If it isn’t enough that federal regulators are looking into whether the managers of two failed Bear Stearns hedge funds, Ralph Cioffi and Matthew Tannin, misled investors into staying with the risky investments as they were tanking, they are now probing whether they inflated the funds’ returns and outlook to obtain loans from banks or prime custodians, BusinessWeek reports.

 

Some of the companies they might have duped include Bank of America, Barclays, Dresdner Bank and Merrill Lynch.

Should the additional charges be brought forth, a conviction becomes more likely, said Paul Radvany, a professor with Fordham University School of Law.

 

Allegedly, Tannin wrote a letter to Dresdner underestimating the number of investors who wanted to redeem their money, and the duo asked Barclays to invest $100 million in a letter with inflated performance figures.

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