Why did the jury reach its verdicts? I'm not sure, but I know that Cioffi and Tannin were accused of, and acquitted of, lying to investors who lost a total of $1.6 billion that they had entrusted to the pair. The pair had been charged with presenting an optimistic financial picture of their funds without disclosing that they were plummeting in value and that Cioffi had already pulled some assets from one of them.

But wait -- there's more: Cioffi was acquitted on a separate charge of insider trading on allegations that he moved $2 million he had invested in one of the failing hedge funds to another less risky fund while telling investors he was adding to his position.

In trying to understand why the two were acquitted, I think Cioffi's defense attorney summarized it well. He told the Associated Press that prosecutors failed to show that the managers "knew what the future held and they hatched a criminal scheme to lie to investors."

Indeed, the two defendants are a sideshow diversion from where the blame really belongs -- which is that most of the conduct that caused the financial catastrophe was perfectly legal.

Peter Cohan is a management consultant, Babson professor and author of nine books, including Capital Rising (due in June 2010). Follow him on Twitter.