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| Version 3 | Version 4 |
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| Bear Stearns ex-managers arrested | Bear Stearns ex-managers arrested |
| (39 minutes later) | |
| Two former managers at investment bank Bear Stearns have been arrested in New York over the collapse of two of the bank's hedge funds in June last year. | |
| Ralph Cioffi and Matthew Tannin face charges of fraud in connection with their management of the funds. | |
| It is alleged they knew of the funds' problems but did not disclose them to its investors, who lost $1.4bn (£709m). | |
| The hedge funds bet on the high-risk sub-prime mortgage market in the US before it collapsed. | |
| FBI spokesman Jim Margolis told the BBC the men faced criminal charges of "securities fraud related to their management of two Bear Stearns hedge funds". | FBI spokesman Jim Margolis told the BBC the men faced criminal charges of "securities fraud related to their management of two Bear Stearns hedge funds". |
| According to papers filed with a US District Court in New York, the two men are charged with running what is described as "a fraudulent scheme". | |
| Mr Cioffi and Mr Tannin believed that two of the funds they ran were in "grave condition and at risk of collapse", the charges stated. | |
| "Rather than disclosing the true state of the Funds to investors and lenders, thus allowing an orderly wind-down of the Funds, Cioffi and Tannin agreed to make misrepresentations in the ultimately futile hope that the Funds' bleak prospects would change and that their incomes and reputations would remain intact," the papers said. | "Rather than disclosing the true state of the Funds to investors and lenders, thus allowing an orderly wind-down of the Funds, Cioffi and Tannin agreed to make misrepresentations in the ultimately futile hope that the Funds' bleak prospects would change and that their incomes and reputations would remain intact," the papers said. |
| The men are due to appear in the US Federal Court in Brooklyn later this afternoon local time. | The men are due to appear in the US Federal Court in Brooklyn later this afternoon local time. |
| Demise | |
| If charged, the men would become the first Wall Street executives to face criminal charges related to the US sub-prime mortgage crisis. | If charged, the men would become the first Wall Street executives to face criminal charges related to the US sub-prime mortgage crisis. |
| Sub-prime mortgages, loans issued to people with a poor credit history, were repackaged as securities and sold across the globe. | Sub-prime mortgages, loans issued to people with a poor credit history, were repackaged as securities and sold across the globe. |
| The collapse of these hedge funds preceded Bear Stearns' own demise earlier this year. | The collapse of these hedge funds preceded Bear Stearns' own demise earlier this year. |
| In March, JP Morgan agreed to buy Bear Stearns with backing of the US Federal Reserve. The deal was approved by Bear Stearns shareholders last month. | In March, JP Morgan agreed to buy Bear Stearns with backing of the US Federal Reserve. The deal was approved by Bear Stearns shareholders last month. |
| Bear Stearns was one of the most high-profile victims of the credit crunch, which was triggered by bank losses linked to the US housing market. | Bear Stearns was one of the most high-profile victims of the credit crunch, which was triggered by bank losses linked to the US housing market. |
| The Fed took swift action over the situation at Bear Stearns to prevent problems spreading to the rest of the international financial sector. | The Fed took swift action over the situation at Bear Stearns to prevent problems spreading to the rest of the international financial sector. |