Tuesday, February 15, 2005
CIBC Wood Gundy was prepared to return to a retired Montreal couple the
almost $1.5 million it seized from them four years ago, but wouldn't
budge on punitive damages, the head of CIBC Wood Gundy told a broker at
the firm last month.
Their conversation was mentioned yesterday
at the Superior Court case of Haroutioun Markarian, 71, and his wife
Alice, 67, who are suing the CIBC for $10 million in punitive damages as
well as the return of the more than $1.4 million seized from their
accounts to pay for trading losses rung up in other accounts of their
then- broker at CIBC, Harry Migirdic. The Markarians claim they
unknowingly guaranteed the accounts, at the instigation of Migirdic, a
20-year employee dismissed by the CIBC in 2001.
Yesterday's witness, CIBC Wood Gundy head Tom Monahan, 46, admitted
discussing the trial last month with Allan Fenerdgian, a broker who has
since left the firm.
Monahan told him the firm had offered the Markarians $1.5 million before
the trial began in January, but "on punitive damages, that was the only
part I was not willing to discuss."
Monahan also confirmed CIBC Wood Gundy had offered the Markarians
$250,000 to settle last August. Under questioning from the plaintiffs'
lawyer Serge Letourneau, Monahan admitted knowing in the spring of 2001
that Haroutioun Markarian and Migirdic both told CIBC investigators the
couple had no knowledge of the guarantees.
"I did not know what to believe," he said. "It was completely contrary
to what I had been led to believe for a period of years."
The brokerage still decided to exercise the guarantees a few months
Asked if Migirdic's admission about the guarantees figured in the
decision to dismiss him in April 2001, Monahan said it had.
"But it was not sufficient to void the guarantees?" Letourneau asked.
"That's right," Monahan said.
He said it was the view of the CIBC's internal and external experts that
the brokerage had "a reasonable basis" to proceed as it did, given that
it had a series of written confirmations of the guarantee signed by
When Letourneau asked if the brokerage had given any consideration to
the consequences of its actions on Markarian and his health, Monahan
said: "Absolutely." Such actions should be taken "only if you felt you
had very much justifiable reasons to do so," he said.
Monahan said he now believes the Markarians did not know the people
whose accounts they were guaranteeing, but added, "I still believe those
guarantees, today, were duly acknowledged and duly signed by a
knowledgeable business person." People presented with a document have an
obligation to understand it before signing, he said.
Also yesterday, court was told that, of about 600 investment advisers
employed by CIBC Wood Gundy, almost half had the "vice- president" title
held by Migirdic. Monahan said the title involved no added
responsibilities. It simply meant the broker generated a certain level
But he agreed it probably helped them attract clients.
The trial continues today.