In a defeat for New York Attorney General Eliot Spitzer, former Bank of America Corp broker Theodore Sihpol on Thursday was acquitted by a Manhattan jury of 29 counts of helping a hedge fund trade mutual funds illegally.
New York Supreme Court Justice James Yates declared a mistrial on four other counts on which the jury deadlocked.
Lawyers said the verdict might erode some of Spitzer’s clout as the financial services industry’s most prominent crime-fighter. The trial was the attorney general’s first in his probes into Wall Street stock research, mutual fund and insurance practices.
“This is a very significant blow to Eliot Spitzer’s enforcement efforts,” said Robert Heim, a partner at Meyers & Heim LLP in New York. “Mr. Sihpol’s victory will strongly encourage other defendants to consider going to trial rather than settling.”
A jury of seven women and five men found Sihpol innocent of 29 counts of grand larceny, fraud and scheming to defraud, and falsifying business records. It deadlocked on two other fraud counts and two counts of falsifying records. The trial lasted nearly six weeks and jury deliberations took six days.
Yates set a June 23 hearing at which prosecutors may say whether they plan to retry the 37-year-old Sihpol on the four remaining counts. Sihpol still faces a U.S. Securities and Exchange Commission action and other civil lawsuits.