EFTA00722209Set 9
2010-02-224p823w
overseeing marketing and management of Bear Steams
High-Grade Structured Credit Strategies, M. ("High-Grade Fund") and Bear Steams High-
Grade Structured Credit Enhanced Leverage Fund, M. ("Enhanced Fund ... their risk by prudently
hedging.
7. Mr. Spector continually reassured me that the High-Grade Fund and subsequently the
Enhanced Fund were using proper valuation and risk management techniques ... During 2006, the managers of the High-Grade Fund came up with the idea to create the
Enhanced Fund, which would utilize the same strategy as the High-Grade Fund
https://www.justice.gov/epstein/files/DataSet%209/EFTA00722209.pdf
EFTA00316714Set 9
2009-02-27347p119,473w
Period.
Cioffi: Ralph Cioffi, the Bear Steams trader who started and managed the High Grade Fund, a
Managing Director of BSAM and a Director of BSC.
CDOs: Collateralized debt obligations ... Executive Committee of Bear
Stearns during the Class Period.
Hedge Funds: The High Grade Fund and the High Grade Enhanced Fund.
HELOCs: Home-equity lines of credits.
High Grade Fund ... defendant Spector. The High Grade Enhanced Fund was structured similarly to the High Grade
Fund, but allowed for a much greater amount of leverage, thereby increasing potential returns.
IPO: Initial
https://www.justice.gov/epstein/files/DataSet%209/EFTA00316714.pdf
EFTA00314490Set 9
2009-12-0430p9,885w
illogical, inconsistent allegations. For
example, among other misstatements:
• Epstein alleges that the High Grade Fund was experiencing losses in 2006, a
time when it was actually quite profitable.
• Epstein alleges ... that the value of the High Grade Fund's portfolio was
artificially inflated prior to 2006, yet fails to articulate how, or why — which
is unsurprising given that there ... been no finding that the valuation of the
High Grade Fund in 2006 was inaccurate.
• Epstein alleges that Spector played a role in valuing the Funds' portfolio. In
fact, Spector
https://www.justice.gov/epstein/files/DataSet%209/EFTA00314490.pdf
EFTA00300203Set 9
20p5,701w
sister fund, Bear Steams High-Grade Structured Credit Strategies, L.P. (the "High-Grade
Fund").
968107 2
EFTA00300204
6. The Enhanced Fund fraud actually began with (and was designed in part ... cover-
up) huge problems with the original High-Grade Fund, which had been running for years before
the Enhanced Fund was created. Claimant FTC invested in the High-Grade Fund ... creation of the Enhanced Fund, which Bear Steams
represented would function like the High-Grade Fund (as to which Bear Steams had already been
misleading investors by regularly reporting artificially
https://www.justice.gov/epstein/files/DataSet%209/EFTA00300203.pdf
EFTA01118524Set 9
4p1,169w
Structured Credit
Stams HighaGrade.Stnrctured Cre Strategi
dit Strategies Enhanced Leverag es, L.P. (the "High-Grade Fund") and Bear
e Fund, L.P. (the "Partnershi
p=').
WHEREAS, the Investor is the
Stearns ... withdrawn
withdrawal. The Investor authoriz prior to the effectivene
es the High-Grade Fund or the ss of such in-kind
Fund Ltd. (the "High-Grade Master High-Grade Structured ... invested in both the Partnership r 2006 and any year thereaft
and the High-Grade Fund, the er in which it is
each of the Partnership and the Hig Investor
https://www.justice.gov/epstein/files/DataSet%209/EFTA01118524.pdf