CIBC Settles ABCP Case
- Thursday, December 24, 2009, 9:47
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Canadian Imperial Bank of Commerce (CIBC) will be paying $22 million to settle allegations of wrong doing in connection with asset backed commercial paper.
The Ontario Securities Commission orders that CIBC and CIBC World Markets pay the penalty on Monday December 21st, 2009.
The province’s stock market regulator has also ordered that HSBC Bank Canada pay $6 million to settle similar allegations.
These banks have also agreed to submit a third party review of their compliance practices.
Asset backed commercial paper, which is known as ABCP, is a short term debt instrument with a typical maturity of 30 – 180 days.
The $32 billion ABCP market stopped in August 2007 when investors worried that the investments were backed by shaky U.S. subprime mortgages.
Under terms of the settlement deals, CIBC, CIBC World Markets and HSBC admitted that they engages in conduct contrary to the public interest by failing to respond to emerging issues in the ABCP market while they continue to sell the investments from July 25th and August 3rd, 2007.
These banks sold ABCP to institutional investors. Retail investors who brought these investments suffered huge financial losses when the ABCP market groze.
Other regulators in Ontario, British Columbia and Quebec were expected to release settlement deals with other Canadian banks on Monday.
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My favorite weapon of choice is the samurai sword. I use it to cut my chicken during dinner, cut my hair and periodically carve my name into stone when I am bored. I love meditating on top of a 15ft high pole and eating those sushi’s with smoked salmon on top.
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