Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Hedge Fund Perps Walk Free From Financial Crisis Criminal Trial

Politics / Credit Crisis 2009 Nov 11, 2009 - 05:30 AM GMT

By: Danny_Schechter


Best Financial Markets Analysis ArticleWill Anyone Ever Go To Jail In Connection With Wall Street Crimes?

Danny Schechter Reports On How The Prosecutors Blew The First Big Case

PARIS: I had come from a heated financial journalism conference in a far more orderly Brussels where I had been thundering against Wall Street crime. The first news I saw from “the homeland” was that the only two big shots busted for crimes against their investors when they ran Hedge Funds, now imploded, at Bear Stears were acquitted in a New York courtroom dramatizing the difficulties prosecutors face in achieving the “jail-out” I have been calling for.

Here’s how the NY Times covered it:

“It was, prosecutors claimed, a clear case of Wall Street crime — and a chance to bring to account two culprits of the subprime age.

But jurors disagreed, and on Tuesday, two former Bear Stearns hedge fund managers were found not guilty of securities fraud in federal court in Brooklyn, in what legal experts called a setback for prosecutors hoping for easy victories in this era of bailouts and foreclosures.

The verdict, the first in a major criminal case stemming from the current financial crisis, brought to an end a two-year ordeal for the managers, Ralph R. Cioffi and Matthew M. Tannin. They had been led away in handcuffs in June 2008 and accused of lying to their investors about the precarious state of the funds they oversaw.

Investors lost $1.6 billion when the funds, heavily invested in mortgage securities, collapsed in the summer of 2007. The fiasco presaged the financial turmoil that would later upend Wall Street and the broader economy.”

The jury deliberated for six hours. The key evidence were emails that said that they considered their own products bogus while encouraging their customers to buy them. A juror said the case had not proven, and that a bad investment was not a crime. The SEC will also be taking civil action.

At issue was what their emails said. Bear Stearns was a big promoter of Sub-crime subprime securities which were NOT an issue in the trial. Explained the report:

“One of the main documents in the case was an e-mail message that Mr. Tannin sent from his private Gmail account to the e-mail account of Mr. Cioffi’s wife. He wrote that the subprime market — the market to which the funds were tied — “looked pretty damn ugly,” and that if a recent report was correct, “then the entire subprime market is toast.” Days later, during a conference call, Mr. Tannin told investors that “we’re very comfortable with exactly where we are.”

They may have been “comfortable” but the families who subsequently faced foreclosure were victimized. Securities laws protect investors, not homeowners or people were talked into buying mortgages that were part of what the FBI later called an “epidemic of mortgage fraud.”

So once again, as the late Lenny Bruce once quipped, “in the halls of justice, the only justice is in the halls.”

This case was also said to be poorly brought by prosecutors. Reported Bloomberg: “Prosecutors missed the mark so widely in the fraud trial of Bear Stearns Cos. hedge fund managers Ralph Cooffi and Matthew Tanin that a juror said after their acquittal she would invest with them if she had the money.” Reuters had reported that the defense lawyers had focused on weakness in the prosecutor’s case.

One legal challenghe was the need to prove criminal intent, hard to show when defendants, as is usually the case, deny they had bad motives. In this case, as throughout the subprime industry, it was all about making money, homeowners be dammed.
Reuters described the defense:

NEW YORK, Nov 6 (Reuters) - The government's allegations of fraud against two former Bear Stearns hedge fund managers were built on "hindsight bias," including emails selected out of context, a defense lawyer told a jury in closing arguments on Friday at their trial in New York.” “hindsight bias” suggest that the Bear Stearns duo did not know the consequences of their actions, something many in the business admit now they did realize.

“Hindsight Bias?”

The FBI has been denouncing an “epidemic” of subprime fraud as far back as 2004. On July 22, President Obama said Wall Street was “pedaling loans they knew could never be paid back.” But this issue was not raised in the trial.

CBC earlier reported that the Government blew its own case. ‘CNBC’s Charlie Gasparino reports that numerous signs, including the court’s refusal to admit some key evidence and the “blow up” of a witness, indicate that the government’s case against Bear Stearns hedge fund managers Cioffi and Tannin may be slipping away

So here you have the biggest crime of our time, massive predatory lending, widespread fraud and abuse. In the first instance the government did not regulate it, and now they can’t get it together to prosecute it.

Widely perceived criminals of all kinds will now walk while the Chairman of the Senate Finance Committee proposes new avenues for civil law suits but not cracking down

WASHINGTON -(Dow Jones)- Senate Banking Committee Chairman Christopher Dodd's (D., Conn.) broad financial overhaul bill, unveiled Tuesday, includes several investor protection devices, including investors' ability to sue people who help commit securities fraud.

The provision would permit private civil actions for any person who "knowingly or recklessly provides substantial assistance" to securities fraudsters.

The "aiding and abetting provisions" in Dodd's bill could be seen as something of a change for the veteran senator, who also sponsored the controversial 1995 Securities Litigation Reform Act, which limited individual investors' ability to sue securities and accounting firms in class-action stock fraud cases.

Again, the focus mostly is on protecting investors, not other victims like the American people who consume these flawed products. The New American reports though that the real purpose is to protect cobsumers.

Senator Christopher Dodd and fellow Senate Democrats are proposing to scale back the regulatory authority of the Federal Reserve and eliminate the Office of the Comptroller of the Currency, among many other provisions in a new 1,136-page bill made public on Tuesday. Dodd, the chairman of the Senate Banking Committee, blamed the Fed for alleged failures in consumer protection and regulatory oversight that contributed to last year’s financial implosion.

Senator Dodd’s bill would create a new Consumer Financial Protection Agency to protect consumers against so-called “predatory lending practices.” It would also create a Financial Institutions Regulatory Administration that would impose tighter regulatory oversight on banks.

A new Agency for Financial Stability would have the power not only to enforce new financial regulations but also to break up large financial firms whose activities are deemed a threat to the economy as a whole.

Predictably Republicans and business interests are opposing new rules. As for reform, look at how health care reform has been gutted and you can see what awaits financial reform.

Meanwhile, at least the big banks are being criticized.

“Many senior banking executives failed to accept responsibility for the financial crisis and neglected the need to change their behavior, Hector Sants, the chief executive at Britain’s financial industry regulatory body, said Monday.”

Ooops, sorry, that’s in Britain.

News Dissector Danny Schechter, blogger in chief at, is making a film based on his book PLUNDER (Cosimo) Comments to

© 2009 Copyright Danny Schechter - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules