Former Bear Stearns hedge fund manager Matthew Tannin, on trial for fraud and charges he lied to investors early in the financial crisis, could not have foreseen problems in the subprime mortgage market in 2007, his lawyer said in opening his defense on Thursday.

Fund managers Tannin and Ralph Cioffi have denied charges of securities fraud, wire fraud and conspiracy in the June 2008 indictment that made them the first high-profile Wall Streeters to be criminally charged in a case stemming from the stock market meltdown.

No one can lie about what the future will bring because nobody knows what the future will bring, Tannin's lead lawyer, Susan Brune, told the jury in a New York court before U.S. District Judge Frederic Block.

As Judge Block told you, Matt is presumed innocent, more than that, he is innocent, Brune said. He tried to foster debate, think through all the options and he used emails to foster that kind of debate.

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 mortgage market.

The two funds run by Tannin and his boss Cioffi were crammed with subprime mortgage-backed securities and lost investors $1.4 billion, according to the indictment. If convicted, both men could face imprisonment of up to 20 years.

Brune said in court that the case was about risks inherent in hedge fund management and about her client worrying and being anxious as he was trying to do his best for investors, many of whom were large financial institutions.

Neither man is charged with contributing to the demise of Bear Stearns Cos less than a year after the funds collapsed in mid-2007. The company was sold to JPMorgan Chase & Co in a government-backed deal.

The 12 jurors were selected after answering written and oral questions about whether they could be fair to the defendants in an era of home foreclosures, job losses and government bailouts of banks.

In the government's opening statement to the jury in U.S. District Court in Brooklyn on Wednesday, a prosecutor said the two men repeatedly lied to investors in March and April 2007 to save their bonuses and their reputations.

The prosecutor, Patrick Sinclair, said in court that the investors, institutions and wealthy individuals from all over the world, lost $1.6 billion.

Cioffi's lawyer, Dane Butswinkas, told the jury in his opening statement on Wednesday that his client, did not know how things would turn out and didn't have hindsight like the government has today.

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 Maureen Bavdek)

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