Bank of America Corp on Wednesday sued Bear Stearns and two former hedge fund managers who were indicted in June in the first major federal case stemming from the subprime mortgage crisis.
The lawsuit in U.S. District Court in Manhattan accused Bear Stearns, which was sold in March to JPMorgan Chase & Co., and three of its officers of “egregious misconduct” in a $4 billion transaction structured and marketed by Bank of America and other financing transactions in 2007.
It named Ralph Cioffi and Matthew Tannin, the former managers who were charged on June 19 with conspiracy and securities fraud related to the demise of their two funds. The pair were also charged by the Securities and Exchange Commission.
In May 2007, Bank of America, at the request of Bear Stearns Asset Management, structured and marketed a $4 billion transaction known as a “CDO-squared”, the suit said. A CDO is a collateralized debt obligation, and the transaction involved mortgage-backed assets pooled and structured to support the sale of certain securities.
The lawsuit said that over several months Bear Stearns and its employees, including the three named in the complaint, concealed substantial withdrawal requests from Bank of America, hedge fund investors and other creditors.
For additional information or to further discuss these matters, investors should contact either:
Scott L. Silver, Esq.
Blum Law Group
1-877-STOCK LAW (1-877-786-2552)
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