Matthew tannin trial

The funds were crammed with collateralized debt obligations CDOs , securities backed by pools of debt that included subprime mortgage-backed securities.

Neither man is charged with contributing to the demise of Bear Stearns Cos not long after the funds collapsed. N in a government-backed deal. District Court in Brooklyn. Prosecutors contend that by March -- more than 18 months before the full extent of the global financial crisis became clear -- the pair promoted the funds to investors while privately emailing their fears about a possible market calamity.

Among the most high profile of these upcoming civil cases is a recent billion-dollar lawsuit filed by activist investor Bruce Sherman against Bear.

The reason Cioffi and Tannin's criminal case matters for the ongoing civil litigation is that as testimony and evidence is presented in the criminal trial, the roles of various senior Bear Stearns executives, if any, in the collapse of the hedge funds may be revealed.

These revelations could prompt a new wave of civil suits or strengthen pending ones. Also, the greater the role that Cioffi and Tannin's bosses play in the trial, the more costly the case becomes for JPMorgan.

As part of the merger agreement with Bear Stearns, JPMorgan agreed to indemnify each of Bear's current and former officers and directors for six years following the completion of the merger, or until May Cioffi and Tannin stand accused by the U. Cioffi was also charged with insider trading. According to the government, by March , Cioffi and Tannin believed the two hedge funds they supervised were "in grave condition and at risk of collapse" but failed to inform the funds' investors and creditors and instead "made misrepresentations to stave off withdrawal of investor funds and increased margin calls from creditors in the ultimately futile hope that the funds' prospects would improve and that the defendants' incomes and reputations would remain intact.

Attorneys for the two men argue -- on the contrary -- that their clients did nothing illegal or criminal but merely had poor judgment and made investment mistakes at a time when the markets were crumbling in catastrophic, unprecedented ways. That is the case in any stock-for-stock merger. Some civil cases that could further negatively impact JPMorganChase's rate of return on the Bear deal include last week's suit from Bruce Sherman, the CEO of Private Capital Management and once one of Bear's largest shareholders with a stake of about 5.

Sherman alleges in his complaint that the defendants "fraudulently overstated the value of Bear's mortgages, mortgage- and asset-backed securities and other derivative financial instruments, the adequacy of its liquidity and capital reserves and the quality of Bear's risk management" with the intent of getting Sherman to hold onto his Bear shares and to invest more money in Bear, both of which Sherman claims he did.

Sherman, represented by superstar lawyer David Boies, is alleging four counts of wrongdoing, including violation of securities laws. He is seeking unspecified damages plus interests for the losses he suffered from continuing to hold onto Bear Stearns stock. Sherman and other potential litigants will likely be watching the Cioffi and Tannin trial closely. The defendants have not yet filed a response to the complaint with the court.

The deal closed at the end of May Since JPMorgan executives would not comment for this story, it is hard to know whether the rising litigation costs have given them buyer's remorse on the Bear deal.

It is doubtful, though. That's a deal JPMorgan would probably do again. Ralph Cioffi, 53, and Matthew Tannin, 48, were acquitted of all charges on the second day of deliberations by a jury in U. District Court in Brooklyn, New York. Cioffi and Tannin left the courthouse with their smiling wives and relatives, some of them crying tears of relief.

The jury on Tuesday acquitted both men of conspiracy, securities fraud and wire fraud -- charges brought in a June indictment. Cioffi was acquitted of an additional charge of insider trading.

Bear Stearns collapsed in March , several months after the funds managed by the two men failed. N in a government-brokered fire sale. N over the bank's investment in their funds.