A former managing director with Canadian Imperial Bank of Commerce (CIBC) agreed Tuesday to pay US$528,750 to settle charges brought by the Securities and Exchange Commission (SEC) last year in connection with Enron Corp.

The SEC alleged that CIBC’s Ian Schottlaender and others arranged 34 disguised loans that allowed Enron to overstate reported earnings by more than $1 billion, to increase reported operating cash flows by nearly $2 billion, and to avoid disclosure of more than $2.6 billion in debt on its financial statements between June 1998, and October 2001.

According to the SEC, Schottlaender agreed to pay disgorgement of $249,000, a penalty of $249,000, and prejudgment interest of $30,750. The SEC order also bars Schottlaender from serving as an officer or director of a publicly traded company for five years.

Schottlaender, who had contested the SEC charges (see Daily GPI, Dec. 24, 2003), consented to the order without admitting or denying the allegations, the SEC said.

Last December, the SEC and the Department of Justice reached settlements with CIBC for the institution’s role in defrauding investors in the years leading up to Enron’s bankruptcy. The SEC complaint charged CIBC and three executives, including Schottlaender, but he was the only one to contest the charges. The civil action permanently enjoining CIBC from violating anti fraud and other provisions of the federal securities laws and ordered the bank to pay $80 million to Enron fraud victims. CIBC and the two other executives charged agreed to the final judgment without admitting or denying the SEC’s allegations.

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