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Wall Street Execs Arrested over Subprime Fraud
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by Jordan Yerman | June 19, 2008 at 07:56 am
706 views | 66 Recommendations | 18 comments
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The subprime chickens are coming home to roost, as two former Bear Stearns executives face fraud charges over hedge fund management. Ralph Cioffi and Matthew Tannin will be the first Wall Street execs to face charges over the subprime fiasco.
Reports say Ralph Cioffi and Matthew Tannin will face charges in connection with their management of hedge funds that collapsed in June 2007.
The bank's hedge funds bet on the high-risk sub-prime mortgage market in the US before it collapsed.
Tannin was arrested outside his home in New Jersey Thursday morning and Cioffi was taken into custody in New York City, according to the Associated Press. The pair is accused of misleading investors about the health of two Bear Stearns hedge funds prior to their collapse last summer.
The blow-up were one of the first major symptoms of the credit crunch that has consumed markets since that time. Losses at the Bear funds led to wide losses at the firm, and eventually to a loss of investor confidence in it. The Federal Reserve in March rescued the firm, then on the brink of bankruptcy, by brokering a sale to JPMorgan Chase(JPM - Cramer's Take - Stockpickr).
The arrests are the first criminal charges brought against Wall Street executives in relation to the collapse of the subprime mortgage market.
Sub-prime mortgages, loans issued to people with a poor credit history, were repackaged as securities and sold across the globe.
The collapse of these hedge funds preceded Bear Stearns' own demise earlier this year.
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Most RecentMost Recommended Comments (18)
at 08:19 on June 19th, 2008
jordan, I like this story. It's good stuff.
at 08:24 on June 19th, 2008
jordan, I like this story. It's good stuff.
at 08:43 on June 19th, 2008
jordan, I like this story. It's good stuff. LOL. Can we get the money back?
at 09:17 on June 19th, 2008
Jordan, I like this story. It's good stuff.
at 09:40 on June 19th, 2008
Tar and feather them with mortgage documents! Hangin's too good for em' Arrrrgh!
at 09:49 on June 19th, 2008
jordan, I like this story. It's good stuff.
at 10:00 on June 19th, 2008
jordan, More than 400 real estate industry players have been indicted since March — including dozens over the last two days — in a Justice Department crackdown on incidents of mortgage fraud nationwide that have contributed to the country's housing crisis. Since March 1, 406 people have been arrested in the sting dubbed "Operation Malicious Mortgage" that saw 144 cases across the country. Sixty people were arrested on Wednesday alone, including in Chicago, Miami, Houston and a dozen other regions policed by the FBI.
Yahoo
at 13:20 on June 19th, 2008
Good info, learned something from that one
at 10:06 on June 19th, 2008
jordan, I like this story. It's good stuff.
at 11:35 on June 19th, 2008
Jordan, a corollary to this:
" the growing trend of terrorist associations with mortgage fraud rings in the US.
Financial experts say that mortgage fraud has become the fastest growing type of white-collar crime, and terrorist organizations have been quick to jump on the trend. But what concerns federal authorities is how regularly mortgage fraud is showing up in terrorism investigations." http://www.aina.org/news/2007041194958.htm
There's detailed descriptions of just how easy and profitable this type of fraud works and why terrorist groups have helped fuel this crisis. Obviously this damaged our economy. 5th column?
at 12:16 on June 19th, 2008
jordan, I like this story. It's good stuff.
at 13:19 on June 19th, 2008
jordan, I like this story. It's good stuff. Next a few Democrats who got sweet heart deals with countrywide may end up in the same trouble
at 13:29 on June 19th, 2008
Thank you all for the flags. Here's a bit of an update:
Source: bloomberg.com
at 13:49 on June 19th, 2008
Where these two where still in office @ Bear Sterns even though they where aware of these actions by them ?
I wonder also if they got a quarterly bonus, while place all those mortgages in default and if so that's B.S.
at 14:17 on June 19th, 2008
Jordan, This happens over and over. From Junk Bonds Ivan Bolsky (sp) to now. The always say they will clean up the mess and fail to. What happens the begining of the mortgage Market Crash and little people get slammed. 20 years, Yeah and how about restitution to every home owner that lost their homes because of these capitalist Pigs. Oh BTW that was an Opinion. We are lucky as our mortgage is 5 1/4 with no baloons. Many who wanted a home would sign everyone of those 50 documents without knowing what is in them. The lawyer comes over and tells you what each one means and your done in a couple of minutes. Not knowing that the Mortgage company has all the rights and the consumer gets shafted. Then we have congressman getting sweet heart deals on their homes. The same guys who are working out a mortgage company bailout. No Wonder everyone REP/DEM is going to get thrown out of office in Nov. People are tired of a government that forgotten who they work for. Sorry about the ramble.
at 13:43 on June 19th, 2008
While I cannot speak for all liberals I can speak for one, myself. The one reason I detest all the carping about the virtue of market based economics is captured in this story. You get guys like these morons, acting as if their end justifies any means. Lie, cheat, steal, connive - do anything it takes to make sure their corporate cash cow keeps giving them milk.
I swear it makes me nuts when hogs like these treat the economy - along with the savings and investments of countless well-meaning, investors who play by "the rules" and treat the whole thing like it's some sort of pyramid game with them at the top.
One last piece of rant then I'll go - the basic argument economic argument between liberals and conservatives seems to be that one group believes in the inherent evil of the body corporate and the other of the body politic. Both ideas are flawed in that both bodies are staffed by individual people and people are subject to temptation.
It is in yeilding to the temptation that we see evil. The only benefit of government control in the liberal political government tradition is that it is generally easier to gt rid of the evil at the top.
at 14:21 on June 19th, 2008
Well said, one differance I am for a free market economy, but not like this! My gosh, how hard is it to watch these guys. Conservative views on corporations self policing has one little problem, there are people involved. I liked your comment
at 14:55 on June 19th, 2008
It's hard to commenting something like this without going nuts. It just makes a liberal want to paint all conservatives with one broad brush, if that makes sense.
Luckily, I have two acquaintances through work who are died in the wool conservatives, but incredibly ethical ones. In fact, more than ethical, they are moral. Reading the headlines then looking at them presents a moral quandry - how can I condemn all free marketeers when they are beyond reproach (at least in this area)? One is forced to remember that people can be good or bad apart from their isms.