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Last updated on April 16, 2014 at 7:00 EDT

Ex-Bank of America broker faces retrial

July 7, 2005

NEW YORK (Reuters) – Former Bank of America Corp.
broker Theodore Sihpol, acquitted last month on most counts of
helping a hedge fund trade mutual funds illegally, will be
retried on four counts on which the jury deadlocked, lawyers in
the case said on Thursday.

Justice James Yates of New York State Supreme Court set an
Aug. 22 date for a new trial, which is expected to last four to
five weeks.

Prosecutors had 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.

Jurors on June 9 acquitted Sihpol of seven counts of grand
larceny and 22 other counts, after a nearly six-week trial and
six days of deliberations.

The verdict was a defeat for New York Attorney General
Eliot Spitzer, in his first trial stemming from his probes into
Wall Street stock research, mutual funds and insurance.

The jury deadlocked on one count each of fraud and scheming
to defraud, and two counts of falsifying business records.
Sihpol, 37, faces up to four years in prison on each remaining
count.

“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.” Shechtman said he learned Wednesday night of the
decision to retry his client.

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

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”

Ron Geffner, a partner at Sadis & Goldberg LLC in New York,
said a conviction might encourage other prospective defendants
to settle with Spitzer, because it would “impose a fear that
Spitzer will prosecute them to the fullest extent.”

Spitzer has accused American International Group Inc.
and former chief executive Maurice “Hank” Greenberg in
a lawsuit of accounting fraud, and is suing former New York
Stock Exchange Chairman Richard Grasso over his pay package.

The defense plans to file a motion asking Yates to exclude
matters on which the first jury acquitted Sihpol. A hearing is
set for Aug. 15.

If the motion is successful, Shechtman said the
prosecution’s case might “look like Swiss cheese, because it
will have so many evidentiary holes.”

Charlotte, North Carolina-based Bank of America 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.

Canary was led by Edward Stern, whose billionaire father
Leonard ran Hartz Mountain Corp.