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There has been a lot more smoke found around these hedge fund managers (Matthew Tannin and Roger Cioffi) in the last few days. Here is a sampling from the WSJ Law Blog:

Before Cioffi and Tannin reassured investors that everything was just fine, Tannin

• told Cioffi they should close the fund. ““If we believe the [CDOs reports is] ANYWHERE CLOSE to accurate I think we should close the funds now.” He added, “caution would lead us to conclude the [CDO Report] is right — and we’re in a bad shape.”
• suggested to Cioffi that they retain outside counsel to help them with whatever might come
• used his personal email rather than his work email to express his doubts about the market (Tannin was a 1994 graduate of USF law school)

A WSJ article on Friday, suggested “Defense lawyers are likely to argue that debates about the economy and the stability of the credit markets were standard fare last year as U.S. housing prices began a long slide.

This is called the “everyone else was doing it” defense. While it may work legally, it doesn’t hold much water ethically. Just because other hedge funds may have been privately worrying and publicly confident, this doesn’t make it ethically any better.

Apparently Cioffi and Tannin did not remember their mother’s admonition not to be a lemming. With my mom it went something like “if everyone else were jumping off a cliff would you do it too?” It seemed like a dumb idea when I was little and it seems like even a dumber idea now that I’m older.

Tags: Cioffi, Tannin, Bear Sterns, Clint Korver, Ethics for the Real World, Lemmings

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