Two former Bear Stearns managers claim another victory.
New York Times reports that Ralph R. Cioffi and Matthew M. Tannin, two former Bear Stearns managers who were among the few executives to face a trial on criminal charges in the aftermath of the financial crisis, have won another legal victory.
A U.S. federal judge dismissed a lawsuit brought against Cioffi and Tannin by Bank of America. The bank accused the two men of lying about the health of their hedge funds, which had invested heavily in subprime mortgage-backed securities that plummeted in value when the housing market collapsed.
Judge Alison J. Nathan of Federal District Court in Manhattan rejected Bank of America’s claims of fraud and breach of fiduciary duty, ruling that bank had failed to prove damages tied to the conduct of the two men.
The Bank of America suit centered on a complex $4bn deal in which the bank securitised mortgage securities owned by the Bear Stearns hedge funds. When the funds imploded in June 2007 as the credit markets first started to seize up, Bank of America absorbed billions of dollars of losses in the deal, called a C.D.O.-squared.
The dismissal of the civil claims is a big win for Cioffi and Tannin.
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