Is that a real investigation or what?

I am afraid the answer is What.
What it is one will most likely finds it in a future if ever? If investigators were for real the entire community of stock market would have to be shut down and all of their employees would have to go to jail as their role in business is to hype up the actual value of the companies which requires repeating the lies of the individual companies in order to grow the value of their stock.
Well if we were to go that far I would luck up our government too. But I guess the need to grow outstrips the value of being honest about things. So it goes our national integrity.

The following is an article that moved me to present my comment above.

Former Bear Stearns Cos. hedge fund managers Ralph Cioffi and Matthew Tannin, arrested this morning at their homes in New Jersey and Manhattan, were indicted for mail fraud and conspiracy in the first prosecution stemming from a federal investigation of last years mortgage-market collapse.

The two men were charged with misleading investors about the health of two Bear Stearns hedge funds whose implosion ignited the subprime mortgage crisis. Cioffi was also charged with insider trading in the indictment, which cites a series of e-mails between the two men. They face as much as 20 years in prison if convicted of the most serious charges.

The U.S. government has been investigating possible fraud by banks and mortgage firms whose investments in subprime loans and securities plunged in value, causing losses that now total $396.6 billion. Cioffi and Tannin were also sued today by the Securities and Exchange Commission.

``The e-mails tell a damning story of these managers awareness of the dire state of the funds, even as they talked them up among investors, said Dan Richman, a former federal prosecutor and now a professor at Columbia Law School in New York. ``There is a lot of political pressure on the Justice Department to move forward in this area.

Arrested in Tenafly

Cioffi, 52, was arrested at 7 a.m. at his Tenafly, New Jersey, home. Tannin, 46, was arrested at the same time at his Manhattan apartment, said James Margolin, a spokesman for the Federal Bureau of Investigations New York office. The two men were fingerprinted at FBI headquarters in Manhattan, then taken in handcuffs by six FBI agents to be transported across the East River to Brooklyn federal court for an appearance later today.

The collapse of the hedge funds began a credit squeeze that led to lawsuits against Countrywide Financial Corp., American Home Mortgage Investment Corp., Citigroup Inc. and JPMorgan Chase & Co.

After demands by clients and lenders for payment threatened Bear Stearns with bankruptcy, the 85-year-old firm agreed to sell itself to New York-based JPMorgan in March.

Cioffis lawyer attacked the arrests, triggered by an investigation by Brooklyn U.S. Attorney Benton Campbell, as an effort by the government to make an example of innocent men.

``Because his funds were the first to lose might make him an easy target but doesnt mean he did anything wrong, said Edward Little, Cioffis lawyer, in a statement.

`Made a Scapegoat

Susan Brune, a lawyer for Tannin, also said her client is innocent and that he ``is being made a scapegoat for a widespread market crisis.

``Hedge fund managers cannot lie to their own investors, Antonia Chion, an SEC attorney overseeing the agencys lawsuit, said in a statement. ``Even sophisticated investors look to fund managers to speak truthfully.

At a press conference today, Campbell said the criminal investigation is continuing.

Cioffi managed the two funds that collapsed, and Tannin served as his chief operating officer. The funds invested almost all of their assets in subprime-mortgage-related securities. Their investment bets failed last June when prices for collateralized-debt obligations, called CDOs, linked to loans plummeted amid rising late payments by borrowers with poor credit histories or heavy debt.

The indictment describes e-mails allegedly sent by the two men suggesting the funds were headed for trouble while they were telling investors they were ``comfortable with their holdings.

Tannin allegedly e-mailed Cioffi saying he was afraid that the market for bond securities they had invested in was ``toast, and suggested shutting the funds.

Vodka Toast

On March 2, 2007, Cioffi hosted an informal meeting attended by Tannin and other members of the funds portfolio management team, according to the indictment. Cioffi said ``the funds had averted disaster and led a vodka toast to celebrate surviving the month, according to prosecutors. He directed those at the meeting ``not to talk about the funds difficulties with others, including other members of the funds team, who werent present, the indictment alleged.

Columbia Law School professor Richman said the defendants will likely ``say that they were acting in good faith, based on a faulty understanding of the market, an understanding shared by all too many in the industry.

In a separate move today, two government officials said more than 400 people have been charged in a U.S. Justice Department mortgage-fraud sweep, called ``Operation Malicious Mortgage.

