By Kristin Jones
Oppenheimer Holdings Inc. (OPY) has accused Canadian Imperial
Bank of Commerce (CM, CM.T) of failing to fulfill its contractual
obligations related to the sale of CIBC's U.S. capital markets
business to Oppenheimer in January 2008.
CIBC said in a statement that the claim is "without merit" and
plans to defend itself against the suit.
The operator of financial services firm Oppenheimer & Co.
said that Toronto bank CIBC "was seeking a quick way out of the
U.S. market to placate its critics among analysts, journalists, and
investors" in late 2007 when it contacted Oppenheimer to propose a
deal, according to a filing Friday in a New York state court.
As an inducement, CIBC pledged "to support Oppenheimer's lending
activities with its own balance sheet for a period of five years,
in an aggregate amount of $2 billion."
But soon after the deal closed, CIBC installed new management
that "openly disparaged the essence of the bargain" and "exhibited
no intention of following through" on the commitment, Oppenheimer
alleged. It is seeking to recoup losses of $176 million it blames
on CIBC's alleged breach of contract.
Oppenheimer & Co. agreed earlier this month to pay more than
$2.8 million to settle federal allegations that a former unit
overstated the returns of one of its funds and failed to provide
accurate details regarding how the fund valued its holdings.
Oppenheimer shares closed Friday at $20.54 and were unchanged
after hours. The stock is up 19% since the start of the year.
CIBC's U.S.-traded shares closed at $80.48 and were down four
cents after hours. The stock is up 1.4% in the past six months.
Write to Kristin Jones at kristin.jones@dowjones.com
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