Trial of ex-Bear Stearns execs goes to jury

By Grant McCool

NEW YORK (Reuters) - Pay and venue were the focus of a jury's early deliberations on Monday in the trial of two former Bear Stearns hedge fund managers accused of fraud over dealings in mortgage-backed securities early in the financial crisis.

"Please explain venue further," said one of the first notes to the judge from the 12-member jury in federal court in Brooklyn, New York, who also asked to rehear testimony on the compensation of defendants Ralph Cioffi and Matthew Tannin between 2001 and 2007.

Although the trial is the first against high-profile Wall Streeters who worked in the borough of Manhattan, the charges were brought in the federal district that includes the borough of Brooklyn. The judge explained to the jury that venue means the government need only prove the offenses took place within the district by a preponderance of the evidence, a lesser standard than proof beyond a reasonable doubt.

It was not clear why the jury sent the note. In his closing arguments last Thursday, Cioffi's lawyer raised the issue. Prosecutors said some investors who lost money were based in the district.

Whether the government is successful in its case against Cioffi, 53, and Tannin, 48, could influence the aggressiveness of other investigations arising from the market meltdown.

U.S. prosecutors called a score of witnesses and cited hundreds of documentary exhibits for their case, in which they accused the former Bear Stearns hedge fund managers of lying to investors over the health of their funds in 2007 at an early point in the financial crisis.

Two hedge funds managed by Cioffi and Tannin failed in mid-2007, costing institutional and individual investors up to $1.6 billion. Bear Stearns Cos, once worth $45 billion, collapsed in March 2008 and was sold to JPMorgan Chase & Co in a government-brokered fire sale.

In the opening two hours of deliberations, the jury asked to see a total of about 20 exhibits. They are due to resume deliberations on Tuesday.