Former Bear Stearns hedge fund manager Matthew Tannin won a round during his trial in New York on fraud charges on Monday when a judge ruled the jury cannot see a personal email in which he wrote about his fears of a blow up risk for investors.
Emails written by Tannin and his former boss at Bear Stearns Asset Management, Ralph Cioffi, are central to the prosecution's case against the two men -- the first high- profile Wall Streeters to be criminally charged stemming from problems with subprime mortgages and overall liquidity.
Bear Stearns Cos was taken over in 2008 by JPMorgan Chase & Co
Cioffi, 53, and Tannin, 48, have denied charges of securities fraud and conspiracy over funds crammed with subprime mortgage-backed securities that collapsed in the summer of 2007, early in the financial meltdown. Both face up to 20 years in prison if convicted by the Brooklyn federal court jury, which was selected on October 13 for a trial expected to last well into November.
Investors lost as much as $1.6 billion, according to a U.S. prosecutor, who accused them in his opening statement of lying repeatedly to investors who had money in two funds they managed.
In their opening statements, lawyers for both men told jurors their clients did not lie and could not forecast the severity of the market's decline as they debated possible strategies for the funds in emails sent to each other and sometimes shared with other colleagues.
Monday's written ruling by Judge Frederic Block granted Tannin's motion to suppress evidence from his personal email account on the ground that the warrant authorizing the seizure did not comply with the Warrants Clause of the Fourth Amendment.
The ruling referred to a November 23, 2006 email that was part of Tannin's personal diary on a private Google Inc
Tannin wrote about his fear that one of the funds could not be run the way he had hoped and that it was going to subject investors to 'blow up risk'.
A spokesman for prosecutors in the office of the U.S. Attorney in the Eastern District of New York declined to comment on Monday's ruling. Tannin's lawyers were not immediately available to comment.
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 Andre Grenon)