1 of 5. Money market pioneer Bruce Bent (R) leaves the Manhattan Federal Court behind his son Bruce Bent II in New York October 11, 2012. Bent took a swipe at the U.S. government's response to the 2008 financial crisis when he testified at his own trial on Thursday, describing the desperate situation that led to the death of his conservative fund. The U.S. Securities and Exchange Commission sued Bent, his son Bruce Bent II and their family-run Reserve Management firm in 2009, saying they lied to investors about the safety of their money after Lehman Brothers filed for bankruptcy on September 15, 2008, intensifying a global financial crisis.

NEW YORK | Thu Oct 11, 2012 8:47pm EDT

NEW YORK (Reuters) - Money market pioneer Bruce Bent took a swipe at the U.S. government's response to the 2008 financial crisis when he testified at his own trial on Thursday, describing the desperate situation that led to the death of his conservative fund.

The U.S. Securities and Exchange Commission sued Bent, his son Bruce Bent II and their family-run Reserve Management firm in 2009, saying they lied to investors about the safety of their money after Lehman Brothers filed for bankruptcy on September 15, 2008, intensifying a global financial crisis.

Reserve held $785 million in Lehman debt, or 1.2 percent of the $62 billion it had invested in its funds. There was a run on Reserve funds and sources of liquidity dried up in the market turmoil, making it impossible to keep up with demand for redemptions.

Bent, answering a question on the Manhattan federal court witness stand about the government helping troubled financial institutions after the historic Lehman collapse, responded sharply: "Two days later everybody got it, except Reserve."

Part of the defense strategy is to shift the blame onto the SEC, which sued the Bents. Bruce Bent's testimony implies that the government should have made Reserve part of the bailout of financial institutions in an unprecedented crisis.

The white-haired, flush-faced Bent, 75, at times appeared irritated with the pointed questioning of SEC lawyer Nancy Brown, saying "no, no, no," before correcting her. His son Bruce Bent II, 46, is also expected to testify at the trial.

Brown's questioning over more than three hours took Bent and the jury through three Reserve board meetings and phone calls between the Bents, senior fund executives and lawyers during two hectic days of September 15 and September 16, 2008. The eight jurors heard that Reserve approached the New York Federal Reserve Bank and told the SEC itself about its dire straits.

Bent testified they were in a "desperation situation" and "we're throwing it at the wall, we're hoping something sticks."

The Reserve "broke the buck" - an almost unheard of event for money market funds when their net asset value falls below $1 a share. By January 2010, Reserve said it had distributed nearly all of the $50.5 billion left in its Reserve Primary fund after Lehman's bankruptcy.

Investors recovered about 99 cents on the dollar.

The regulators and the Bents failed to reach a settlement and the case went to trial on Tuesday. The trial is expected to last three weeks before U.S. District Judge Paul Gardephe.

The jury is being asked to decide whether or not the Bents played by the rules of the securities markets. The SEC seeks unspecified gains the Bents might have made and a fine.

Reserve was the first money-market fund in the United States when Bruce Bent started it in 1970. Its collapse was a driver of the credit market seizure following Lehman's bankruptcy. New regulations have since reduced the credit and maturity risks that money funds may take.

The case is SEC v. Reserve Management Co et al, U.S. District Court, Southern District of New York, No. 09-04346

(Reporting By Grant McCool; Editing by Richard Chang)

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1 of 9. Gu Kailai (front, C), wife of ousted Chinese Communist Party Politburo member Bo Xilai, attends a trial in the court room at Hefei Intermediate People's Court in this still image taken from video August 9, 2012.

HEFEI, China | Thu Aug 9, 2012 10:41pm EDT

HEFEI, China (Reuters) - China pressed ahead with an offensive against ousted politician Bo Xilai on Friday, a day after the murder trial of his wife, with a separate prosecution of four police officers accused of trying to cover up the killing that she was accused of.

The dismissed officers went on trial for "bending the law to show favoritism" by shielding Bo's wife, Gu Kailai, from an inquiry into the death of Briton Neil Heywood.

Gu stood trial for poisoning the businessman over a financial transaction that went sour, according to a court statement. She did not dispute the murder charge during Thursday's seven-hour, closed-door trial hearing and a verdict will soon be delivered, the statement said.

Heywood's death in November and its alleged cover-up in Bo's stronghold of Chongqing, the southwestern municipality he ran, was central to the torrent of events that toppled him from the Politburo and exposed the ruling Communist Party to its worst upheaval in decades.

