Federal prosecutors have been very busy. First, leveling the long arm of the law at Swiss bank UBS for possibly improperly valuing its holdings and now taking aim at two former hedge fund managers at Bear Stearns whose fall from grace last year marked the beginning of the subprime crisis (though, we are pretty sure, did not cause it). In the wake of the collapse of the two Bear hedge funds run by Ralph Cioffi and Matthew Tannin that cost investors roughly $1.6 billion, could criminal charges be filed as soon as this week?

Federal prosecutors, capping a yearlong investigation, are preparing to file criminal charges against managers of two Bear Stearns Cos. hedge funds whose collapse helped mark the start of the credit crisis.

The U.S. Attorney's office in Brooklyn is slated to complete interviews of witnesses and other key people in the case this week, and has indicated to lawyers with interest in the case that indictments could be imminent, according to people familiar with the matter.

The former Bear Stearns managers, Ralph Cioffi and Matthew Tannin, managed two high-profile bond portfolios for the securities firm's asset-management unit. They could be charged with securities fraud within the next week, says one of the people familiar with the matter, though evidence could emerge that would change that.

At issue is whether the managers intentionally misled investors by presenting a rosy picture of the funds at a time when they were privately communicating with colleagues about their worries over how the investment vehicles would ride out weakness in the mortgage market. Any indictments would be the first criminal charges against Wall Street executives arising from the credit crisis that swept the financial world last year.

A spokesman for the U.S. Attorney for New York's Eastern District declined to comment, as did a lawyer for Mr. Tannin, 46 years old. A lawyer for Mr. Cioffi, 52, didn't return a call for comment. During the investigation, Mr. Cioffi has told people that he and Mr. Tannin were grappling with the fast-changing dynamics in mortgage markets just as the rest of the financial world was, and didn't mislead anyone.

The collapse of the Bear Stearns funds, which cost investors $1.6 billion, rang early alarm bells about the imprecise valuations Wall Street firms were putting on their holdings of mortgage securities. Since then, financial firms world-wide have written down $387 billion in mortgage and other holdings, according to the Institute of International Finance Inc., a Washington-based banking group.

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