Two former Bear Stearns managers have surrendered to face criminal charges in the wake of the collapse of the subprime mortgage market, federal authorities said Thursday.

Authorities in Brooklyn are expected to give details later Thursday on the case against Ralph Cioffi and Matthew Tanin, who are ex-managers of Bear Stearns Cos.(BSC: 9.33, +0.00, +0.00%) hedge funds that collapsed last year.

A law enforcement official told The Associated Press on Wednesday that an indictment naming the men was the result of a year-long federal securities fraud investigation.

The former executives are suspected of misleading investors about the risky subprime mortgage market, the official said, speaking on condition of anonymity because the outcome of the investigation is pending.

Attorneys for Tannin and Cioffi declined comment on Thursday and the U.S. attorney's office did not return a call for comment.

The fallout from the collapse of the subprime mortgage market has rattled the global economy and the American housing market.

The implosion of the hedge funds also foreshadowed Bear Stearns' own demise, with the Federal Reserve having to intervene earlier this year to bail out the beleaguered bank. Their collapse also fueled the recent credit crisis by showing how much damage the slumping mortgage market could incur on the companies that bought, repackaged and sold the loans.

Despite positive assessments by Cioffi and Tannin, the Bear Stearns hedge funds failed in June 2007. The funds had more than $20 billion in assets before crashing.

Thursday, June 19, 2008
Two Former Bear Stearns Fund Managers Surrender in NYC
Cioffi, 52, and Tannin, 46, already have been named in lawsuits brought last year by hedge fund investors, including Barclays Bank PLC, who allege they were purposely misled.

Barclays accused Bear Stearns of knowing for months that certain assets in the Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Master Fund were worth "far less" than their stated values.

The bank alleged Bear Stearns managers "hatched a plan to make more money for themselves and further to use the Enhanced Fund as a repository for risky, poor-quality investments."

The complaint said Bear Stearns told Barclays that the enhanced fund was up almost 6% through June 2007 -- when "in reality, the portfolio's asset values were plummeting."

Last month, Bear Stearns shareholders approved JPMorgan Chase & Co.'s (JPM: 37.90, -0.84, -2.16%) $2.2 billion buyout at about $10 a share. Back in January 2007, before mortgage defaults began clobbering banks and draining demand from the debt markets, Bear Stearns had traded at $171 a share