Bear Stearns Cleared of Fraud Charges
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A federal judge cleared Bear Stearns Cos. of charges that the Wall Street firm assisted a now-bankrupt hedge fund in committing fraud that led investors to lose more than $400 million. “There are insufficient allegations that [Bear Stearns] knew of or assisted in the alleged fraud,” U.S. District Judge Denise Cote said. The founder of the hedge fund, Michael Berger, has pleaded guilty to sending phony financial statements to investors overstating the performance of Manhattan Investment Fund Ltd. Bear Stearns acted as the fund’s clearing broker and, although the U.S. attorney’s office never accused the company of any wrongdoing, two lawsuits were filed against the firm by investors. Lawyers involved in one of the two lawsuits will have 10 days to submit an argument on why their case shouldn’t be thrown out, but as of now, all charges have been dismissed.
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