Daily Telegraph – The funds collapsed as billions of dollars of bets made on mortgage-backed bonds and collateralised debt obligations (CDOs) unravelled, and when the time came to try to sell some of the funds’ sub-prime mortgages, no one wanted to buy them.

At the centre of those funds sat two men – hedge fund manager Ralph Cioffi and Matthew Tannin, the chief operating officer of Bear Stearns Asset Management (BSAM) – who were arrested a year later and charged with several counts of wire and securities fraud, following the loss of $1.4bn of investors’ money.

They face possible 20-year prison sentences, though both have consistently pleaded their innocence. The case against them will be set out at a trial slated to start in October. It centres on emails between the two – and with investors – in which both funds were referred to as "an awesome opportunity", despite allegations that both men knew of the problems within them.

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Tags: allegations, asset-management, bear-stearns, bets, billions of dollars, bsam, chief-operating-officer, collateralised debt obligations, daily-telegraph, innocence, investors, money, mortgage-backed-bonds, prison sentences, ralph cioffi, securities fraud, sub prime mortgages, tannin, two men

Citywire.co.uk – The Serious Fraud Office (SFO) is to probe UK banks for evidence that complex financial products were mis-sold to consumers before the recession hit.

SFO director Richard Alderman plans to investigate the sale of complicated financial instruments like credit default swaps and collateralised debt obligations. The SFO has changed its tactics and will take a more active tack with investigations and will intervene to prevent future frauds, according to a report in The Times.

SFO staff are already investigating Madoff’s UK operations, hedge funds accused of over valuing securities, AIG UK and the collapse of Weavering Capital, according to The Times. The government has also asked its fraud taskforce to examine the collapse of MG Rover in 2005. And the workload is set to grow with the decision to look into the Keydata saga, as reported by Citywire this week.

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Tags: aig, citywire, collapse, collateralised debt obligations, consumers, credit default swaps, director richard, financial-instruments, frauds, hedge funds, investigations, mg rover, nbsp, recession, richard alderman, saga, serious fraud office, sfo, uk banks, uk operations