Two former Bear Stearns hedge fund managers charged with lying to investors always were honest about the risks of investing in securities linked to the volatile subprime mortgage market, a defense lawyer told a jury on Friday.

A co-worker who testified at a federal trial in Brooklyn "couldn't recall one meeting where they did not discuss the risks," attorney Susan Brune said in closing arguments.

Ralph Cioffi and Matthew Tannin made sure investors knew that with their investment strategy there were "rewards, but there's risks too," Brune said. "That's the deal."

Cioffi, 53, and Tannin, 47, pleaded not guilty last year to conspiracy and fraud charges _ the first criminal case to hit Wall Street amid the housing market meltdown.

The eventual implosion of the defendants' hedge funds cost 300 investors $1.6 billion and started a domino effect that nearly led to the demise of Bear Stearns itself. The firm barely avoided bankruptcy in a rescue buyout by JP Morgan Chase & Co.

At trial, prosecutors showcased a series of e-mails they alleged revealed behind-the-scenes alarm at the hedge funds as their investments began to slide.

"The subprime market looks pretty damn ugly," Tannin wrote to Cioffi in April 2007. If Bear's internal reports were accurate, Tannin suggested, "I think we should close the funds now," and "the entire subprime market is toast."

The situation became so dire that Cioffi pulled $2 million of his own cash from the fund, but the pair still told investors that they should stay in and that the outlook was good, prosecutors said.

"The trial isn't really about hedge fund strategy," Assistant U.S. Attorney Ilene Jaroslaw said Thursday in her closing argument. "This case is about what the defendants said and what they did, and all their lies."

Cioffi's attorney, Dan Butswinkas, countered in his closing argument on Friday by accusing the government of relying on misleading, out-of-context "e-mail snippits" to try to turn his client into a scapegoat for a crash that was unpredictable and out of his control.

"We have proven that the government's case lacks credibility," he said.

Jurors were expected to begin their deliberations on Monday.