The acquittal of two Bear Stearns Cos. hedge-fund managers in a subprime-mortgage fraud case that relied heavily on e-mail evidence may make it more difficult for the government to win related cases based on similar facts, reports Bloomberg News. Ralph Cioffi and Matthew Tannin were acquitted by a Brooklyn jury after a month-long trial, the first stemming from a U.S. probe of the collapse of the subprime mortgage-market, which cost investors as much as $396 billion.
The acquittal may also have impact on hedge fund cases, including that of Galleon co-founder Raj Rajaratnam. This “will give the government pause before they indict” in similar cases, said Todd Harrison, an ex-federal prosecutor. “For those kinds of cases that are more market driven, as the Bears Stearns was, it'll give the government a lot of pause.”