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Get ready, Wall Streeters, for your trial of the century; First criminal case of the bank bubble could mean prison for Bear Stearns duo.

Article Excerpt
Byline: AARON ELSTEIN

It was march 2007. The housing market was starting to crack. So too, perhaps, was Ralph Cioffi.

The hedge funds he managed at Bear Stearns were crumbling because they were stuffed with subprime-mortgage-related securities. The collapse of his funds three months later was the first boulder in the avalanche that destroyed Bear Stearns a year later and sent the rest of Wall Street into a death spiral.

Those calamities were well into the future, of course, but that winter, Mr. Cioffi quickly recognized that the mortgage market's early tremors spelled bad news for outfits like his.

"It may not be a meltdown for the general economy but in our world it will be, he wrote to a colleague in a prescient March 15 e-mail whose subject line was "fear. "Dealers will lose millions and business will not be the same for years.

In public, however, Mr. Cioffi kept a brave face. A day after writing the "fear e-mail, he gave his sales force a pep talk, telling them, "If someone were to ask me, I would tell them that...

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