NICOLAS VAN PRAET
Thursday, February 3, 2005
CIBC World Markets summoned an investment adviser now at the centre of a
multimillion-dollar lawsuit against the brokerage to its Toronto
headquarters to grill him over his sloppy record-keeping four years
before it finally gave him the axe.
The CIBC compliance manager who did the
grilling, Guenther Kleberg, told a Quebec Superior Court yesterday he
wanted to "throw the book" at the adviser, Harry Migirdic, because
Migirdic repeatedly violated company policy through various trade
practices and took too much time to update client records.
Four months after that 1997 meeting, Migirdic's assistant blew the
whistle on an irregularity involving the signature of a Migirdic client.
In 2001, Migirdic was dismissed.
The trial, which started in mid-January, pits retired machine shop owner
Haroutioun Markarian and his wife, Alice, against the CIBC World
The retired couple say they lost a large part of their savings through
account schemes set up by Migirdic, their former adviser. They're
seeking from the CIBC $10 million in punitive damages, $1.4 million
taken from their accounts because of allegedly fraudulent guarantees,
$226,935 in transaction losses, plus legal costs.
The couple's lawyer argues CIBC officials knew of Migirdic's 20- year
record of "chronic delinquency," failed in its duty to safeguard
clients, and kept Migirdic on only because he generated millions of
dollars in commissions. In 2000 alone, Migirdic generated $1.5 million
in gross commissions, the court heard.
The CIBC argues the transactions that led to the couple's financial loss
were legitimate and signed by the Markarians. It is the first of several
such lawsuits to come to court.
Despite numerous warnings by CIBC compliance officials about Migirdic's
practices, Kleberg testified he did not see an improvement in Migirdic's
record-keeping. So he summoned him from Montreal to Toronto.
"I wanted to be strong and for Harry to listen and do something about
it," Kleberg, now retired, said. "I wanted Harry to believe this is a
Four months later, after being tipped off by Migirdic's assistant, CIBC
officials determined Migirdic broke proper procedures in allowing a
third party to sign a document for one of his clients.
Kleberg asked Migirdic's superior for his opinion about the signature
violation given that Migirdic had received an in-person reprimand in
Toronto only several weeks before, the court heard.
The superior, Tom Noonan, answered that he did not believe Migirdic
would intentionally commit fraud. Noonan recommended fining Migirdic
$20,000. He was eventually fined $30,000.
"What do you think of Noonan's (comment) that the only thing FCs
(financial consultants) understand is money?" presiding Judge Jean-
Pierre Senecal asked Kleberg.
"There is an element of truth to this," Kleberg answered.
The trial continues today.