Administration January 5, 2007

Sihpol Late Trading Case Heads to Jury

May 25, 2005 (PLANSPONSOR.com) - A New York state judge threw out seven counts of falsifying business records against former Bank of America employee Theodore Sihpol after the broker's defense team rested its case Wednesday.

Reported by

Fred Schneyer

Defense lawyer Paul Shechtman decided not to call any witnesses, according to an Associated Press report, despite earlier plans to summon Jonathan Macey, a professor of corporate law at Yale University.

Sihpol, 37, is accused of helping hedge fund Canary Capital Partners LLC conduct late trading transactions (See Sihpol Heads to Trial on Improper Fund Trading Charges ). Canary eventually paid $40 million to settle fund-trading charges with regulators and Bank of America paid hundreds of millions of dollars, leaving Sihpol as the lone defendant to face possible criminal sanctions in the case (see BofA, Fleet Near Settlement With SEC, Spitzer ).

New York Attorney General Eliot Spitzer based his case on a series of trades Sihpol allegedly helped the hedge fund make after mutual-fund trading closed at 4 p.m. Eastern time. Ordinary investors in Nations Funds Trust, Pimco Funds, MFS Funds, the Janus Investment Fund, the Alger Fund and the RS Investment Trust were defrauded of millions of dollars as a result of the trades, Spitzer alleged (see BofA, Fleet Come to Terms with Spitzer, SEC in Fund Probe ).

For their part, defense lawyers have maintained that Sihpol was a junior broker not well versed in mutual-fund trading and that he had cleared any new or unknown procedures through his bosses (see Ex-BoA Broker Sihpol Indicted in Scandal ).

The prosecution wrapped up its case Monday. The jury is expected to start deliberating the remaining charges against Sihpol after the Memorial Day weekend, according to the news report.