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Fox Guarding the Hen House


'We will probably have to eat this one'
Investigator never spoke to clients
Retired Montreal couple allegedly victimized by CIBC Wood Gundy broker



Tuesday, April 26, 2005

A former compliance officer for brokerage firm CIBC Wood Gundy testified in Superior Court yesterday that his initial reaction after looking into the case of a retired Montreal couple allegedly victimized by CIBC broker and vice-president Harry Migirdic was "we will probably have to eat this one."

Daniel Bowering, who worked in Wood Gundy's compliance department from 2000 to 2002, was assigned to gather information relating to the claims of Migirdic clients Haroutioun and Alice Markarian, whose account was guaranteeing a trading account in the name of Migirdic's uncle in Turkey, Sebuh Gazarosyan, someone they'd never met. That account was about $1 million in debt

Early in 2001, Migirdic confessed to his CIBC superiors that the Markarians had no knowledge of that guarantee or another on a second account. He obtained their signatures by misrepresenting documents he had them sign.

CIBC dismissed him shortly after but nonetheless exercised the guarantees, seizing about $1.4 million from the Markarians' accounts. They're suing CIBC World Markets (parent company of Wood Gundy) for return of the money, plus $10 million in punitive damages.

The Superior Court trial, which began in January, resumed yesterday with Bowering on the witness stand.

As compliance officer, he said it was his job to supervise branches, managers and brokers, review trades and handle customer complaints..

But under questioning from Judge Jean-Pierre Senecal, he admitted he never actually spoke to Migirdic or the Markarians in the course of his investigation. Since others at the brokerage already had done so, he didn't feel it necessary.

"It's not standard in the industry to go to the clients themselves," he said.

Bowering's investigation did include looking at trading records and documents on file. In the Markarian case, these included signed confirmations of the guarantee going back six years.

He said he didn't have that information in hand when he made an early notation CIBC might have to "write off" the $1 million in losses in the Gazarosyan account because of Migirdic's admissions.


"CIBC must assume responsibility for the fraud.
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