The regulators are concerned about more than $1 billion in financing provided by CIBC to investors who made the alleged illicit trades, the New York Times reported, citing people briefed on the inquiry.
Specifically, the SEC and Spitzer are looking into how CIBC may have assisted various hedge funds in making far bigger bets in mutual fund shares, mainly though the use of derivatives. Some instances may have involved bank-financed late trading, an illegal activity by which trades are placed after stock trading has closed for the day.
Legal action from the SEC and Spitzer could come against the Toronto-based CIBC in a couple of weeks. Additionally, the Times’ sources said the pair of regulators might also consider action against senior executives at the bank who were aware of the activity.