NEW YORK — New York prosecutors filed the first criminal counts Tuesday in their investigation of mutual fund trading practices, charging a former Bank of America broker in a scheme they said cost investors tens of millions of dollars.

Theodore Sihpol III, 36, surrendered Tuesday to face felony charges of grand larceny and violations of securities law, New York Attorney General Eliot Spitzer said at a news conference where the Securities and Exchange Commission also announced civil charges against Sihpol.

Sihpol was in custody following his arraignment in Manhattan Criminal Court late Tuesday. Judge Melissa Jackson set bond at $750,000 and agreed it could be secured by $50,000 in cash, but Sihpol brought a certified check. He was expected to be freed on bond by Wednesday morning at the latest.

Authorities allege Sihpol helped Canary Capital Partners, a multimillion-dollar hedge fund, gain special trading opportunities known as late trading, in which mutual fund shares are bought at the 4 p.m. price after the market closes. Late trading is prohibited by New York law and SEC regulations. Ordinary investors who place late orders must pay the following day's price.

Sihpol's lawyer, Don Buchwald, said Spitzer's civil complaint in the Canary Capital case makes clear that when the hedge fund proposed the trades in question, Sihpol "sought and obtained approval for Canary's trading procedures from all appropriate personnel and levels at the bank."

"Under these circumstances, given the absence of criminal intent on Ted's part, we believe that proceeding against him with a criminal complaint was inappropriate," Buchwald said.

Bank of America, which fired Sihpol and several others last week, reiterated Tuesday that it is cooperating fully with investigators. A spokesman declined to comment on allegations raised in the complaint. If convicted of the criminal charges, Sihpol faces eight to 25 years in prison. He also could face substantial fines and be banned from the securities industry for life if the SEC finds he violated the law.

It was the first criminal complaint filed in the case since Spitzer's office began investigating the mutual fund industry earlier this year. The investigation became public Sept. 3, when Spitzer announced that Canary had agreed to pay $40 million to settle charges that it had improper trading arrangements with several mutual fund companies, including Bank of America. Canary did not admit or deny wrongdoing and has cooperated with investigators.

Spitzer declined to say whether Bank of America had similar arrangements with other hedge funds.

Several dozen mutual fund companies and a smaller number of hedge funds have been subpoenaed. Spitzer said new information has been "pouring in at a surprising rate," but declined to elaborate.