The reliance on e-mails as definitive, incriminating evidence of chicanery was once a given, but that didn't last long. Social media have now damaged the credibility of such e-mails, as the monumental Bear Stearns fraud verdict shows.

E-mails shooting back and forth during 2007 between Ralph Cioffi and Matthew Tannin looked like bullets that hit the target, damning the two hedge-fund goniffs on charges of securities fraud. (See my previous item for details from the indictment.)

Such careless and stupid e-mails revealing crooked behavior doomed previous goniffs, like Jack Abramoff and his henchmen in the infamous Wampumgate corruption scandal of the Bush era. (The unmasking of that scandal was one of John McCain's finest moments, if you recall.) The e-mails wove a fascinating web of corruption extended to the religious right, several congressmen, and Karl Rove. And the e-mails not only brought Abramoff and crew to justice, but they forced congressmen out of their jobs.

But this is a new time, and texting and twittering have now convinced many people that e-mails are also thoughts on the fly that aren't necessarily proof or even strong evidence. That's obviously because we all now rue some of the thoughts on the fly that we text and twitter. And texting and twittering are even more careless and less thought-out than e-mails.

So cases built on e-mails no longer have the cred they once had.

But the problem is this: Those thoughts on the fly are often really good evidence of malicious or illegal intent. Twittering and texting have merely inured the common folk, blinding them to that fact. Just because someone twitters, texts, or e-mails incriminating statements doesn't make those statements not incriminating.

In any case, John Hueston, who prosecuted Enron's top crooks, Ken Lay and Jeff Skilling, says it best in this morning's New York Times:

The verdict in the Bear Stearns fraud case has far-reaching implications for Wall Street execs, and it's all good — for them.

Ralph Cioffi and Matthew Tannin were found not guilty in Brooklyn federal court of fraud and other charges related to their blatant lying about their hedge funds, which were built on the subprime-mortgage house of cards.

In the only federal prosecution so far of any of the goniffs who helped cause last year's Wall Street meltdown, they got away with murder (of their investors' money), if you read the last year's indictment. Even their participation in the homicide of Bear Stearns (their funds lost almost $2 billion) was blessed by the jury, which said the prosecutors didn't give them enough evidence.

According to the indictment, back on March 2, 2007, Cioffi and Tannin were freaked out by their funds' extremely shaky — even doomed — liquidity because the subprime mortgages underlying the CDOs they were peddling were collapsing. They drank "a vodka toast" privately just for surviving the previous month without having to fold their huge hedge funds, and they kept their worries to themselves, not even telling their bosses, apparently. To investors, however, they lied, saying everything was hunky-dory (lie) and that they were putting their own money into their funds (lie).

The next day, March 3, according to the indictment, Cioffi told Tannin that things could be worse: "[W]e have our health and families ... [w]e are not a 19-year-old Marine in Iraq. ..."

The only real prosecution for securities fraud relating to the subprime crisis has flopped: Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin were acquitted today of fraud charges. A federal jury in Brooklyn took less than six hours to reach the verdict, after a month-long trial.

They were indicted in June 2008, a year after two funds they managed failed, costing investors a cool $1.6 billion. The duo were accused of not telling investors about the the shaky subprime-mortgage foundation of their funds.

The WSJ notes that the trial "trial was viewed a test of the boundary between putting a positive spin on bad results and outright fraud."

As my colleague James Lieber recently noted in a Voice cover story, Cioffi and Tannin were the targets of a Bush-era prosecution (and they were hardly big fish), and Barack Obama's crew has yet to launch a major securities fraud prosecution of its own.

In any case, the not-guilty verdict makes such prosecutions even more unlikely now.

Perp walk for Raj Rajaratnam

How could anybody be breathless about the Manhattan U.S. Attorney's Office measly $20 million bust of hedge-funder Raj Rajaratnam and cohorts for allegedly illegal inside trading?

Yet the Wall Street Journal's follow story this morning on Friday's bust of the pirates associated with Rajaratnam's aptly named Galleon treats this as if it were a real indication that Wall Street's goniffs are being tracked down.

If this is the crux, the main point, of the Galleon case — read the U.S. attorney's press release and complaints — it's not that big a deal.

New York Attorney General Andy Cuomo is the prosecutor who's doing the hard work of hounding the culprits of last fall's crash. U.S. Attorney Preet Bharara, Barack Obama's guy in the crucial Southern District prosecutor's office, wants us to salute him for the Galleon case?

Bloomberg News notes that this is an indication that prosecutors will use wiretaps in unraveling future Street crime. Yeah, that's comforting.

And the NYT insists that prosecutors "intended [the] case as a shot across the bow of hedge funds." What total bullshit that is. Yeah, I'll bet hedge fund moguls like John Paulson are really shaking in their boots that people made $20 million from this alleged wrongdoing and got caught.

The WSJ story notes Galleon "pushed its traders so hard to get market-moving information that those who failed were frequently berated or pushed out."

