Bear Stearns Asset Management Inc., now part of JPMorgan Chase & Co., and two former Bear Stearns fund managers must defend some claims by Bank of America Corp. in a lawsuit over the collapse of two Bear Stearns funds in 2007, a federal judge has ruled.

According to a notation in the court docket Wednesday, U.S. District Judge Paul A. Crotty in Manhattan has denied a motion to dismiss breach of contract and fraud claims. The judge granted a motion to dismiss a breach of fiduciary duty claim. He did not rule on the merits of the case.

The lawsuit, filed last October, alleges the asset management unit and former fund managers Ralph Cioffi and Matthew Tannin misled B of A about the funds' financial health in connection with financing transactions with the Charlotte banking company, including a $4 billion securitization of mortgage-backed assets in May 2007.

The complaint claims that the Bear Stearns unit and its managers concealed from B of A that the funds were suffering substantial withdrawal requests from investors and were in imminent danger of collapse in the spring of 2007. The lawsuit is alleging breach of contract and fraud.

Cioffi and Tannin are separately facing criminal charges related to the collapse of the funds in a case set to go to trial later this month in U.S. District Court in Brooklyn. Jury selection is scheduled for Oct. 13. They have denied wrongdoing.

The funds — the Bear Stearns High Grade Structured Credit Strategies Master Fund and the Enhanced Fund — imploded in June 2007 as credit markets contracted. The closing of the funds marked the beginning of problems for Bear Stearns, which was forced to sell itself after being pushed to the brink of failure because of the liquidity crunch.

Spokesmen for Tannin and JPMorgan declined to comment Thursday. A lawyer for Cioffi did not return phone calls seeking comment.

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