Thursday, October 13, 2005

Spitzer Drops Prosecution of Broker for Mutual Fund Late Trading

New York Attorney General Eliot Spitzer announced that his office will not retry former Bank of America broker Theodore Sihpol on the four remaining counts of an indictment charging him with aiding a hedge fund to trade after-hours in mutual funds.  Sihpol was found not guilty in June on 29 counts, including a grand larceny charge, but the jury deadlocked on four counts, and shortly after the trial ended Spitzer announced that Sihpol would be tried again.  Sihpol entered into a settlement with the SEC in which he agreed to pay a $200,000 civil penalty and in an administrative proceeding would accept a five-year bar from the securities industry (Litigation Release here).  Spitzer's office dropped the four remaining charges in light of the civil settlement and Sihpol's admission that he acted improperly in assisting in the late-trading of the mutual funds. While certainly not a victory for the New York Attorney General, the resolution of the case certainly avoids a defeat that would have opened Spitzer up to charges of being vindictive, certainly not something he would want at the start of a gubernatorial campaign. A Reuters story (here) reviews Spitzer's decision. (ph)

Civil Enforcement, Prosecutions, Securities | Permalink

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