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FaGal · 11-05-05, 10:38

Sihpol Was Paid `Thousands of Dollars' Witness Says
www.bloomberg.com - May 10, 2005

Ex-Bank of America Corp. broker Theodore Sihpol III was paid ``hundreds of thousands of dollars'' in commissions from late mutual fund trades he handled for a hedge fund, his former assistant testified at his fraud trial.

Prosecution witness Andrea Wenner, 27, told jurors today in New York state court in Manhattan that she helped determine Sihpol's commissions for the trades. Assistant New York Attorney General Stephen Antignani asked her how much Sihpol was paid for handling the trades of the now-defunct New Jersey hedge fund Canary Capital Partners LLC.

``It was a lot of money,'' Wenner said. ``Hundreds of thousands of dollars.''

Wenner's testimony, coming in the second week of trial, was the first to mention a possible financial incentive for Sihpol to make Canary's after-market trades. Sihpol, 37, is accused in a 40- count indictment of helping Canary engage in what prosecutors contend was the illegal late trading of mutual funds. Sihpol's trial is the first arising from New York Attorney General Eliot Spitzer's mutual fund industry investigation.

Under U.S. Securities and Exchange Commission rules, mutual fund shares trade at the price set at 4 p.m., the end of the trading day, Spitzer contends. Sihpol is accused of allowing the Canary to make trades after the market closed, at that day's price, instead of waiting for the market to reopen the next day.

Arrangement

Noah Lerner, a former Canary trader, testified last week that Canary had an arrangement with Bank of America in which the hedge fund would e-mail the bank its proposed trades for the day in the mid-afternoon, and Sihpol or an assistant would time-stamp the order tickets before 4 p.m. Canary would then call after 4 p.m. with the trades it wanted completed, Lerner said.

Sihpol told Wenner which Canary trades to complete, she said. Asked what she did with order tickets for proposed trades that were later canceled, she said, ``Based on his instructions I probably would have tossed them in the garbage,'' referring to Sihpol. On cross-examination, Wenner said she didn't think there was anything wrong with throwing out the unused tickets.

Wenner also testified about a conversation she overhead in spring 2003 between Sihpol and Michael Brown, a managing director at Banc of America Securities. Brown asked Sihpol what time of day Canary made its trading decisions, she told the jury. Sihpol told Brown that the decisions were made before 4 p.m., she said.

Cross-Examination

Wenner said on cross-examination by defense attorney Evan Stewart that Bank of America's mutual funds trading operations in San Francisco knew Sihpol was trading after hours.

Lerner said yesterday that Canary usually decided what trades to make based on information obtained before the market closed, and that it wasn't unusual for trades to be completed after 4 p.m.

Today, Stewart had Wenner identify several trading tickets time-stamped after 4 p.m., in an effort to show that Sihpol wasn't trying to hide late trades.

Stewart, a partner at New York-based Brown Raysman Millstein Felder & Steiner, showed the jury a May 2002 e-mail from Sihpol to Bank of America mutual fund operations in Wilmington, North Carolina.

Canary ``has always traded with the understanding that as long as the trades are to us by about 5:15 they will be processed,'' Sihpol wrote in the e-mail. ``We have never been told differently and continue to understand that this is acceptable.''

Calls and an e-mail to a Michael Brown at Bank of America's Charlotte, North Carolina, headquarters weren't immediately returned.

Indicted

Sihpol, who was indicted last year for larceny, securities fraud and falsifying business records, facilitated Canary's late trading in Bank of America Nations Funds and other companies' mutual funds, Spitzer said. Sihpol has pleaded not guilty.

Defense lawyers have said late trading wasn't illegal and that their client never intended to commit a crime. He faces a maximum of 30 years in prison if he's convicted and a fine of $200,000.

Wenner left Bank of America in May 2003 and is currently a student at Columbia Business School. She resumes her testimony tomorrow under redirect questioning by prosecutors.

The case is People v. Sihpol, New York State Supreme Court, Indictment No. 1710/2004.

To contact the reporter on this story: Thom Weidlich in New York State Supreme Court at tweidlich@bloomberg.net.

