January 18, 2005
On the day in 2001 when he learned he was
on the hook for almost $1.4 million in trading losses in the accounts of
two complete strangers, retired machine-shop owner Haroutioun Markarian
froze in a chair at the CIBC World Markets office in downtown Montreal,
and had to be helped from the room.
"I felt physically ill. I was stressed, panicked. I felt I'd lost our
security," Markarian, 71, testified in Superior Court yesterday, the
second day of the trial into his multi-million-dollar lawsuit against
CIBC World Markets.
Markarian and his wife, Alice, were clients of former CIBC World Markets
broker Harry Migirdic, as was Rita Luthi, a woman they didn't know.
Unbeknown to the Markarians, or Luthi, they also had been made the
guarantors of her trading account and that of Migirdic's uncle, Sebuh
Luthi, first witness in the case, testified she was under the impression
her investments were doing well under Migirdic's management and thought
her account was worth between $145,000 and $165,000.
Only when Migirdic went on sick leave in 2001 did she learn the account
was empty, and she owed $356,824.
That money was extracted a few months later from the Markarians by CIBC,
which exercised their guarantee on her account.
But CIBC later repaid Luthi $115,000, court was told.
The 2002 settlement followed a letter from Luthi's lawyer that
originally demanded $224,000 from CIBC, an amount she said had been
determined by an accountant who went over her records.
Asked why she had settled for less, Luthi said "I wanted to be done with
it. My lawyer said it could take years to go to court."
CIBC lawyers had asked that the terms of the agreement be kept
confidential, but Judge Jean-Pierre Senecal denied that request, saying
the deal has direct bearing on the matter before the court.
Invited to further explain the rationale of the deal, CIBC lawyer
Bernard Amyot said the indemnity was paid to "buy peace," with "no
admission of responsibility."
Markarian, a Migirdic client since the mid-1980s, described himself as
an unsophisticated investor and said he made it clear to Migirdic he
wanted only low-risk investments. The actual choices were left to him.
"I wanted security," Markarian said. "I didn't want to risk retirement
He said he never looked closely at any of the documents sent to him and
readily signed whatever and whenever Migirdic asked.
"I didn't read them. I had faith in him," Markarian said. "I felt
fortunate to be served by a company vice-president."
Usually, Migirdic dropped by the house to have him sign forms. It would
have been "like an insult" to read them with him waiting, Markarian
He testified he was never aware he'd signed guarantees for the accounts
of Luthi and Sebuh Gazarosyan, Migirdic's uncle in Turkey. "Why would I
risk the family fortune for people I don't know?"
Before his fateful meeting at the CIBC office in 2001, no one from the
firm had ever called him to double-check, Markarian said.
The trading deficit in the Gazarosyan account totalled more than
$950,000 when CIBC exercised the guarantee in 2001.
"When the account went from $1 million to a few bucks, that was another
shock," said Markarian, who had attempted in vain to get the funds
transferred to another institution. "It's not easy seeing an account
Asked by lawyer Serge Letourneau if it had changed his life, Markarian
said, "Surely, it's had an impact ... We had established a certain
standard of living. It was cut in half."
The trial continues today.