You don't say! WTF, this unpleasant behavior is SOP on the Street and in thousands of other businesses.

This morning's NYT story notes that the wiretaps leading to the charges against the Sri Lankan dude were full of "a fair number of four-letter swear words." Fucking unusual, eh?

I like how Bharara says "this case should serve as a wake-up call for Wall Street." Not likely. This may be a big insider-trading case (but it's not really, based on what we know so far), but it's nothing compared with last fall's meltdown — and it has nothing to do with last fall's meltdown. We're still waiting for some federal government action on that.

One item of political interest: Indian-born Preet Bharara's first highly publicized bust is of a Sri Lankan who supposedly contributed money to the Tamil rebels, the Liberation Tigers of Tamil Eelam. They're the dudes who assassinated Indian pol Rajiv Gandhi.

This case against Rajaratnam by an Obama appointee should help the Democrats among the steadily more influential Indian-American population, especially because of Rajaratnam's supposed support of the Tamil terrorists.

Good for a snicker is the NYT story last August about Bharara, particularly the headline: "For Manhattan's Next U.S. Attorney, Politics and Prosecution Don't Mix." Yeah, right. Except that Bharara was chief counsel for Demo kingpin senator Chuck Schumer.

BofA to face 12 angry taxpayers in trial: SEC (NY Post)

Get ready for the fireworks: In shrewd p.r. move, SEC demands a jury trial over Merrill Lynch scandal.

Can snails save the economy? It's working in Bulgaria (NY Daily News)

Selling US short (NY Post, Mark DeCambre)

Hedge-fund honchos "wagering that global investors will lose faith in America, thanks to the country's post-credit crisis spending."

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Big Merger Deals Signal Restored Confidence (NYT)

N.Y. Poverty Data Paint Mixed Picture (NYT)

Actually, the same grim picture with a desperate attempt to paint at least a faint smile on it.

Deals Drive Push Back Into Stocks (WSJ)

"The Dow industrials rose 124 points and are on course for the best quarter since 1998 amid a burst of deals and analyst upgrades."

Obama Enters Olympics Race (WSJ)

Going to Denmark this week to use his charm to try to get the costly Olympics in Chicago in 2016.

Exelon to Quit Chamber Over Climate Bill (NYT)

"The carbon-based free lunch is over," says the CEO of one of the nation's biggest utilities, rebelling against the U.S. Chamber of Commerce's head-in-sand stance against global-warming legislation.

Sex Drive Boosted by Testosterone Spray, Study Says (Bloomberg)

Bailout of Wall Street execs gets personal: Aussie drug company Acrux will ask FDA to let it sell Axiron, an underarm spray that boosts testosterone. Global markets for testosterone treatments, story says, is $1 billion a year and has risen up, up, up by more than 20 percent in the U.S. Meanwhile, "U.S. Drug Companies Chase Vaccines," WSJ says of impending flu profits.

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Emerging economies get new role (BBC)

G-20 roundup from Pittsburgh. Click on the above video for Russian TV footage of black-clad cops rousting black-clad protesters, as a robotic-sounding voice emanates from a police loudspeaker: "No matter what your purpose is, you must leave." NYT story here.

Twitter's Value Is Set at $1 Billion (WSJ)

Thanks to all of you who get paid nothing by Twitter despite your being its only product/asset, the company that hasn't yet generated any significant revenue is about to get $100 million in new funding. In August 2008, Twitter had 4.3 million unique visitors; this August it had 54.7 million. Now hooked, users are, like it or not, about to be bombarded by advertisers and marketers. Too bad most of you are either out of work or otherwise can't afford to buy all the shit you'll be told to buy. (See next item.)

The Long Slog: Out of Work, Out of Hope (WSJ)

Typically excellent human-interest WSJ story, this one focuses on jobless Americans. Introducing an array of hard-luck yarns: "Nearly 15 million Americans are jobless, and the number is widely expected to remain high even as the economy slowly begins to recover. Part of the problem many of the unemployed face: the very fact that they have been out of work a long time."

IPO Market Snaps Back as Taste for Risk Returns (WSJ)

Five companies go public — the biggest IPO week in a year and a half. One of them is electric-car battery maker A123 Systems. Two others are REITs.

Boss blames smartphones for stress as company suicide rate comes under scrutiny (The Age, Melbourne)

CFO at France's biggest telecom warns that, as story says, "the barrage of emails from smartphones and personal computers was stressing out employees."

Market's Eyes Are Bigger Than Its Stomach; Chokes On New Supply (StreetInsider.com)

Double bubble trouble.

Yes, Celebs Have Tax Issues Too (ABC News)

No, not a reality show, but a slideshow.

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For Obama, a Chance to Reform the Street Is Fading (NYT)

The president "sternly admonished the financial industry and lawmakers to accept his proposals." Obama says Wall Street is "choosing to ignore" the "lessons of Lehman and the crisis."

