Investors Scrutinizing the Regulators

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Fox Guarding the Hen House


CIBC suit begins

January 11, 2005

MONTREAL (CP) -- The CIBC knew of broker Harry Migirdic's 20- year record of "chronic delinquency" and failed in its duty to safeguard its clients, a lawyer representing two investors said Monday at the start of a multimillion-dollar damages trial.

"They kept him employed for one reason -- he was one of its most performing producers, generating more than $1 million in commissions," said Serge Letourneau, lawyer for retired machine- shop owner Haroutioun Markarian and his wife Alice.

They want damages and reimbursements after losing a large part of their savings in a scenario they claim was orchestrated by Migirdic.

CIBC World Markets' lawyer Bernard Amyot, while admitting he had no evidence of a motive for the Markarians' $356,824 guarantee of Ruth Luthi's account in 2001, argued in his opening statement that the guarantees were legitimate and signed by the plaintiffs.

He said the company was within its rights in exercising them.

While the couple's experience was "regrettable," Markarian is a prudent businessman who "understands the consequences of a signature," Amyot said.

If people can avoid contractual commitments because they claim they didn't read or understand what they signed, the implications for the economic and judicial system are profound, Amyot maintained.

Luthi, a resident of the northern Quebec community of Senneterre, was the first witness in Quebec Superior Court Monday in the case pitting Markarian and wife against CIBC World Markets, Migirdic's former employer.

Luthi, 51, who runs a small meat shop with her husband, also is a former client of CIBC World Markets and Migirdic, who was assigned as her broker in the early '90s when her first broker left.

She testified Monday she didn't know her account was being guaranteed by the Markarians, people she didn't know.

Luthi said she didn't even know she was losing money in her trading account. She had indicated to Migirdic she did not want risky investments. Capital preservation "was primordial for me," Luthi said. But she left the decisions to him.

Montreal Gazette

"CIBC must assume responsibility for the fraud.
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