The credit crisis may get its first formal criminal charges against Wall Street execs in coming days, according to a published report Monday. The Wall Street Journal reported that federal prosecutors are preparing to charge two former Bear Stearns & Cos. managers with securities fraud tied to the well-publicized implosion of two hedge funds at the company that served to mark the start of the credit crunch on the Street. Likely to be charged are Ralph Cioffi and Matthew Tannin, who managed two hedge funds that ran aground in June of last year. The High-Grade Structured Credit Strategies Fund and High-Grade Structured Credit Strategies Enhanced Leverage Fund, managed by both men, were the first two major hedge funds to implode amid a burgeoning credit crisis that has still yet to fully work its way through the global financial system. See HW coverage of the funds’ blow-up by clicking here. The funds’ trouble were the first in a series of difficulties that helped push Bear Stearns to the brink of insolvency, leading to its bailout arrangement with JPMorgan Chase & Co. (JPM) and the Federal Reserve in May of this year. The U.S. Attorney’s office in Brooklyn is set to unveil charges as early as this week, the Journal said, once the investigation is completed. At issue is whether the two men painted a rosier picture for investors than they knew to be true privately. Cioffi is alleged to have publicly pushed calm to investors in April, while expressing grave concern with colleagues internally over email. He also moved $2 million of his own investment in one of the troubled funds out in March, before any trouble became widely known. But it’s what the investigation may mean for Wall Street in general, which is increasingly becoming the central focus of federal criminal investigations into various angles of the U.S. mortgage mess, that seems to have the attention of many. Criminal charges for Coffi and Tannin may very well portend what lies ahead for other executives at key Wall Street firms now under investigation, sources told Housing Wire. Disclosure: The author held no positions in JPM when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

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