Reuters – U.S. federal prosecutors asked securities regulators to delay a civil case against two former Bear Stearns hedge fund managers while they hold grand jury hearings in building a criminal case against the pair.
Fund managers Ralph Cioffi and Matthew Tannin were arrested and indicted in June, the first executives to face federal criminal charges in fallout from the subprime mortgage crisis. Both pleaded not guilty. A trial date has not yet been set.
The Securities and Exchange Commission had also begun civil securities fraud charges against Cioffi and Tannin, accusing them of misrepresenting the investments of two funds they oversaw.
A memorandum filed on Wednesday by U.S. Attorney Benton Campbell in the U.S. District Court in Brooklyn asked for a stay in the civil case until the conclusion of the criminal case.
"A stay is necessary in the civil case to preserve the secrecy of the ongoing grand jury proceedings," the memorandum said.
The document said the SEC was consulted and took no position on the stay, and that the defendants had declined to comment on the request.