Matthew Tannin and Ralph Cioffi, two former Bear Stearns hedge fund managers, were indicted Thursday by the FBI for their part in the demise of the former Wall Street giant.
The two were the first Wall Street executives to be arrested in relation to a subprime mortgage scandal.
Tannin, 46, and Cioffi, 52, were arrested at their homes in Manhattan and Tenafly, New Jersey, respectively, processed at the FBI's New York office and then taken to federal court in Brooklyn.
Tannin and Cioffi have been accused of securities fraud related to their management of hedge funds backed by the sub-prime mortgage market.
The two are face nine counts of conspiracy, securities fraud and wire fraud for allegedly misleading investors about the two Bear Stearns hedge funds they managed. Their funds collapsed last summer, losing $1.6 billion of their investors' money.
Tannin and Cioffi knew of their sub-prime mortgage portfolios were in trouble, but lied to investors about it. Their decisions eventually helped to cause the utter collapse of Bear Stearns.
Cioffi and Tannin both deny the charges and have been granted bail. If convicted, the two could face jail sentences of seven to ten years.
According to Tannin's biography, Tannin was a portfolio manager for Bear Stearns Asset Management (BSAM), reporting directly to Cioffi. Cioffi's bio says that he had been with BSAM since 1985 and was a member of the BSAM's board of directors.
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