Bloomberg, Phil Milford, 3 October 2006
Canadian Imperial Bank of Commerce, Canada's fifth-largest bank by assets, was sued by two former employees who asked a judge to dissolve a money-losing company investment fund and distribute its assets.
In an amended complaint made public today in Delaware Chancery Court following scrutiny of company records, James Forsythe and Alan Tesche contend CIBC failed to properly oversee the $561 million CIBC Employee Private Equity Fund (U.S.) Inc.
'The fund has suffered the waste of millions of dollars of its assets' because of 'willful and wanton lack of supervision of the fund's management,' Forsythe and Tesche say in the complaint.
Toronto-based CIBC had a third-quarter profit of C$662 million ($597 million), reversing a year-earlier loss, after consumer banking profit rose. The bank agreed in August 2005 to pay investors $2.4 billion to settle claims it helped Enron Corp. inflate revenue by hiding debt.
The Delaware lawsuit contends 'CIBC misused the fund's assets to its own benefit in order to artificially inflate its own financials, including off-loading non performing investments which it would otherwise have had to write off.'
The fund started out in 2000 with $561 million in investment commitments from 490 investors, and promised returns of up to 25 percent, court papers say. The complaint says the fund had 'significant losses,' and in early 2002, 'CIBC ceased disclosing the market value' of the investments.
'CIBC believes the action to be without merit,' said Rob McLeod, senior public affairs director for the company, in an e- mailed statement.
The suit was originally filed in February 2005, McLeod said.
The case is Forsythe, et al, v. CIBC, CA1091-N, Delaware Chancery Court (Wilmington).
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Canadian Imperial Bank of Commerce, Canada's fifth-largest bank by assets, was sued by two former employees who asked a judge to dissolve a money-losing company investment fund and distribute its assets.
In an amended complaint made public today in Delaware Chancery Court following scrutiny of company records, James Forsythe and Alan Tesche contend CIBC failed to properly oversee the $561 million CIBC Employee Private Equity Fund (U.S.) Inc.
'The fund has suffered the waste of millions of dollars of its assets' because of 'willful and wanton lack of supervision of the fund's management,' Forsythe and Tesche say in the complaint.
Toronto-based CIBC had a third-quarter profit of C$662 million ($597 million), reversing a year-earlier loss, after consumer banking profit rose. The bank agreed in August 2005 to pay investors $2.4 billion to settle claims it helped Enron Corp. inflate revenue by hiding debt.
The Delaware lawsuit contends 'CIBC misused the fund's assets to its own benefit in order to artificially inflate its own financials, including off-loading non performing investments which it would otherwise have had to write off.'
The fund started out in 2000 with $561 million in investment commitments from 490 investors, and promised returns of up to 25 percent, court papers say. The complaint says the fund had 'significant losses,' and in early 2002, 'CIBC ceased disclosing the market value' of the investments.
'CIBC believes the action to be without merit,' said Rob McLeod, senior public affairs director for the company, in an e- mailed statement.
The suit was originally filed in February 2005, McLeod said.
The case is Forsythe, et al, v. CIBC, CA1091-N, Delaware Chancery Court (Wilmington).
