June 30, 2004
Fined $305,000 for multiple infractions.
Harry Migirdic's penalties among stiffest ever assessed by the IDA in
In a ruling that brought little solace to some of his victims, a former
broker with CIBC World Markets in Montreal has been barred for life from
the securities industry for a long list of infractions, among them using
the accounts of certain investors to guarantee the trading losses of
others they didn't know.
Harry Migirdic, a prominent member of the local Armenian community (from
which he drew many clients), has also been assessed $305,000 in fines
and $55,000 in investigation costs by the Quebec district council of the
Investment Dealers Association of Canada, though the association admits
it lacks the enforcement powers to collect that money from people no
longer employed in the industry.
"(Migirdic) getting the lifetime ban does not do justice to what
happened," said Richard Papazian, 43, whose late mother, Kiganouchi (Ketty)
Papazian, had $299,275 withdrawn from her account by the CIBC to make up
for shortfalls in the trading account of two other Migirdic clients.
"Harry did the paperwork, but who exercised the fraudulent guarantee?
CIBC went ahead and helped itself to the money (by exercising the
guarantee) after they found out what he was doing.
"He put it in the bag for them, but they decided to walk out of the
store with it."
Another former client, Haroutioun Markarian, also can't understand how
the CIBC can wash its hands of the actions of someone it employed as a
"While Mr. Migirdic was churning profits for them, CIBC was more than
willing to accept them. However, after being exposed for his wrongdoings
and even having been fired by CIBC for these actions, they incredibly
still shun any liability and responsibility. How convenient.
"Simply put, CIBC is saying to the public that you are more than welcome
to bring your savings to them, but if someone within their organization
takes away your money, then that is too bad."
Migirdic is the second former CIBC World Markets broker this week to
receive a lifetime ban from the IDA. Alex Gurion, who used to work for
the brokerage's North York branch, also got a lifetime suspension for
cheating a 90-year-old customer out of $350,000 in 2001, the same year
Gurion moved to Moscow. The CIBC made full restitution to the customer
It also has settled with some of the more than 20 clients who complained
about Migirdic, but not all.
That's a source of great frustration for Papazian, whose 78-year- old
mother died of cancer last year, and for Markarian, a retired
machine-shop owner who is 71.
Markarian and his wife had about $1 million extracted from their
investment accounts to guarantee the trading losses of Migirdic's 73-
year-old uncle in Turkey.
"CIBC's strategy is a simple and ruthless one," Markarian said. "Drag
out the lawsuits long enough to outlive the victims. In Ketty Papazian's
case, this strategy worked to perfection."
The CIBC declined to comment. "The cases are what they are,"
spokesperson Rob McLeod said from Toronto yesterday. "We aren't
commenting on these cases."
Its position in the Papazian case, outlined in documents filed in a
Quebec Superior Court suit, is that she was fully aware of the guarantee
and she and her son were "complicit in their own misfortunes." It also
claims no legal responsibility for the actions of the broker and any
losses suffered by his former clients.
Lawsuits seeking about $5 million for losses and $55 million in punitive
damages from Migirdic and the CIBC are now making their way through the
Quebec legal system. The first is due to come to trial in January.
Migirdic, also known as Harutyun Migirdicoglu, was a registered
investment representative in Quebec for more than two decades at Merrill
Lynch, Wood Gundy and CIBC World Markets before his termination in 2001.
Evidence entered at the IDA hearing showed he was the subject of several
warnings and disciplinary measures.
This year, he was found guilty by the IDA of 24 transgressions during
his time as a CIBC representative. They included multiple counts of
trading without the knowledge or authorization of a client, obtaining
account guarantees under false pretences, 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 the CIBC. Migirdic admitted to all the infractions but did not plead
In its decision on an appropriate penalty, the IDA's three-member disciplinary committee said there's no denying the extent of the
financial prejudice suffered by Migirdic's clients and the firm that
employed him or the harm he did to the credibility of financial markets.
"Some of the violations are clearly of a fraudulent nature," the
committee said. "It's the case with the guarantees that he (Migirdic)
had clients sign, on the pretext it was a formality for their file. The
reprehensibility (of this type of fault) is undoubted."
Another aggravating factor was the vulnerability of many of his clients,
who trusted him blindly, the panel said.
A lifetime ban, severe as it may be, is the obvious response in a case
like this, since the person can no longer be trusted to act honestly
with the public, clients and the profession as a whole, it said. "They
weren't isolated incidents."
Migirdic's lifetime ban and $360,000 in fines and costs are among the
stiffest penalties ever assessed by the IDA in Quebec. Last year, Warren
McCaffrey, a former investment representative at the Hudson branch of
Leduc et Associes Securities Canada Ltd., was fined $585,000 and barred
for life for a series of regulatory violations and fund
misappropriations that included falsifying a letter on which he forged a
client's signature, depositing in his own bank account cheques destined
for or sent by clients, and depositing in his spouse's account a bank
draft received from a client for the purchase of securities.