A federal judge said Bank of America Corp may pursue a lawsuit accusing former Bear Stearns Cos managers Ralph Cioffi and Matthew Tannin of lying in an attempt to prop up two failing hedge funds.

A U.S. district judge in Manhattan on Wednesday let the largest U.S. bank pursue fraud and contract claims against JPMorgan Chase & Co , which now owns Bear, and the other defendants over transactions involving billions of dollars, court records show. Two other claims were dismissed, the records show.

Cioffi and Tannin are scheduled to go on trial October 13 in a Brooklyn, New York, federal court for alleged fraud over their handling of the hedge funds, whose 2007 collapse helped lead to Bear's demise the following year.

In its complaint, Bank of America said it suffered significant losses on transactions because of Bear's having concealed that the funds were suffering substantial withdrawal demands in the spring of 2007 and faced imminent collapse.

It said it lost money on a $4 billion securitization tied to complex mortgages it created at Bear's request, and on nearly $1 billion of financing the hedge funds raised from the bank because they were desperate to secure liquidity. Bank of America sought compensatory and punitive damages.

JPMorgan spokesman Brian Marchiony declined to comment. Lawyers for Cioffi and Tannin were not immediately available for comment.

The case is Bank of America NA v. Bear Stearns Asset Management Inc, U.S. District Court, Southern District of New York (Manhattan), No. 08-9265.

(Reporting by Jonathan Stempel; editing by John Wallace)

New York Investment Jpmorgan chase Bank of america