WEST PALM BEACH, FL (www.hedgeco.net) – A Canadian arbitrator has asked CIBC to pay back the sum of $3.6 million to 11 US hedge fund investors, according to Wall Street report. A spokesman for CIBCrefused to comment on the report. The arbitration ruling resulted from the suit filled by 11 US based investors who allegedly lost $5.5 million in a New York based hedge fund which was marketed byCIBC according to the report.
CIBC sources said the bank authorities would not be responding to the report, according to Wall Street Journal. Some professional baseball players including player Bobby Bonilla lost money through one of the hedge funds marketed by CIBC. The reports further claimed that the research unit of CIBC failed to carry out a detailed research on a fund before it began marketing such fund to investors.
As a result, investors who put their money in the hedge fund family known as Red Coat fund were not informed that some of the funds belonging to the Red Coat Family were losing money. Further more those unsuspecting investors were not even allowed to cash out, even when it was revealed that one of the CIBC employee involved in the bank�s brokerage unit was even allowed to withdraw his own investments from the failing fund.
While hedge funds generally require minimums of about $1 million from investors, the reports also charged that some investors in the Red Coat Family were allowed to invest as little as $75, 000. According to Wall Street Journal, CIBC charged investors in the Red Coat Family of funds one percent for annual management fee and twenty percent for performance fees.
It is unclear if CIBC will abide by the arbitrator�s ruling or not since at this time the bank has not commented on the case itself.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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