The Securities and Exchange Commission is taking proceedings against former CIBC brokers, Michael Sassano and Dogan Baruh, for allegedly assisting hedge funds market time mutual funds between 1999 and at least 2003. The SEC also says that Baruh placed illegal late trades.
When the mutual funds tried to stop the timing, Sassano and Baruh helped the hedge funds try to conceal their activities by creating new accounts with CIBC and even opening up accounts at competitive brokerages, including Charles Schwab and Fidelity Investments. Sassano and Baruh also used multiple registered rep and branch numbers, as well as trades in smaller dollar amounts. These, the SEC said, were among Sassano’s and Baruh’s favorite tactics to enable market timing customers to deceive mutual funds and stay under the radar of the mutual funds’ internal timing monitors.
The SEC is also charging former CIBC branch manager R. Scott Abry and his boss, Robert Orkin, who headed the private client services division, for failing to supervise the two brokers. Okin and Abry directly supervised Sassano and Baruh and knew of, and assisted, their deceptive market timing practices.
The case will be heard before an administrative law judge to determine what, if any, remedial sanctions and penalties are appropriate.
Meanwhile, former CIBC executive Marshall Dornfeld has agreed to pay $100,000 to the SEC for also failing to supervise the brokers, although he neither admitted to nor denied the charges.