The Canadian Imperial Bank of Commerce (CIBC) and several of its affiliates are to answer charges of insider trading, after a $2 billion lawsuit was issued against them.
The charges relate to the bank's dealings in the sale of shares in Global Crossing – a telecommunications company.
Although originally accused of insider trading back in 2004, the new lawsuit is the first time that CIBC affiliates have been involved in the dealings, which saw the company fall from a successful publicly listed company to bankruptcy in a little over five years.
CIBC paid $38 million for a 38 per cent stake in the company back in 1996 – a stake worth $1 billion only a year and a half later when the company made its initial public offering (IPO).
However, Global Crossing's creditors allege that CIBC manipulated financial statements to make the company appear more successful than it really was, allowing CIBC employees to make money from selling shares, and eventually leading to bankruptcy.
The allegations come as Canada-based CIBC makes efforts to distance itself from the legacy of the Enron scandal, in which it has been implicated along with many high-profile investment banks.