SINCLAIR STEWART, 04 February 2004
A former executive at Canadian Imperial Bank of Commerce was arrested yesterday and slapped with criminal charges for allegedly bankrolling clients who participated in an illegal mutual fund trading scheme. Paul Flynn, who served as a managing director in CIBC’s U.S. arbitrage business before leaving the bank in December, was charged with five felonies by New York State Attorney-General Eliot Spitzer. If convicted on two counts of grand larceny, he could face up to 25 years in state prison.
Mr. Flynn arranged financing for a pair of hedge funds — Canary Capital Partners LLC and Samaritan Asset Management — that engaged in late-trading and “deceptive” market-timing practices, according to regulatory allegations. Mr. Spitzer’s office accused Mr. Flynn of “stealing” more than $1-million (U.S.) from mutual fund investors by providing the financial backing for these trades.
