The two men were accused by the US Attorney’s Office of a wide range of crimes, including mail fraud and conspiracy. Mr Cioffi also faced a separate charge of insider trading after allegedly moving $2 million of his own money from one of his funds to another without informing investors.

In a statement released yesterday, the Attorney’s Office Eastern District of New York expressed its disappointment but accepted the verdict.

The breakdown of the hedge funds managed by Mr Cioffi and Mr Tannin contributed to the eventual collapse of Bear Stearns in March 2008, when it was acquired by JP Morgan. Bear Stearns was one of the earliest casualties of the credit crisis.