Judge Rejects Settlement Over Merrill Bonuses (NYT)

Astonishing, rare, and powerful rebuke of Wall Street by federal judge Jed Rakoff that far outstrips Obama's for-public-consumption scolding — and embarrasses the president and Obama's SEC chief Mary Schapiro. WSJ's "Judge Tosses Out Bonus Deal" points out that the "unusual ruling ... casts doubts about how the [SEC] handles probes of major U.S. companies." Rakoff's ruling strengthens NY AG Andy Cuomo's attempt to file civil-fraud charges against Bank of America's CEO Ken Lewis. Meanwhile, Lewis tells Japan that "there is a potential for a rebound that beats the forecasts." He's talking about the global economy, not his own future.

No Easy Exit for U.S. As Housing's Savior (WSJ)

Housing market's only doing better because the government's propping it up.

Swine Flu Means $25,000 Chartered New York Flights for Senior Executives (Bloomberg)

"Demand for private travel during the swine flu pandemic is boosting the charter business, worth about $33 billion a year worldwide."

For France, a Joie de Vivre Index (WSJ)

"Sarkozy to Add New Indicators, Such as Well-Being, to Measure Economic Health." Clever. Based on Joseph Stiglitz's analysis.

Wells Fargo Dismisses Executive Accused of Using Foreclosed Home for Parties (WSJ)

Bank seized $12 million beach house lost amid Madoff scheme, and senior veep Cheronda Guyton used it to party like it was 1999.

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New Phase of Crisis: Securities Sink Banks (WSJ)

"The U.S. banking crisis is entering a new stage, as lenders succumb to large amounts of toxic loans and securities they bought from other banks."

Souring Prime Loans Compound Mortgage Woes (WSJ)

Frightening foreclosure figures. One in eight households nationwide are in foreclosure or behind on mortgage payments. "Loans extended to borrowers with good credit are deteriorating at a faster clip" than loans to subprime borrowers. Doesn't feel like "recovery." Calculated Risk's detailed breakdown/analysis points out that Alt-A loans are included in the "prime" category, which may make the high numbers a little misleading. More on that (plus this explanation) from Reuters: "That could be skewing things since Alt-A loans by definition are less than prime and extremely loose lending standards during the boom have made them look more like subprime loans. For example, borrowers taking out an Alt-A loan could state their income rather than prove it."

Rise of the Super-Rich Hits a Sobering Wall (NYT)

John McAfee's net worth has fallen from $100 million to $4 million. Send him a sympathy card.

Burress Will Receive 2-Year Prison Sentence (NYT)

A New York millionaire, football player Plaxico Burress, who wounded no one but himself and threatened no one, gets two years in jail for his gunplay. Other New York millionaires who didn't need to pack heat to cripple millions of Americans are still on the loose on Wall Street.

Insider Selling Highlights Growing Downside Risk (TradingHelpDesk.com)

"... Company insiders are now selling stock at the highest rate in two years. This action does not guarantee a market decline but it does imply the easy money in the current bullish run has been made and downside risks, whether temporary or cyclical, have increased. ..."

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Key Feature Of Obama Health Plan May Be Out (WashPost)

"White House may be willing to jettison a controversial government-run insurance plan favored by liberals."

Citigroup May Shift Phibro Trader Hall's Pay to Stock From Cash (Bloomberg)

Regular investors don't think much of Citigroup stock right now (it fell 3.9 percent this morning in early NY trading), and energy trader Andy Hall got $100 million last year, so why should he do this? Traders like Hall don't have to disclose their compensation and don't fall under the aegis of pay czar Ken Feinberg, so the feds may have to send some leg-breakers to Hall's mansion.

Thick Fashion Magazines Are So Last Year (WSJ)

Advertisers not only suddenly frugal but also increasingly turning to the Web. Uh-oh. The Internet virus is spreading from the newspaper industry (which started to waste away before the recession) to the slicks.

A Detailed Look At The Stratified U.S. Consumer (Zero Hedge, Tyler Durden)

Extremely long and extremely interesting analysis of why most of you are fucked.

Wall Street Stimulus Buoys Continental Airlines, Prudential, Goldman Sachs (Bloomberg)

The S&P 500 "has soared 48 percent since it reached a 13-year low on March 9." That says something about the manic-depressive economy. Read the rest of this overview by Michael J. Moore. Goldman's equities revenue was up 59 percent over the first quarter, Wall Street firms have raked in $4.2 billion in underwriting fees because of all the action. The rally bolsters confidence in companies "that cater to wealthy and corporate clients." But, speaking of manic-depression, see this WSJ story: "After Dow's 42% Run, Roadblocks Looming." Lithium may be indicated.

Death of a Rally (Seeking Alpha, Alan Brochstein)

"It's easier to call the economy than stocks, and the economy has been experiencing a dead-cat bounce. I have some charts that I looked at recently, and I think that the likelihood of a normal post-recession bounce is very low."

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