SEC Surrender Continues With Bear Bankers Deal: William D. Cohan

Feb. 20 (Bloomberg) -- Once again, the Securities andExchange Commission has embarrassed itself. Last week it let offthe hook two hotshot former Wall Street hedge-fund managers wholost a bundle for the investors trusting them to manage theirmoney responsibly.

Instead of going to court on Feb. 13 and laying bare thesordid facts for a jury, at the last minute the SEC settled acivil suit against Ralph Cioffi and Matthew Tannin of the nowdefunct Bear Stearns Cos. These were the hedge-fund managers whofive years ago loaded up their two funds with billions ofdollars of lousy mortgage-backed securities and collateralized-debt obligations, leveraged them to the hilt and, when themarket for the securities soured in July 2007, liquidated thefunds.