The indictment of two Bear Stearns hedge fund managers for securities fraud is expected to be announced later on Thursday in connection with a fund tied to the subprime lending market, CNBC has learned.
The U.S. Attorney's Office for the Eastern District of New York has signaled the move to Edward Little, an attorney for Ralph Cioffi, who ran the two Bear Stearns hedge funds that imploded and signaled the start of the subprime crisis.
Little told CNBC the indictment of Cioffi and his partner in running the fund, Matthew Tannin, was likely to happen sometime on Wednesday and be announced on Thursday morning.
Little says Cioffi plans to fight the charges, which will include allegations that he misled investors to stay in the fund at a time when Cioffi knew the subprime market was imploding.
The defense is expected to argue both in court and in the court of public opinion that Cioffi did nothing more than what Dick Fuld and Erin Callen did in promoting Lehman Brothers - make a case that turned out to be wrong.
Charges from the Securities and Exchange Commission are expected to accompany the indictment.
Cioffi and his attorney told CNBC that they will fight the charges vigorously.