The party's priority now is ensuring top-down control before a handover of power to a new generation of leaders this year.

The legal noose is tightening fast on Bo's wife and police involved in investigating the murder case, suggesting there is a danger Bo could himself face charges of masterminding a cover-up and could risk a lengthy jail term.

The South China Morning Post said on Friday that Bo's former Chongqing police chief, Wang Lijun, would stand trial as early as next week in the southwestern city of Chengdu. Wang sought temporary refuge in Chengdu's U.S. consulate in February after sources said he told Bo that Gu was a murder suspect.

Wang's dramatic flight to the U.S. mission triggered the murder scandal that quickly led to Bo's downfall. Until then, Heywood's death had been officially attributed to a possible heart attack brought on by excessive alcohol consumption.

Chinese media stuck to the terse official account of Gu's trial on Friday, despite avid public interest in this scandal that has exposed the fusion of wealth and privilege in China's political elite, and exposed rifts in the party.

Bo, 63, has not been a focus of the proceedings so far. But most experts believe the trial and almost certain conviction of his wife Gu and the four police officers is a prelude to his punishment, which could include a criminal trial.

VERDICT WON'T BE DELAYED

The court in the eastern Chinese city Hefei did not say when it would announce any verdict against Gu. But the usual wait was about a fortnight said Chen Guangwu, a criminal defense attorney who has followed the Chongqing scandal closely.

"But they won't delay for too long, because this case is being heard in order to pave the way for dealing with Bo Xilai himself," said Chen, who is based in eastern Shandong province.

"This case is in part about testing the waters for that. That is, they will sentence her and see what reaction there is in society and public opinion."

Bo's downfall has stirred more public division than that of any other party leader for over 30 years. To leftist supporters, Bo became a charismatic rallying figure for efforts to reimpose party control over dizzying and unequal market growth. To liberal critics, Bo was a dangerous opportunist who yearned to impose his harsh policies on the entire country.

As the four sacked officers went on trial, also in Hefei, Chinese police cordoned off the courthouse and excluded foreign reporters from the hearing. Vans parked nearby were bristling with video surveillance equipment.

A court spokeswoman said the case would start at 8:30 (0030 GMT). "It's open to the public but I'm afraid all the places are full at this time," she said.

The four men on trial - Guo Weiguo, Li Yang, Wang Pengfei and Wang Zhi -- were senior police officers in Chongqing who allegedly sought to stymie an investigation into Heywood's death in a hilltop hotel villa overlooking Chongqing.

On Thursday, a court official said prosecutors believed Bo's wife, Gu, and a family aide, Zhang Xiaojun, killed Heywood by pouring poison down his throat after a business dispute led Gu to believe Heywood had threatened her son, Bo Guagua, then a student at Harvard University.

During Gu's seven-hour hearing on Thursday, it was alleged Heywood had written a letter to Guagua, threatening to "destroy" him, said a source who had been briefed on the hearing. Heywood and Guagua had fallen into dispute over Heywood's demand for a fee to help arrange a 130 million pounds ($200 million) financial transaction, the source added.

Guagua, believed to be in the United States after graduating this year from Harvard University, denied there was such a deal of that value but appeared to confirm the letter's existence.

"I cannot comment on any of the details (of the letter), but I can disclose that there is no such thing as either possessing or transferring 130 million pounds," Guagua said in an e-mail sent to Reuters. ($1 = 0.6396 British pounds)

(Writing and additional reporting by Chris Buckley in Beijing; Editing by Raju Gopalakrishnan)

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HEFEI, China | Thu Aug 9, 2012 5:14am EDT

HEFEI, China (Reuters) - China's most politically sensitive trial in three decades ended in just about seven hours on Thursday after the wife of ousted Politburo member Bo Xilai did not contest charges of murdering a British businessman, a court official said.

A verdict will be delivered at a later date.

The official's account of the closed-door hearing in the eastern Chinese city of Hefei signals that Gu Kailai and a family aide are sure to be convicted in a case that has ended her husband's career and rocked China's leadership.

"The trial finished this afternoon and the court adjourned," official Tang Yigan told reporters. "The trial committee will announce the verdict after discussion. The date of the verdict will be announced.

"The accused (Gu) Kailai and Zhang Xiaojun did not raise objections to the facts and the charges of intentional homicide."

Gu's trial is seen by many Chinese as part of a push against Bo, an ambitious populist who made powerful enemies as he campaigned to join the next generation of top central leaders.

