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Ex-Bank of America broker to be retried

July 7, 2005

NEW YORK (Reuters) – Former Bank of America Corp.
broker Theodore Sihpol, who was acquitted last month on charges
of helping a hedge fund to trade mutual funds illegally, will
be retried on four counts on which the jury deadlocked, his
lawyer said on Thursday.

Jurors on June 9 were unable to reach a verdict on one
count each of fraud and scheming to defraud, and two counts of
falsifying business records, leading New York Supreme Court
Justice James Yates to declare a partial mistrial.

The jury had acquitted Sihpol of seven counts of grand
larceny, the top charge, and 22 other counts, following a trial
that lasted nearly six weeks and six days of deliberations.

“I think it is an odd response under those circumstances to
bring a new trial,” said Paul Shechtman, a lawyer for Sihpol.
“My guess is most prosecutors’ offices would not have followed
this course.”

The first verdict had been seen as a defeat for New York
Attorney General Eliot Spitzer.

Shechtman said he learned Wednesday night of the decision
to retry his client. The new trial is slated to begin Aug. 22
and last four to five weeks. Sihpol faces up to four years in
prison on each of the remaining counts.

Lead prosecutor Harold Wilson, an assistant New York
attorney general, declined to discuss the retrial. Marc
Violette, a spokesman for Spitzer, declined immediate comment.

Prosecutors accused Sihpol of helping the Canary Capital
Partners LLC hedge fund trade mutual funds as late as 6:30 p.m.
and yet still get the 4 p.m. price, known as “late trading.”

This helped Canary generate market-beating returns by using
late-breaking news to make profits or avoid losses, a privilege
not afforded to ordinary investors. Prosecutors said Canary,
with Sihpol’s help, traded illegally by submitting trade
tickets manually and using an electronic trading system.

Sihpol’s lawyers had argued that their client at the time
thought Canary’s trades were proper, made no attempt to conceal
them and had no criminal intent.

“SWISS CHEESE”

Shechtman plans by July 27 to file a motion asking Yates to
exclude matters on which the first jury had acquitted Sihpol.

If this motion is successful, Shechtman said a new jury may
never see evidence related to electronic trading. “(It would
be) a case that may look like Swiss cheese, because it will
have so many evidentiary holes,” he said.

The Charlotte, North Carolina-based bank agreed to pay $675
million to settle regulatory charges over its mutual fund
practices, and Canary settled with Spitzer for $40 million.
Neither admitted wrongdoing.




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