11-05-05, 10:38	#4 (permalink)
FaGal Member Data registrazione: Jul 2002 Messaggi: 21,553 Popolarità: 0	Sihpol Was Paid `Thousands of Dollars' Witness Says www.bloomberg.com - May 10, 2005 Ex-Bank of America Corp. broker Theodore Sihpol III was paid ``hundreds of thousands of dollars'' in commissions from late mutual fund trades he handled for a hedge fund, his former assistant testified at his fraud trial. Prosecution witness Andrea Wenner, 27, told jurors today in New York state court in Manhattan that she helped determine Sihpol's commissions for the trades. Assistant New York Attorney General Stephen Antignani asked her how much Sihpol was paid for handling the trades of the now-defunct New Jersey hedge fund Canary Capital Partners LLC. ``It was a lot of money,'' Wenner said. ``Hundreds of thousands of dollars.'' Wenner's testimony, coming in the second week of trial, was the first to mention a possible financial incentive for Sihpol to make Canary's after-market trades. Sihpol, 37, is accused in a 40- count indictment of helping Canary engage in what prosecutors contend was the illegal late trading of mutual funds. Sihpol's trial is the first arising from New York Attorney General Eliot Spitzer's mutual fund industry investigation. Under U.S. Securities and Exchange Commission rules, mutual fund shares trade at the price set at 4 p.m., the end of the trading day, Spitzer contends. Sihpol is accused of allowing the Canary to make trades after the market closed, at that day's price, instead of waiting for the market to reopen the next day. Arrangement Noah Lerner, a former Canary trader, testified last week that Canary had an arrangement with Bank of America in which the hedge fund would e-mail the bank its proposed trades for the day in the mid-afternoon, and Sihpol or an assistant would time-stamp the order tickets before 4 p.m. Canary would then call after 4 p.m. with the trades it wanted completed, Lerner said. Sihpol told Wenner which Canary trades to complete, she said. Asked what she did with order tickets for proposed trades that were later canceled, she said, ``Based on his instructions I probably would have tossed them in the garbage,'' referring to Sihpol. On cross-examination, Wenner said she didn't think there was anything wrong with throwing out the unused tickets. Wenner also testified about a conversation she overhead in spring 2003 between Sihpol and Michael Brown, a managing director at Banc of America Securities. Brown asked Sihpol what time of day Canary made its trading decisions, she told the jury. Sihpol told Brown that the decisions were made before 4 p.m., she said. Cross-Examination Wenner said on cross-examination by defense attorney Evan Stewart that Bank of America's mutual funds trading operations in San Francisco knew Sihpol was trading after hours. Lerner said yesterday that Canary usually decided what trades to make based on information obtained before the market closed, and that it wasn't unusual for trades to be completed after 4 p.m. Today, Stewart had Wenner identify several trading tickets time-stamped after 4 p.m., in an effort to show that Sihpol wasn't trying to hide late trades. Stewart, a partner at New York-based Brown Raysman Millstein Felder & Steiner, showed the jury a May 2002 e-mail from Sihpol to Bank of America mutual fund operations in Wilmington, North Carolina. Canary ``has always traded with the understanding that as long as the trades are to us by about 5:15 they will be processed,'' Sihpol wrote in the e-mail. ``We have never been told differently and continue to understand that this is acceptable.'' Calls and an e-mail to a Michael Brown at Bank of America's Charlotte, North Carolina, headquarters weren't immediately returned. Indicted Sihpol, who was indicted last year for larceny, securities fraud and falsifying business records, facilitated Canary's late trading in Bank of America Nations Funds and other companies' mutual funds, Spitzer said. Sihpol has pleaded not guilty. Defense lawyers have said late trading wasn't illegal and that their client never intended to commit a crime. He faces a maximum of 30 years in prison if he's convicted and a fine of $200,000. Wenner left Bank of America in May 2003 and is currently a student at Columbia Business School. She resumes her testimony tomorrow under redirect questioning by prosecutors. The case is People v. Sihpol, New York State Supreme Court, Indictment No. 1710/2004. To contact the reporter on this story: Thom Weidlich in New York State Supreme Court at tweidlich@bloomberg.net.