(Corrects by adding dropped words him against in paragraph one)

NEW YORK - A lawyer for former Bear Stearns hedge fund manager Ralph Cioffi on Wednesday vigorously defended him against prosecution allegations he repeatedly lied to investors early in the financial crisis, describing as ridiculous one charge of insider trading.

Fund managers Cioffi and Matthew Tannin have denied charges of securities fraud, wire fraud and conspiracy in a June 2008 indictment that made them the first high-profile Wall Streeters to be criminally charged in a case stemming from subprime mortgage-backed securities that fueled the crisis.

In an opening statement at their trial in New York, Cioffi's lawyer Dane Butswinkas told the jury that even the best minds in the financial industry could not have predicted the credit crisis that precipated the worst U.S. recession since the Depression of the 1930s.

Ralph Cioffi did not know how things would turn out, said Butswinkas, whose client's funds, laden with subprime mortgage-backed securities, collapsed in June 2007 after years of consistent success.

Less than a year later, Bear Stearns Cos was out of business. Neither man is charged with contributing to the collapse of Bear in March 2008. It was sold to JPMorgan Chase & Co in a government-backed deal.

Real trials are not like the movies. He didn't have hindsight like the government has today, said Butswinkas, who paced and gestured with his arms during a 90-minute long presentation. What matters is not the soundbite, but the details ... not cherry picking from thousands of thousands of emails.

He said Cioffi, who worked for Bear Stearns for 25 years, used his vast experience and was not someone to let panic dictate in a market downturn. He said the hedge funds were under the microscope at every level of Bear Stearns Asset Management.

PROSECUTION TARGETS EMAILS

Emails written by Cioffi, 53, and Tannin, 48, are key to the government's case. Prosecutors contend that in March 2007 -- more than 18 months before the full extent of the crisis became clear -- the pair promoted the funds to investors while privately emailing their fears about a possible calamity in the subprime market.

These two defendants lied to their investors to save their multimillion dollar bonuses, Assistant U.S. Attorney Patrick Sinclair told the jurors in the government's opening statement. The defendants saw their successes coming to an end ... to save their bonuses and their reputations they decided to commit a crime.

Cioffi and Tannin, dressed in dark suits and white shirts, sat impassively taking notes at a long wooden table with their lawyers in the courtroom. Their wives and some relatives sat in the public seats of the courtroom.

Tannin's lawyer Susan Brune will make her opening statement on Thursday to the jury in U.S. District Court in Brooklyn.

Sinclair cited emails in his opening statement that he said would be presented in evidence showing the pair wrote privately about their fears for the subprime market even as they promoted the funds to investors.

Together, the men were paid bonuses of nearly $20 million in 2005 and 2006, the prosecutor said, in addition to salaries of $250,000.

CIOFFI ALSO ACCUSED OF INSIDER TRADING

The charges carry a possible prison sentence of 20 years. Cioffi is also accused of insider trading by taking $2 million out of one fund and investing it in another.

This allegation is ridiculous, Butswinkas told the jury. He described how portfolio managers at Bear Stearns Asset Management were encouraged to put skin in the game by investing their own money in the funds they managed.

The transfer was completed under the rules. The government is jumping up and down about not telling investors what he did with his personal money, Cioffi's lawyer said.

He said a private placement memorandum to investors in the funds stated that a manager could transfer his own money at any time without notice.

At another point, the lawyer talked to the jurors about financial terms such as leveraging, hedging, shorts and collateralized debt obligations, a security backed by a pool of debt such as mortgages.

The two funds lost $1.4 billion in investor money, according to the indictment. But in court on Wednesday, prosecutor Sinclair cited an amount of $1.6 billion.

The funds' investors were wealthy, sophisticated and from all over the world, Sinclair said.

He said Cioffi and Tannin lied about their personal investments in these funds and they lied about the level of redemptions in these funds.

Twelve jurors were selected on Tuesday after answering written and oral questions about whether they could be fair and impartial in an era of lost jobs, government bailouts of banks and the Wall Street financial crisis.

The case is USA v Cioffi & Tannin, U.S. District Court for the Eastern District of New York, No. 08-415.

(Reporting by Grant McCool; Editing by Gerald E. McCormick, Richard Chang and Bernard Orr)

Investment Jpmorgan chase Lawyer