Jury Clears Fund Managers in Bellwether Case

Two Bear Stearns executives who ran hedge funds that collapsed after betting heavily on the shaky subprime mortgage market were acquitted today of lying to investors—a defeat in the government's bid to punish fraud exposed by the financial crisis. The closely watched case was the first one against Wall Street executives related to the meltdown and doesn't bode well for future prosecutions.

The jury in federal court in Brooklyn deliberated about eight hours over two days before finding Ralph Cioffi and Matthew Tannin not guilty of conspiracy and other charges in an alleged scheme that cost 300 investors about $1.6 billion. At one point in 2007, Cioffi pulled $2 million of his own cash out of the tanking subprime market, but the pair continued to encourage investors to stay in, prosecutors say. (More Bear Stearns stories.)