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Guarantees exercised in good faith
CIBC: Seized $1.4 million from retired couple.

Fraud victims were negligent and contributed to their own misfortune, bank's lawyer argues

 

PAUL DELEAN

 

May 28, 2005

To the end, CIBC Wood Gundy held fast to its contention that guarantees a disgraced former broker had clients sign for strangers were legally binding.

By signing confirmation documents without reading them, retiree Haroutioun Markarian was negligent and contributed to his own misfortune, CIBC lawyer Bernard Amyot said as a 42-day trial spread over five months concluded in Superior Court. A written ruling from Judge Jean-Pierre Senecal is expected within months.

Markarian and his wife, Alice, are suing CIBC for $1.4 million the brokerage seized from them in 2001 when it exercised guarantees they had unknowingly provided at the behest of their former CIBC broker, Harry Migirdic, covering the trading losses of people they didn't know. The Markarians also are seeking $10 million in punitive damages.

During his final arguments yesterday, Amyot insisted CIBC Wood Gundy exercised the guarantees in good faith, based on documents it had in hand.

The Markarians "weren't ruined" by the seizure and aren't indigent today, Amyot said. "They didn't need that money to maintain the standard of living they had."

Amyot defended CIBC's decision to pay $115,000 to Rita Luthi, a former Migirdic client whose $356,000 trading deficit ended up being paid from the Markarians' account. (Luthi testified she knew nothing about the debt and was told by Migirdic her investments were doing well).

The Luthi payment was a business decision by CIBC to "buy peace," Amyot said.

Judge Senecal wondered why the brokerage hadn't gone after Luthi, the principal debtor. Not only did it decide she didn't owe $356,000, it sent her a cheque covering most of her losses when she complained.

"We had the right to go to the guarantor first," Amyot said.

He added that there's nothing preventing the Markarians from suing Luthi.

That prompted Serge Letourneau, lawyer for the Markarians, to remark that the brokerage's position is to let Migridic's fraud victims fight it out while it emerges unscathed.

Amyot denied the brokerage had been lax in supervising Migirdic. He'd faced some disciplinary action and "wasn't a model employee," but Wood Gundy "never had reason to doubt his honesty" until his confession in 2001, the lawyer said.

pdelean@thegazette.canwest.com

 

"CIBC must assume responsibility for the fraud.
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