David Siegal Comments on Bear Stearns Executives' Acquittal in the Washington Post


Wall Street test case U.S. sought convictions for financial crisis
Washington Post

The government's most prominent criminal case against Wall Street executives accused of wrongdoing in the financial crisis collapsed Tuesday as a jury found two former Bear Stearns hedge-fund managers not guilty of charges they lied to investors when their investments in subprime mortgages turned sour.

The acquittal of former Bear Stearns executives Ralph Cioffi and Matthew Tannin dealt a blow to the government's efforts to hold financial executives criminally responsible for the crisis. The jury's decision capped a two-year drama that began in the summer of 2007, when a pair of hedge funds run by Cioffi and Tannin crumbled, sparking a series of events that led to Bear Stearns's collapse in March 2008 and the ensuing economic meltdown.

With dozens of ongoing investigations into potential criminal wrongdoing at the largest financial companies in the country, the verdict underscores the government's challenge in making the case that Wall Street executives broke the law - rather than made bad decisions - in loading up on the risky investments that crippled the financial system.

"I think, and I've always thought, that making successful criminal cases out of the financial meltdown is going to be very difficult for prosecutors," said David Siegal, a former federal prosecutor now in private practice. "You have to prove that somebody intended to defraud their investors as opposed to just being horrible at their jobs."

Cioffi and Tannin faced up to 20 years in prison on charges of conspiracy, securities fraud and wire fraud. Cioffi was also acquitted on charges of insider trading.

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