TEXT OF INTERVIEW

Steve Chiotakis: The government yesterday lost the first criminal case it’s brought in response to the financial crisis. Two bear Stearns hedge fund managers were acquitted on charges of lying to investors. Let’s bring in Marketplace’s Nancy Marshall Genzer, who’s with us live from our Washington bureau this morning. Hi, Nancy.

Nancy Marshall Genzer: Good morning.

Chiotakis: So, what went wrong for prosecutors?

Marshall Genzer: Prosecutors relied to a great extent on e-mails between the two former hedge-fund mangers — Ralph Cioffi and Matthew Tannin. In one e-mail Tannin quotes a report saying, if it’s correct, the entire subprime market is toast. But jurors were quoted as saying said prosecutors took snippets of e-mails and used them out of context. I talked to James Coffman about this. He’s a former assistant director of enforcement at the SEC. And he told me the prosecutors might have needed more solid evidence than e-mails.

JAMES COFFMAN: There was sufficient ambiguity, apparently, in the evidence to allow the jury to acquit these people.

Chiotakis: Will the Bear Stearns case, Nancy, make prosecutors more reluctant to bring future cases? Or will it change their strategy?

Marshall Genzer: Not according to Coffman. He doesn’t think this will make prosecutors change anything. He doesn’t see this as a bellwether case. He does say other cases, like the insider trading case involving the Galleon group, may be stronger. That case alleges that there was an insider trading ring that included the Galleon Group hedge fund. Prosecutors in that case have wiretap evidence, and some people have already pleaded guilty. Prosecutors used FBI tactics in that case, actually trailing people and getting wire taps.

Chiotakis: All right, Marketplace’s Nancy Marshall Genzer joining us from Washington. Nancy, thanks.

Marshall Genzer: You’re welcome.