A pair of former Bear Stearns hedge-fund managers arrested today on federal fraud charges could be done in by an email in which one described their market position as "toast"—days before telling investors it was "quite comfortable." Matthew Tannin and Ralph Cioffi will be indicted later today in a collapse that cost investors $1.6 billion, the Wall Street Journal reports.
Tannin's lawyer proclaimed his innocence, saying, "He is being made a scapegoat for a widespread market crisis." The crucial email, sent in April 2007, was an early warning sign of the financial meltdown that hastened Bear Stearns' demise and swamped world markets since last summer. Financial firms have been forced to write down some $400 billion thus far.