Bo was formerly considered a contender for the inner sanctum of power - the party's Politburo Standing Committee - in a once-in-a-decade leadership transition that is currently underway. The new leadership is expected to be unveiled in October.

Gu and her co-accused were charged with poisoning Briton Neil Heywood, a family friend, last year. The official said the court was told Zhang, the family aide, had put poison in a drink of water that Gu then gave to Heywood who was drunk at the time.

His body was found last November in a hotel in Chongqing, the city where Bo was the Communist Party chief.

Gu and Zhang face the death penalty if convicted. But many legal experts expect Gu will be convicted but only sentenced to a lengthy jail term.

Entry to the courtroom, in the capital of Anhui province, was restricted but two British diplomats were invited to be present because of the nationality of the victim. Journalists were not allowed in.

As the trial took place, police dragged away two Bo supporters into an unmarked car after they had appeared outside the courthouse, singing patriotic songs that were the trademark of Bo's populist leadership style and condemning the trial as a sham.

"I don't believe it. This case was decided well in advance," Hu Jiye, a middle-aged man wearing a T-shirt and baseball cap, told foreign reporters at the rear of the court building, which was cordoned off by dozens of police standing in heavy rain.

Hu and his friend were then shoved by plainclothed police into a car. His companion, also a middle-aged man, struggled, yelling "Why are you taking me? Why are you taking me?"

INTERNET CHATTER CENSORED

State censorship of Internet chatter on the trial was swifter than normal on Thursday, with users of China's popular Twitter-like service Sina Weibo playing cat and mouse with censors to discuss the case, using word play to try and get around the controls.

Gu, herself a career lawyer, was defended by a state-appointed lawyer with meager experience in criminal cases, leaving little doubt she will be convicted.

The state has decided who will represent Gu, denying her the use of a family lawyer - a move that has also prompted Gu's 90-year-old mother, Fan Xiucheng, to recently complain to the Justice Ministry, according to a source close to the family.

"The answer (from the ministry) was that the legal process did not have to be fully carried out in this case and that Fan should stop pestering them," the source said.

The trial of Gu, glamorous daughter of the ruling Communist Party aristocracy, is the most sensational since the conviction of the Gang of Four more than 30 years ago for crimes during the 1966-76 Cultural Revolution.

But despite British calls for the case to be handled fairly and to unearth the truth around Heywood's death, her defense has instead been entrusted to two provincial lawyers.

The two lawyers, Jiang Min and Zhou Yuhao, could not be reached for comment but a search of public information shows the more senior attorney, Jiang, is a specialist in financial cases and that neither has any obvious connection to the Bo family.

A newspaper profile of Jiang from 2005, which was posted on Jiang's own website, quoted him as saying that he was "an expert in financial law, who rarely conducts criminal defenses", although he has represented some officials accused of corruption in the more than 20 years he has been practicing law.

Little is known of Gu's other lawyer, Zhou, except that he, like Jiang, is from Anhui province. Provincial capital Hefei is a bustling city more than 1,000 km (650 miles) east of the scene of the alleged crime - Chongqing, the vast municipality formerly ruled by Bo.

GREEDY WIFE OR PROTECTIVE MOTHER?

Police sources initially claimed Gu had poisoned Heywood in a dispute over an illicit financial transaction she had wanted him to help her complete, and they portrayed Gu as a greedy wife who was translating her husband's connections into dollars.

But when Gu was formally indicted, the official allegation instead hinted at a personal motive, saying Heywood had made unspecified threats against her son Bo Guagua, a factor that may count as a mitigating circumstance and help Gu avoid execution.

The younger Bo, who is believed to be still in the United States after graduating from Harvard this summer, told CNN in an e-mail that he had submitted a witness statement to the court.

"I hope that my mother will have the opportunity to review them," he added. "I have faith that facts will speak for themselves." CNN said he did not elaborate.

The trial and sentencing of both Gu and Zhang are widely seen as a prelude to a possible criminal prosecution of Bo, who is being detained for violating party discipline - an accusation that covers corruption, abuse of power and other misdeeds.

Bo, who was a favorite of party leftists by promoting himself as a friend of the poor and an enemy of corruption, was sacked as Chongqing party chief in March after his police chief, Wang Lijun, identified Gu as a suspect in Heywood's death.

On Thursday morning, there was no sign of Gu's elderly mother, nor of any members of Heywood's family in or around the courtroom.

(Additional reporting by Chris Buckley, Benjamin Kang Lim and Ben Blanchard in BEIJING; Writing by Mark Bendeich; Editing by Raju Gopalakrishnan)

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