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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