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Jury selection for former Bank of America broker Theodore Sihpol III is set to begin today in Manhattan Supreme Court.

Jury selection for former Bank of America broker Theodore Sihpol III is set to begin today in Manhattan Supreme Court.

In a 40-count indictment, Attorney General Eliot Spitzer, as part of his office’s ongoing efforts to curb alleged abuses in the mutual fund industry, charged Sihpol for late-trading by helping hedge fund Canary Capital Partners buy and sell mutual funds after trading hours.

The trial before Justice James Yates is the first high-profile case coming out of Spitzer’s probes into the mutual fund industry. To date, Spitzer has won national attention for entering into large settlements with the nation’s largest investment banks, insurance companies and mutual funds.

Spitzer’s assault on the mutual fund industry began in September 2003, when he announced industry-wide trading scams. From the outset, his focus was locked on late-trading practices.

“The mutual fund industry operates on a double standard,” he said in a statement in 2003. “Certain companies and individuals have been given the opportunity to manipulate the system. They make illegal after-hours trades and improperly exploit market swings in ways that harm ordinary long-term investors.”

Several of these arrangements involved Canary Capital. The hedge fund and its managing principal, Edward Stern, settled with Spitzer in September 2003 for $40 million.

Sihpol’s case stems from a probe of Bank of America, which in March 2004 paid $675 million to settle charges of fraudulent dealings with Canary Capital.

Sihpol, 37, was the first individual to be charged in the mutual fund probe.

The indictment accuses him of grand larceny, securities fraud under New York’s Martin Act and falsifying business records. Spitzer’s office claims Sihpol stole more than $1 million from six different mutual funds operated by or affiliated with Bank of America by participating in the late-trading or market-timing scheme. If convicted, Sihpol could face more than 25 years in prison.

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