Ralph Cioffi and Matthew Tannin. In November 2009, when we last heard from them, the former Bear Stearns executives - managers for a Bear Stearns hedge fund - had just been acquitted by a jury on charges they lied to investors and misled them about the health of their funds, which were laden with complex securities backed by subprime mortgages. The loss was seen as a major setback for the the Justice Department, and the not-guilty verdict demonstrated how challenging it would be for the feds to build successful cases against Wall Street executives accused of being at the center of the financial crisis.  The SEC vowed to continue pursuing its case, even though some legal specialists questioned whether it made any sense for the Commission to take the lawsuit to trial - and a probable waste of the SEC's limited resources. A second trial was set to begin on Monday - with the the Justice Department and the SEC once again bringing parallel criminal and civil charges the pair - as they did in 2008.  The trial was averted when the SEC announced late Thursday that it had reached a settlement with the former Bear Stearns hedge fund managers. The deal, subject to court approval, could be announced on Monday, said two people with direct knowledge of the matter, who requested anonymity because they were not authorized to discuss it publicly.  The settlement also comes just as federal authorities have pledged to redouble their efforts to hold Wall Street executives responsible for questionable conduct during the housing boom. SEC's Risk of Failure. For the SEC, “a loss would have called into question the government’s apparent strategy of leaning heavily on civil litigation to handle crisis-related misconduct,” according to NYU Law Professor Neil Barofsky, who also is a former inspector general of the Treasury Department’s bank bailout program.  “And a poor trial performance could seriously have undermined the SEC’s ability to achieve settlements in other cases.” Defendants' Incentive to Settle. Mr. Tannin and Mr. Cioffi had an incentive to settle because of the government’s lower burden of proof in a civil securities fraud trial.  While Federal prosecutors needed to prove their case “beyond a reasonable doubt,” the SEC would have needed to prove only “by a preponderance of the evidence” that the defendants knowingly defrauded their investors.  Lawyers for Mr. Cioffi and Mr. Tannin declined to comment, as did an SEC spokesman. One crucial issue that remains unclear is whether the 2 men will acknowledge any misconduct.  Judges and legal commentators have criticized the commission for not forcing defendants to admit any wrongdoing when settling. For further details: [DealBook, 2/9/12].