Prosecutors loaded for Bear

By James Ledbetter

(Filling in today for Colin Barr, who’s more than earned a day off.) Financial turmoils that involve vast sums follow definite rhythms, and one predictable beat is the arrival of the subpoena. Yesterday Businessweek.com reported that federal prosecutors are investigating whether bankers at Bear Stearns (BSC) may have pulled their own money out of subprime-backed funds, even while encouraging the bank’s customers to continue to invest. This morning, the Wall Street Journal specifically names fund manager Ralph Cioffi as a target (indeed, the Journal says the sole target) of this investigation, claiming that he moved $2 million of his own money out of two funds just weeks before they famously imploded this spring.

Let’s be clear: no one has yet been charged with a crime, and there could be many explanations for Cioffi’s transfers if they did occur. Still, the tale has such a familiar ring, echoing the actions of dot-com boom bankers who touted stocks to customers while internally telling everyone the companies were dogs. For those who’ve watched the political careers of prosecutors like Rudolph Giuliani and Eliot Spitzer flourish on the backs of Wall Street investigations, however, there is one nagging question: who is Benton J. Campbell? Sure, he’s been the U.S. Attorney for New York’s Eastern District for, uh, two months, but why would his office - located in Brooklyn - have jurisdiction over alleged Wall Street malfeasance, as opposed to the Southern District, which was Rudy’s stomping ground in the ’80s? Anybody out there know?