May 22, 2004
Two years ago, after her investment account had been emptied by CIBC
World Markets Inc. to pay for somebody else's trading losses,
76-year-old widow Kiganouchi (Ketty) Papazian put her house in north-end Montreal on the market.
Then she had an abrupt change of heart.
"She got a very good offer for the house," son Richard recalled, "but
then she thought, 'If I sell it, where do I put the money?' She didn't
trust banks any more."
Papazian didn't sell. It remained her home until last November, when she
died of cancer at age 78.
It was a painful end to a life complicated in its final years by a
bitter, drawn-out and still-unresolved lawsuit with CIBC World Markets
over what happened to her savings.
Ketty Papazian - and now her estate - wanted reimbursement of the
$299,275 that CIBC withdrew from her account.
The estate is seeking $10 million in punitive damages, $400,000 for
portfolio mismanagement, restitution for losses suffered from
liquidation of her investments and payment of legal costs for what her
lawyer called the "fraudulent manoeuvres" of a former broker at CIBC
Wood Gundy's downtown office.
The lawsuit, filed two years ago, alleges CIBC was professionally
negligent in failing to adequately supervise and control the trading
practices of broker Harutyun Migirdicoglu (also known as Harry Migirdic),
and abusive in making her liable for huge trading losses run up by
people she didn't know.
There is still no trial date set in Quebec Superior Court.
But a lawyer for the Investment Dealers Association of Canada said
yesterday Migirdicoglu should be barred for life for a long list of
After an IDA disciplinary hearing in March, the securities industry's
self-regulatory body found him guilty of multiple counts of trading
without the knowledge or authorization of a client, obtaining account
guarantees under pretense, altering investment objectives and risk
tolerance on Know-Your-Client forms without consent, knowingly accepting
a forged power of attorney and offering a client a $400,000 promissory
note to compensate for trading losses without the knowledge of CIBC.
Migirdicoglu didn't deny the allegations, but did not plead guilty.
At his hearing yesterday to receive submissions on a suitable IDA
penalty, lawyer Caroline Champagne said the severity of the former
broker's breaches of the rules warrants a lifetime ban from the
securities industry. She also recommended $370,000 in fines and another
$80,000 to cover investigation costs. An IDA panel is expected to make
its decision by mid-June.
In connection to other civil actions against Migirdicoglu and CIBC, the
IDA said some have settled out of court with CIBC. But lawsuits seeking
$5 million for losses and $55 million in punitive damages still are
making their way through the legal system. The first is due to come to
trial in January.
For Richard Papazian, the death of his mother only strengthened his
resolve to see the matter dealt with by the courts. Of Armenian descent,
she was born in Greece and lived in Argentina prior to moving to Canada
in 1964 with her late husband, Dicran.
When his mother began cancer treatments, he informed CIBC by letter late
in 2002. The bank didn't budge.
"When she was in hospital, I had to leave her side twice (for
deliberations with CIBC's lawyers) and felt horrible about it. But she
told me, 'You have to take care of this. You have to make it right,' "
"We tried every possible way to get back her money without a $10-
million lawsuit, but got nowhere. I want to make sure no bank or
financial institution acts in this way again."
His mother, whose principal language was Armenian, did not read or
understand English well, Papazian said. She had entrusted about $400,000
to Migirdicoglu after her husband died in 1990. Migirdicoglu had looked
after her husband's affairs.
In the lawsuit, it's alleged Migirdicoglu had her sign a document in
1993 that unknowingly made her responsible for any deficit in the
trading accounts of two other parties - Bedros S.F. Papazian and Aida
Papazian - who were not only unrelated to her, but complete strangers.
CIBC's position, as outlined in Superior Court filings by its law firm
Heenan Blaikie, is that Papazian was fully aware of the guarantee and
that she and her son were "complicit in their own misfortunes."
It claims it acted in good faith, never failed to properly supervise its
financial consultants and is not legally responsible for the actions of
the broker and any losses suffered by his former clients.
Color Photo: ALLEN McINNIS, THE GAZETTE / Disgraced Investment Manager
Facing Call for Lifetime Ban After Clients Burned: Former broker
Harutyun Migirdicoglu, commonly known as Harry Migirdic, yesterday
leaves an Investment Dealers Association hearing on submissions for a
suitable penalty for him. ; Photo: PHIL CARPENTER, THE GAZETTE / Ketty
Papazian was a 76-year-old widow when she put her north-end Montreal
home up for sale in April 2002 after her savings were drained by what
she believed was misconduct by her broker. She died in November. Her
estate is now seeking millions in damages for what one lawyer calls
"fraudulent manoeuvres" of former broker Harutyun Migirdicoglu at CIBC
Wood Gundy's downtown office. ;