Investors Scrutinizing the Regulators

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Fox Guarding the Hen House


Judge scorches CIBC branch manager
Denounces failure to contact fraud victims.

Trial for Montreal couple who unknowingly guaranteed losses of strangers nears verdict




May 27, 2005

The lawyer defending CIBC Wood Gundy's seizure of $1.4 million from a retired Montreal couple who unknowingly guaranteed the trading losses of complete strangers got a thorough grilling yesterday from Superior Court Judge Jean-Pierre Senecal.

As CIBC lawyer Bernard Amyot presented closing arguments in the five-month-old trial, Senecal intervened for clarification on several key points.

He drew attention to the failure of CIBC branch manager Tom Noonan to actually phone or meet with retirees Haroutioun and Alice Markarian in the years before the brokerage took their money using guarantees obtained by former broker Harry Migirdic, an admitted fraudster. (The Markarians are suing the CIBC for the return of the $1.4 million, plus $10 million in punitive damages).

"Why didn't he (Noonan) make a call?," the judge asked.

Amyot said he sent letters instead.

"Is there any better way to facilitate fraud than do everything on paper?" Judge Senecal commented, later adding "if it had only Noonans, CIBC would be bankrupt."

He also wondered why CIBC had never contacted Sebuh Gazarosyan, whose account (guaranteed by the Markarians) was $1 million in the hole. Gazarosyan was Migirdic's uncle in Turkey and only a figurehead.

"If I'm a branch manager, and a client I don't know owes $1 million, I think I'd be interested in meeting him," Senecal observed. "He owes $1 million to CIBC, but the branch manager never meets him. How is that possible?"

Amyot agreed that if calls had been made, the fraud would have been detected sooner, but maintained the Markarians had deactivated CIBC's internal checks and balances by signing guarantee confirmations year after year.

Senecal also zeroed in on wording in the CIBC defence mentioning that Migirdic and Markarian both were members of Montreal's tight- knit Armenian community and giving the impression they were somehow complicit.

"Why this reference to them being in the same community? Why insist on that?" the judge asked.

Amyot said CIBC never alleged there was an Armenian plot, but there could have been. "Was it a possibility? Yes. There's nothing racist in saying that."

The trial is expected to conclude today.


"CIBC must assume responsibility for the fraud.
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