Lawyers for ex-Bank of America Corporation broker Theodore Sihpol III rested their defense in his trial on charges of late-trading in mutual funds without calling any witnesses, after seven counts were dismissed from the case.

The dropped counts charged Mr. Sihpol, 37, with falsifying business records. Five of those counts, dismissed by Manhattan state Supreme Court Justice James Yates at the request of defense lawyers, accused Mr. Sihpol of discarding completed order tickets for mutual fund trades by Canary Capital Partners LLC after the Secaucus, N.J.-based hedge fund had canceled them.

Prosecutors say that from 2001 to 2003, Mr. Sihpol accepted lists of possible trades from Canary before trading closed at 4 p.m. After 4 p.m., Canary confirmed which orders it wanted executed, according to New York Attorney General Eliot Spitzer’s office, which brought the case. U.S. regulators say such “late-trading” is illegal. Mr. Sihpol contends he did nothing wrong.

“Just because Canary gave Sihpol something before he ripped it up, it wasn’t a business record,” Mr. Yates said yesterday.

Assistant Attorney General Harold Wilson withdrew two of the counts and told Mr. Yates he disagreed with the judge’s decision to dismiss the other five. Outside the courtroom, Mr. Wilson declined to comment further.

Twenty-two counts of falsifying business records remain. Mr. Sihpol is also charged with larceny and securities fraud.

Mr. Spitzer accused Mr. Sihpol of allowing Canary to place orders after the New York Stock Exchange was closed, at that day’s prices, instead of waiting for the market to reopen the next day when the prices might have changed. Canary is now defunct.

Mr. Sihpol’s case is the first stemming from Mr. Spitzer’s mutual fund probe to go to trial.

Under U.S. Securities and Exchange Commission rules, mutual fund shares trade at the price set at 4 p.m., the end of the trading day, Mr. Spitzer has said.

Mr. Sihpol’s lawyers decided today not to call Yale Law School Professor Jonathan Macey, an expert in securities law. Mr. Macey said in a defense affidavit submitted earlier that trading after 4 p.m. isn’t illegal.

Mr. Yates said Mr. Macey could testify about mutual fund trading practices, while barring him from discussing whether Mr. Sihpol could reasonably have believed that what he was doing was legal.

“His experience is not as to what the industry practice is, and we think the wiser course” is not to have Mr. Macey testify, Sihpol lawyer Paul Shechtman, of Stillman & Friedman in New York, told the judge.

Outside the courtroom, Mr. Shechtman said the defense wanted to call Mr. Macey “to say the conduct here was lawful, or at the very least that Mr. Sihpol had a reasonable belief that it was lawful.”

Mr. Sihpol was indicted last year and has denied any wrongdoing. His lawyers have said that late-trading was legal and that Mr. Sihpol never intended to commit a crime.

He faces a maximum of 30 years in prison if he’s convicted. The jury was excused until next week. Closing arguments by prosecutors and defense lawyers are expected to begin May 31, and jury deliberations could begin the next day.

The case is People v. Sihpol, Indictment no. 1710/2004, New York State Supreme Court, New York County.