Janus Capital Group Inc. has yet to sue former Bank of America broker Theodore Sihpol III over late mutual fund trades he made for Edward Stern's hedge fund Canary Capital Partners, the chief compliance officer of Janus testified Wednesday at Sihpol's fraud trial, Bloomberg reports.
"There's discussion about possible lawsuits and insurance claims relating to Bank of America," prosecution witness David R. Kowalski told jurors in
Prosecutors argue that Sihpol's trades were fraudulent. Kowalski said Janus hasn't decided yet whether it will file claims with regulators or insurers over any losses from the trades.
Sihpol, 37, is charged with grand larceny and securities fraud, and faces up to 25 years in prison. His case is deemed important because he is the first defendant to be tried in criminal court as a result of New York State Attorney General Eliot Spitzer's nationwide investigation of the mutual fund industry, which began in September 2003.
Sihpol is accused of allowing Canary to make trades after the market close, at that day's price, instead of waiting for the market to reopen the next day when the prices may have changed. The practice, more commonly known as late trading, is illegal.
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