WEST PALM BEACH, FL (HEDGECO.NET) – Officials of the Canadian Imperial Bank of Commerce [CIBC] have pledged their full cooperation to Securities and Exchange regulators looking into the question ofan estimated $1 billion provided by the bank for some investors who were alleged to have conducted illegal trading in the mutual fund scandals.
Informed sources said the Securities and Exchange Commission and the New York State Attorney General Eliot Spitzer are considering filling law suits independently against the Canadian Bank over the financing of such deals.CIBC allegedly helped to finance some hedge fund companies to expand their trades in derivatives instruments. Some of the trades were concluded or initiated after markets closed. Accordingly, investigators could also charge bank officials who were aware that such activities were being carried out.
In both the United States and Canada, late trading and some aspects of market timing are illegal. Late trading by some market participants is unfair to other investors, particularly small investors. Through late trading, large and influential market participants have an undue advantage when orders placed during the day are filled after market hours, instead of at the next day�s opening prices.
CIBC Bank spokesman, Rob McLeod acknowledged that CIBC is co-operating fully with the US Securities and Exchange investigators, but refused to provide details when asked. A professor at the University of Toronto, Lawrence Booth explained that this new accusations against CIBC is pretty easy for the company to defend. According to Booth, you can�t just hold a bank responsible for how a customer uses a loan given to them.
Last December CIBC reached an out of court settlement with the SEC in charges leveled against the bank for its deals with bankrupt Enron, the US energy giant. CIBC agreed to pay $37.5 million penalty without admitting any wrongdoing in that case, CIBC also agreed to tighten its laws and procedures in that settlement.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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