SOURCE: Klayman & Toskes

June 20, 2008 16:19 ET

Klayman & Toskes Expects Investor Claims to Increase Following the Criminal Indictments of Former Bear Stearns Hedge Fund Managers Cioffi and Tannin

NEW YORK, NY--(Marketwire - June 20, 2008) - The Securities Law Firm of Klayman & Toskes, P.A. ( said today that claims against Bear Stearns on behalf of investors in Bear Stearns' High-Grade Structured Credit Strategies and High-Grade Structured Credit Strategies Enhanced Leverage Funds ("the Bear Funds") are expected to increase following the criminal indictment, Cr. No. 08 415, of the former managers of the Bear Funds. (Bear Stearns is now a part of JP Morgan Chase & Co. (NYSE: JPM)).

Early yesterday morning, Ralph R. Cioffi and Matthew Tannin were taken into custody and charged by prosecutors from the Office of the United States Attorney for the Eastern District of New York. Charging Cioffi with four counts of securities fraud and Tannin with three counts of securities fraud, federal prosecutors essentially said that the two lied to investors about the collapse of the subprime mortgage market. In an April 2007 e-mail from Tannin to Cioffi, he said, "The subprime market looks pretty damn ugly." Based upon internal Bear Stearns reports observed by Tannin, he proposed, "I think we should close the funds now," and "the entire subprime market is toast." Tannin, however, failed to convey this material information to investors of the Bear Funds. Cioffi went as far as to pull $2 million of his own money out of the fund, while telling investors to remain optimistic regarding the future performance of the fund. In connection with this redemption, Cioffi was separately charged with insider trading.

In addition to the indictment handed down by the Office of the United States Attorney, the United States Securities and Exchange Commission also filed a complaint yesterday in Brooklyn federal court. The complaint alleges that during the first five months of 2007, Ralph Cioffi and Matt Tannin "deceived their own investors, as well as the fund's institutional counterparts, by fraudulently concealing from them the full extent of the fund's deepening troubles." The SEC also noted, "Cioffi's clandestine redemption caused the Enhanced Leverage Fund to pay out $2 million at a time when the markets were weak and the fund was facing another month of losses, as well as escalating margin calls and forced sales."

According to Steven D. Toskes, a partner at Klayman & Toskes, "While Cioffi and Tannin are the first Wall Street executives to be charged in connection with the subprime crisis, they most likely will not be the last. The criminal counts contained in the federal prosecutors' indictment simply confirm what we have been hearing from investors who believed that Bear Stearns made misrepresentations and engaged in fraudulent conduct in connection with the Bear Funds." Klayman & Toskes expects that filings against Bear Stearns on behalf of institutions, hedge funds and fund of funds will increase in the coming weeks given the amount of inquiries and in light of the recently filed charges.

The attorneys at the Law Firm of Klayman & Toskes are dedicated to aggressively pursuing claims on behalf of investors who have suffered losses in the Bear Funds, and as a result of the credit crisis and subprime fallout as a whole. Klayman & Toskes, an experienced, qualified and nationally recognized securities litigation law firm, practices exclusively in the field of securities arbitration and litigation. It continues its representation of investors throughout the world in securities arbitration and litigation matters against major Wall Street brokerage firms. If you wish to discuss this announcement or have information relevant to our claims, please contact Steven D. Toskes, Esquire or Jahan K. Manasseh, Esquire of Klayman & Toskes, P.A., at 888-997-9956, or visit us on the web at

Contact Information

  • Contact:
    Steven D. Toskes, Esquire
    Jahan K. Manasseh, Esquire
    Klayman & Toskes, P.A.