David Siegal Warns Bear Stearns Trial May Have Limited Implications

October 13, 2009

Bear Stearns Execs' Trial Offers Look Inside the Financial Meltdown
ABC News

The criminal trial of two former Bear Stearns executives, Ralph Cioffi and Matthew Tannin, gets under way this week and a lot of people on Wall Street -- and beyond -- are playing close attention.

The high flying money managers are charged with securities fraud and face 20 years in prison if convicted.

In a 28-page indictment, the government alleges that both 53-year-old Cioffi and 47-year-old Tannin knew their hedge funds were "at risk of collapse" but "rather than disclosing the true state of the Funds ... agreed to make misrepresentations in the ultimately futile hope that the Funds' bleak prospects would change."

But perhaps more significantly, the trial is likely to lay bare some of the inner workings of Wall Street and answer some fascinating questions about what information money managers have a duty to disclose.

But David Siegal, a former prosecutor and currently a partner with the law firm Haynes and Boone, cautioned that this trial may not have the wide-ranging implications many believe.

"This is not an indictment of Bear Stearns," he said. "This is a narrow case about two fund managers specifically relating to what they said to investors and others and about whether or not they had criminal intent."

That alleged criminal intent is key because the prosecution needs to convince the jury that Tannin and Cioffi intended to mislead their investors, not just that their statements weren't true.

This article excerpted from ABC News.  To view the full text, click here.

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