CIBC reveals settlement in one of Global Crossing cases

The Canadian Imperial Bank of Commerce has quietly settled a three-year-old class-action lawsuit launched on behalf of shareholders of Global Crossing Ltd., the bank revealed yesterday while seeking to brush off a separate but related suit launched this week by Global Crossing's trustee against several CIBC affiliates.

The Toronto Star
June 22, 2006

CIBC reveals settlement in one of Global Crossing cases
'Vigorously denies' charges in latest lawsuit. Seeking to dismiss separate, similar claims.
Tara Perkins

The Canadian Imperial Bank of Commerce has quietly settled a three-year-old class-action lawsuit launched on behalf of shareholders of Global Crossing Ltd., the bank revealed yesterday while seeking to brush off a separate but related suit launched this week by Global Crossing's trustee against several CIBC affiliates.

The settlement in the shareholder suit was reached months ago, but was not disclosed because it was not a material amount, the bank said.

The various lawsuits stem from the dramatic rise and fall of Global Crossing, a telecom company that soared during the technology boom and later plunged into one of the biggest bankruptcy- protection proceedings ever in the United States.

This week, the trustee for Global Crossing launched a suit in New York alleging that several "affiliates" of CIBC made $2 billion (U.S.) in profits from insider trading of Global Crossing shares. The allegations say defendants acted to artificially inflate Global Crossing's revenue and stock price, and then sold shares in the company using insider information. The affiliates named include CIBC Capital Partners (Cayman) No. 3, which was a wholly owned indirect subsidiary of CIBC during the time of the allegations; CIBC WG Argosy Merchant Fund 3 LP, of which CIBC was a general partner; and Co-Investment Merchant Fund LLC, which the suit alleges was created to allow certain CIBC employees and affiliates to profit by investing in ventures undertaken by CIBC and its affiliates.

In court documents, Global Crossing's trustee said "from Global's inception in March 1997 through its bankruptcy in January 2002, defendants were controlled by or acted in concert with CIBC Entities and their officers, several of whom sat as directors on Global's board."

Yesterday, CIBC issued a brief statement saying that the lawsuit is "essentially identical" to claims filed against the bank in 2004. The bank sought to have those claims dismissed in January, and that motion is still pending.

"CIBC vigorously denies these allegations and continues to believe it has strong legal and factual defences against these claims," the bank stated.

The bank said "CIBC has reached an agreement in principle in Q2, 2006, to settle the Global Crossing shareholder class-action lawsuit for an amount that is not material."

A consolidated class-action lawsuit was filed in New York in January 2003, on behalf of everyone who bought Global Crossing stock between Feb. 1, 1999 and Jan. 28, 2002. The suit was launched against multiple defendants, including CIBC, Goldman Sachs, Merrill Lynch, Arthur Andersen and Salomon Smith Barney.

Last July, the court approved a $75 million (U.S.) settlement with Salomon Smith Barney and analyst Jack Grubman. In October, a settlement was approved with Arthur Andersen and all Andersen- related defendants; the amount was $25 million in cash.


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