RCAM Capital

Cioffi, now with Tenafly-based RCAM Capital LP, left Bear Stearns in December amid inquiries by prosecutors and the SEC into whether he withdrew $2 million from two funds before their collapse in July, three people with knowledge of the matter said at the time. He was relieved of his duties as a fund manager in June, when his funds subprime investments began to unravel.

Cioffi was born in 1956 and grew up in South Burlington, Vermont, a city of 16,500 that borders Lake Champlain. He went to Rice Memorial High School and St. Michaels College, three miles down the road from each other in the neighboring towns of South Burlington and Colchester.

He was a running back, fullback and offensive guard on the Rice football team and a bodybuilder while at St. Michaels, according to a Rice official. An A student in math and economics in high school, Cioffi studied business administration in college and graduated with honors in 1978.

Tannin had been with Bear Stearns since 1994, according to a company prospectus. He spent seven years on the CDO structuring desk, and from 2001 to 2003, followed the CDO market as a research analyst in Bears asset-backed research group.

A Lawyer

A lawyer, Tannin has a Juris Doctor from the University of San Francisco and was a clerk for a California appeals court.

Today, both men walked out of FBI headquarters in lower Manhattan looking straight ahead with their hands cuffed behind their backs. More than two dozen reporters, photographers and television cameramen watched as Cioffi, wearing a blue blazer, tan slacks and no tie, and Tannin, wearing a blue suit and tie, were led into separate vehicles. Neither man made any comment.

Since the failure of the two Bear Stearns hedge funds, investors claimed in lawsuits that banks and financial companies such as the New York-based securities firm knew their underlying investments werent worth what they were telling shareholders.

CDOs are created by packaging assets including bonds and loans and using their income to pay investors. The securities are divided into different portions of varying risk and can offer higher returns than the debt on which they are based.

Two Funds

The two Bear Stearns funds are part of Bear Stearns Asset Management Inc. They were the Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Master Fund Ltd. and the Bear Stearns High-Grade Structured Credit Strategies Master Fund Ltd.

Investors in the two funds, which filed for bankruptcy in July, lost $1.6 billion. Barclays Bank Plc said in a lawsuit that the funds once held a total of about $20 billion in assets.

Cioffi allegedly pulled $2 million of his own money, one third of the amount hed invested in one of the funds, before March 2007, so he could commit it to another fund he set up, said a person familiar with the investigation. The withdrawal occurred before the funds ran into trouble, the person said.

As the securities dropped in value, the funds creditors demanded more collateral. Bear Stearns extended $1.6 billion in credit to one of the funds before seizing its assets in July. Both funds sought court protection two weeks after the firm told investors they would get little if any money back.

Cayman Islands

The funds tried to liquidate in the Cayman Islands before a U.S. judge held that New York was a more appropriate jurisdiction and that they cant shield their U.S. assets from lawsuits.

Barclays, the U.K.s third-biggest bank, claimed in its lawsuit, filed last year in Manhattan federal court, that it was misled about the health of Bears so-called enhanced fund.

Bear Stearns, Cioffi and Tannin are named as defendants in London-based Barclays suit. The bank accused Cioffi of withdrawing his $2 million at the same time Bear persuaded Barclays to double its investment.

The suit cites a February e-mail to Barclays in which Tannin allegedly said the fund is ``having our best month ever and that our ``hedges are working beautifully.

By then, the fund was having ``severe liquidity problems, said Barclays, which added that it lost ``hundreds of millions of dollars as a result. Internally, Cioffi and Tannin discussed the ``wipe out of the fund, according to the complaint.

Prosecutors relied on e-mail in another high-profile financial industry prosecution.

Frank Quattrone

Former Credit Suisse Group banker Frank Quattrone was accused in 2003 of hindering a government probe of his Zurich- based employer. The chief piece of evidence was an e-mail Quattrone wrote advising employees to ``clean up their files.

Prosecutors said he sent the message, suggesting subordinates destroy records, after learning a grand jury was probing how Credit Suisse doled out shares in initial public offerings.

The government dismissed the case against Quattrone in August 2007 after one jury failed to reach a verdict and a second panels conviction was overturned by an appeals court.

Elizabeth Ventura, a spokeswoman for New York-based Bear Stearns, didnt return a call seeking comment.

The case is U.S. v. Cioffi, 08-00415, U.S. District Court for the Eastern District of New York (Brooklyn).