a great buying opportunity.
Cioffi faces an additional charge of insider trading. Prosecutors contend he transferred a portion of his own holdings from one of the funds without telling investors.
The Securities and Exchange Commission also has filed civil securities fraud charges against the two men.
(Editing by Andre Grenon) Keywords: BEARSTEARNS/HEDGEFUND (martha.graybow@thomsonreuters.com +1-646-223-6133; Reuters Messaging: martha.graybow.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.