Jury had no choice

Expect all kinds of second-guessing after two former Bear Stearns fund managers were acquitted today on securities fraud charges. But proving criminal intent in these cases is very hard - despite the decision by prosecutors to keep the issue of guilt pretty simple. It came down to whether Ralph Cioffi and Matthew Tannin deliberately misled investors about the health of the funds or were just putting a positive spin on bad news? From the WSJ:

Jurors in Brooklyn found there was no evidence beyond a reasonable doubt that the defendants had criminal intent and conspired to mislead their investors. There "was nothing that was clear and convincing," said juror Tabasam Bhatti, a 31-year-old civil servant. The prosecution didn't provide "enough information," he said.

Here's John Carney's take at The Business Insider:

When taken in context, the evidence provided actually indicated that the men were engaged in an active and ongoing analysis of the shape of the market. They were evaluating different pieces of evidence from the market, some of which seemed to show that the market for mortgages was falling apart and some of which indicated that the markets were temporarily dislocated due to an investor panic over the popping of the real estate bubble.

But Business Week's David Henry says the verdict has not resolved culpability.

Left unexplored and unanswered for the public is to what extent Cioffi and Tannin were responsible for significant losses at Citigroup and Bank of America. The men were certainly involved. They put together deals that worked to finance subprime mortgages with cash that investors had originally sent to money market funds. The deals pumped up the credit bubble.