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Two former Bear Stearns managers have surrendered to face criminal charges in the wake of the collapse of the subprime mortgage market, federal authorities said Thursday.
A law enforcement official told The Associated Press on Wednesday that an indictment naming the men was the result of a year-long federal securities fraud investigation.
The former executives are suspected of misleading investors about the risky subprime mortgage market, the official said, speaking on condition of anonymity because the outcome of the investigation is pending.
Barclays accused Bear Stearns of knowing for months that certain assets in the Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Master Fund were worth "far less" than their stated values.
The bank alleged Bear Stearns managers "hatched a plan to make more money for themselves and further to use the Enhanced Fund as a repository for risky, poor-quality investments."