Theodore Sihpol III settled with the Securities and Exchange Commission Wednesday for a $200,000 fine and a five-year ban from the securities industry. While he neither admitted nor denied the charges and still faces civil charges, the settlement, as some observers had expected, bought him leniency from New York Attorney General Eliot Spitzer, who dropped the final four criminal charges against the former Bank of America broker.
Although Spitzer's office contended in July it would not drop the four remaining counts, it also indicated it would revisit the matter following the SEC's case.
"I feel great, I feel great," Sihpol told Reuters after the charges were dismissed.
Earlier, Sihpol expressed his regret over allowing hedge fund Canary Capital Partners to market time and late trade mutual funds, telling New York State Supreme Court Justice James Yates, "I now recognize and regret that my conduct helped give Canary Capital an unfair trading advantage over other Bank of America mutual fund shareholders."
In response, lead prosecutor Harold Wilson said that in light Sihpol's contrition and the jury's earlier acquittal on 29 counts, "the interests of justice have been served, and further proceedings in this matter are unnecessary."
But some in the investment management industry believe Spitzer dropped the case for fear of losing once again. "It's a way of saving face," Ernest Badway, a partner at Saiber Schlesinger Satz & Goodstein told Reuters.
"I would expect most of the major other cases to wind down before Spitzer's campaign for governor gets into high gear," added Robert Heim, a partner at Meyers & Heim.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.