July 2005 – Financial Treason & Crime

CIBC will pay $125M US fine to settle mutual fund trading investigation

CBC News, 20 July 2005

CIBC confirmed Wednesday it will pay out $125 million US to settle an investigation into the bank’s role on behalf of hedge funds that engaged in improper mutual fund market timing and late trading. The bank said the deal was reached with the U.S. Securities and Exchange Commission and the New York Attorney General’s Office.

The agreement will see two of the bank’s subsidiaries, CIBC World Markets Corp. and Canadian Imperial Holdings Inc., pay a penalty of $25 million US and disgorgement of $100 million US related to financing and brokerage services provided to the hedge funds.
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How CIBC Cashed In on Mutual Fund Fraud

MATTHEW GOLDSTEIN, 20 July 2005

One of the darkest realms of the mutual-fund trading scandal was laid bare Wednesday as state and federal prosecutors detailed how a Toronto financial company served as broker, banker and back office in a hedge fund scheme that victimized thousands of retail investors. The Canadian Imperial Bank of Commerce agreed to pay $125 million to settle the charges, which included fraud and deceptive business acts. The allegations cover a five-year period in which dozens of hedge funds used the bank’s money and connections to make abusive trades that resulted in huge profits to them but diluted other investors’ overall returns. From 1998 to 2003, regulators say, CIBC lent up to $2 billion to such traders, generating more than $75 million in fees. The bank neither admitted nor denied guilt in the settlement.
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