Wall St trial summations hone in on 'toast' email

By Grant McCool

NEW YORK (Reuters) - The trial of two former Bear Stearns hedge fund managers on fraud charges ended on Friday with sharp arguments over the meaning of the word "toast" in one defendant's email about the subprime mortgage market.

Ralph Cioffi, 53, and Matthew Tannin, 48, have denied allegations that made them the first high-profile Wall Streeters to be criminally charged in a case stemming from problems with subprime mortgage-backed securities in 2007 that fueled the market meltdown.

Central to the government's case in a New York court is an April 22, 2007 email by Tannin to his boss Cioffi, who worked for Bear Stearns for 25 years. In it, Tannin refers to another colleague's report on collateralized debt obligations, securities backed by a pool of debt such as mortgages.

"The supbrime market looks pretty damn ugly ... If we believe the (report) is ANYWHERE CLOSE to accurate I think we should close the funds now," said part of Tannin's email, cited in the June 2008 indictment. "The reason for this is that if (the report) is correct then the entire subprime market is toast."

Tannin's lawyer, Susan Brune, told the Brooklyn federal court jury in her closing summation that U.S. prosecutors built their case on "hindsight bias" and emails selected out of context.

"They want to freeze-dry that Matt email and stick it to him," Brune told the jury, which is scheduled to begin deliberations on Monday, almost a month since the trial began on Oct. 13.

"It is absolutely not right," she said.

Cioffi and Tannin have denied charges of securities fraud, wire fraud and conspiracy contained in a June 2008 indictment that accuses them of lying and misleading institutional and individual investors, who lost up to $1.6 billion in two funds.