Bloomberg:SEC Surrender Continues w/ Bear Stearns Banker Deal (Another Sell-out by the 'Regulators')

[stockholmer]

http://www.bloomberg.com/news/2012-02-20/sec-surrender-goes-on-with-bear-fund-deal-commentary-by-william-d-cohan.html

Once again, the Securities and Exchange Commission has embarrassed itself. Last week it let off the hook two hotshot former Wall Street hedge-fund managers who lost a bundle for the investors trusting them to manage their money responsibly. Instead of going to court on Feb. 13 and laying bare the sordid facts for a jury, at the last minute the SEC settled a civil suit against Ralph Cioffi and Matthew Tannin of the now defunct Bear Stearns Cos (2942331Q). These were the hedge-fund managers who five years ago loaded up their two funds with billions of dollars of lousy mortgage-backed securities and collateralized- debt obligations, leveraged them to the hilt and, when the market for the securities soured in July 2007, liquidated the funds.

According to the SEC’s 2008 civil complaint against the men, the collapse of the funds cost investors at least $1.6 billion. These problems were among the very first indications that serious trouble was looming in the housing market and securities tied to it. The liquidation of the two funds led to the effective bankruptcy of Bear Stearns itself in March 2008 and the subsequent financial crisis that nearly wiped Wall Street off the face of the earth. But the price the SEC extracted from Cioffi and Tannin as part of a settlement -- after previously telling the court it intended to go to trial -- was a mere pittance, “chump change,” according to the federal judge in Brooklyn overseeing the case. Cioffi, who made $22 million in 2005 and 2006 at Bear Stearns, will pay just $800,000 and agree to a three-year ban from the securities industry. Tannin, who was paid $4.4 million in his last two years at Bear, will pay $250,000 and agree to a two-year ban. Neither has to admit to wrongdoing. The agreement will deter absolutely no one from trying to pull off a similar stunt.

In combination with their November 2009 jury acquittal on criminal charges in federal court, the SEC civil settlement provides a major victory for the defendants’ attorneys, Hughes Hubbard & Reed LLP (for Cioffi) and Brune & Richard LLP (for Tannin). The American public, on the other hand, is left with the trillion-dollar bill for Wall Street’s financial crisis caused by the Wall Street bankers and traders who walked off with billions in bonuses.

This outcome is beyond outrageous. In its complaint, http://www.sec.gov/litigation/complaints/2008/comp20625.pdf the SEC flat-out stated that Cioffi and Tannin mislead their investors: “Particularly during the first five months of 2007, as the funds suffered increasing losses to the value of their portfolios and faced growing margin calls and redemptions … senior portfolio manager Cioffi and portfolio manager Tannin deceived their own investors, as well as the funds’ institutional counterparties, by fraudulently concealing from them the full extent of the funds’ deepening troubles.”

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What a joke. Nothing will ever change if there is no authority that can stop these scum dead in their tracks.

They sit back, count their billions, laugh, and then go back to pissing on the world.

Shameful.

[Angry Dragon]

1. Throw the SEC in jail

[Po_d Mainiac]

2. No need to wonder why

“Citigroup Replaces JPMorgan as White House Chief of Staff.”

http://themoderatevoice.com/136653/the-washington-wall-street-revolving-door-just-keeps-spinning-along-guest-voice/

[dixiegrrrrl]

3. That deserves to be a separate post here.

Heavy sigh....