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No case, no conviction

Scott Jagow Nov 11, 2009

There might be some anger and confusion after two Bear Stearns hedge fund managers were acquitted of fraud. But it sounds like the government may have not had the case. And it certainly didn’t make the case.

Bloomberg sums it up pretty succinctly:

Prosecutors missed the mark so widely in the fraud trial of Bear Stearns Cos. hedge fund managers Ralph Cioffi and Matthew Tannin that a juror said after their acquittal she would invest with them if she had the money.

Scratch Pad reader Mary asked me this morning: who are these jurors? Did they think that people who invest in hedge funds should know better?

Honestly, I don’t think that’s case. Sounds like the jury just did its job. Eight women, four men. Among them, an office coordinator at Brooklyn college and a hotel food and beverage director. If anything, I’d think a jury might be out for blood on Wall Street right now.

But here are the comments from 27-year-old juror Serphaine Stimpson:

Stimpson said she came into the trial thinking both Cioffi and Tannin were guilty of the fraud, insider-trading and conspiracy charges. She said she began to have second thoughts as the testimony progressed and defense lawyers “tore the government witnesses apart.”

The defendants… were made “scapegoats for Wall Street.”

Clearly, there’s some public pressure to pin somebody for criminal activity. But I’m glad the jury could push emotions aside and focus on the evidence:

The government argued Cioffi committed insider trading when he moved the money ahead of investors who lost assets in his funds and while using material, non-public information because of his role as a fund manager.

(Juror) Hong said of Cioffi’s insider trading charge that “if he had taken the money and put it in his own bank account that would be one thing, but it went to a Bear fund which he was also a portfolio manager over. I just don’t think you can blame him for that.”

Another juror, Ryan Goolsby of Williamsburg, Brooklyn, agreed, concluding that the government didn’t sufficiently prove any of its allegations.

“We never found anything beyond a reasonable doubt,” Goolsby said.

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