Flynn had been charged in February 2004 by both Spitzer and federal authorities with helping various hedge funds make illegal fund trades and get additional sources of financing, according to a Reuters report. Specifically, he was facing charges of two counts of grand larceny, one charge of scheming to defraud and two counts of violating the Martin Act, a New York state securities law, to which he pleaded not guilty (See Former CIBC Exec Nabbed for Fund Scandal Involvement .)
There are still New York civil sanctions “being considered,” a spokesman for the attorney general told Reuters.
In July CIBC agreed to pay $125 million to settle US regulatory accusations that it financed hedge funds that engaged in improper mutual fund trading activities (See Report: CIBC Ready to Settle Fund Charges ). CIBC agreed to repay $100 million in ill-gotten gains and pay $25 million in penalties in an agreement reached with the US Securities and Exchange Commission (SEC) and Spitzer at that time.
The SEC had said two CIBC units provided more than $1.3 billion in financing to hedge funds, which then traded shares improperly, both by late trading and market timing.
Further, the SEC said, the CIBC units were involved in financing for hedge fund customers that violated margin and credit extension requirements.