Too big to prosecute, our bankers

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Postby admin » Mon Nov 03, 2008 6:40 pm

Preventative medicine, or treatment for chronic ills?



CIBC braces for new hit
RICHARD BLACKWELL and TARA PERKINS AND LORI MCLEOD

Globe and Mail Update

January 14, 2008 at 10:11 PM EST

Canadian Imperial Bank of Commerce's massive $2.75-billion stock offering puts it in a bullet-proof position to weather more writedowns that may be in the pipeline, bank watchers said Monday.

The $2.75-billion issue comes as the bank is in the process of taking about $3.4-billion (U.S.) in pretax writedowns for its exposure to U.S. subprime loans, including $2.46-billion announced Monday.

CIBC said it would place $1.5-billion (Canadian) of the new shares with a group of four investors, including Hong Kong billionaire Li Ka-shing, at a price of $65.26 apiece, well below the $72.07 the stock was fetching just before the sale was announced Monday afternoon. The rest will go to other investors at $67.05 a share.

The size of the issue took many observers and investors by surprise, and some suggested there could be more writedown pain to come. With its equity infusion, the bank could comfortably afford to take an additional $4-billion in pretax writedowns and still have enough capital to satisfy regulators.

CIBC

CIBC shares have fallen more than 23 per cent over the last 52 weeks.

Recent Related Articles
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From the archives

DeCloet: CIBC: Listen up to Mack the Knife
CIBC faces bigger hit over subprime
Streetwise: CIBC stock overhung by capital infusion concerns
Bank's ills reignite merger debate
At CIBC, the bad old days are back
CIBC investors rattled by subprime exposure
The ABCP black box explodes
Because the issue was quite a bit bigger than the market expected, “it does suggest that clearly there are further writedowns that are going to take place,” said Juliette John, a vice-president at Bissett Investment Management.

“Is there another shoe to drop?” asked Shane Jones, managing director of Canadian equities at Scotia Cassels, who said the bank has raised far more funds than it needs.

The bank said it does not expect any further writedowns, but it is possible they might be required before its quarter ends Jan. 31. It will not be updating investors before its results come out on Feb. 28.

Despite those concerns, most observers said they think the move will help support CIBC's stock price, because it gives so much backing to the balance sheet. “It really does provide a cushion, should there be any unexpected or unforeseen issues that arise,” said Brenda Lum, an analyst at DBRS Ltd.

DBRS still has the bank under review with negative implications due to concerns with overall risk management.

CIBC appears to be operating under the philosophy that it is better to be safe than sorry, analysts said. Having to go back to the market for a further infusion in the future could be costly, while it would be relatively easy for the bank to buy back shares if it found it no longer needed the cushion.

Murray Leith, director of research at investment adviser Odlum Brown Ltd. in Vancouver, said that while the size of CIBC's issue was a surprise, in the long run it will be good for the stock.

“I admit being shocked, off the bat, by the size of the equity offering,” he said. CIBC already had the capacity to deal with major writedowns, but now “with this amount of money being raised their balance sheet is rock solid,” he added.

There's no question that CIBC's cost of funding loans has increased in recent months because of concerns over the writedowns, Mr. Leith said. But this move will cut those costs sharply, and increase profits.

He described the new capital as “as a pretty smart insurance policy,” even if it is dilutive to existing shareholders, some of whom will not be happy.

“This will probably leave a bad taste in a bunch of people's mouths and I expect it will trade down tomorrow,” Mr. Leith said.

“But the way I look at it is that they are taking all the downside out of the stock, and of all the Canadian banks I think this is the one that will do it [perform best] over the next 12 months.”

Ms. John agreed that CIBC will likely emerge in very good shape. “You can't overlook the fact … that this bank does have the power to earn a lot of money,” she said.

Still, the price discount of the new shares is actually even deeper than it appears on the surface. That's because there is also a 4 per cent “commitment fee” paid to the main investor group – equivalent to another discount of $2.61 a share.

With files from Boyd Erman
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Postby admin » Mon Nov 03, 2008 6:39 pm

Advocate critical of CIBC's disclosure
JANET MCFARLAND
GLOBE AND MAIL UPDATE
DECEMBER 11, 2007 AT 10:30 PM EST
Shareholder advocate Bob Verdun says Canadian Imperial Bank of Commerce [CM-T] awarded shares worth more than $100-
million to top executives between 2000 and 2003 without clearly disclosing the value of the incentive program.
Mr. Verdun said on Tuesday he has analyzed the bank's shareholder proxy circulars to piece together the value of a special incentive
program created in 2000 to link executive compensation to merchant banking investments.
Mr. Verdun, a long-time critic of Canada's big banks, believes most of the program was linked to the bank's investment in Global
Crossing Ltd., a U.S. technology company that CIBC bought a piece of in 1996. The position was sold and hedged in 2000, earning
CIBC total gains of $2.3-billion (U.S.), which were recognized over four years.
News reports in the past have disclosed that CIBC executives had compensation linked to merchant banking operations, but there have
not been dollar values attached to the compensation program.
CIBC
Mr. Verdun has called on CIBC to review its compensation disclosure.
CIBC spokesman Rob McLeod said yesterday the bank has disclosed far more than required about the special incentive program.
Disclosure of the program began in the proxy statement for 2000 and has continued every year since then, he said.
“This disclosure has provided investors with an overview of the program, and, over time, the necessary information to calculate the
potential benefits for named executive officers at a particular date,” he said.
In its 2001 proxy circular, the bank said four executives – including then-chief executive officer John Hunkin and current CEO Gerry
McCaughey – got a total of 17,500 units based on “net gains from certain CIBC investment holdings.” Mr. Verdun said it was not clear
enough to readers that the relatively modest number of plan units would be subsequently converted into a total of 1.09 million CIBC
deferred share units before the program ended in 2003.
Executives were required to hold the special deferred share units until they left the bank. Mr. Hunkin, who retired in 2005, cashed out
his units for a total of $25.7-million. The gain was disclosed in the company's shareholder proxy circular, but Mr. Verdun argues
investors failed to understand the source of the units.
Mr. McCaughey, who has not left the bank, received a total of 219,095 CIBC deferred share units under the program, currently worth
$17.6-million.
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Postby admin » Mon Nov 03, 2008 6:37 pm

InvestorVoice.CA


--------------------------------------------------------------------------------

Securities Regulation in

Canada
NATIONAL POST

-Quebec case a painful win for investors
Judge criticizes CIBC for failing to protect clients

Jonathan Chevreau

Thursday, November 2, 2007

Personal Finance Documents for a landmark legal case hailed a year ago as a “great victory” for investors but publicized mostly in the Quebec media are now available in English. Securities industry watchdog Robert Kyle has just added court-approved translations of French court rulings to his Web site at www.investorvoice.ca.

Go to “Cases” and “Investor Cases in provincial courts,” then “Markarian vs. CIBC World Markets Inc.”

The Markarians were a retired Canadian couple of Armenian descent defrauded of $1-million in the 1990s by fellow Armenian financial advisor Harry Migirdic.

In June, 2006, Montreal Superior Court Judge JeanPierre Senécal awarded more than $3-million, including $1.5-million in punitive damages, to Haroutioun and Alice Markarian. As Kyle explains, the couple unwittingly guaranteed the trading losses of people they didn’t know at the behest of Migirdic, then a broker with CIBC Wood Gundy.

The brokerage invoked the guarantees to seize $1.4-million from the Markarians in 2001, leaving almost nothing in their accounts — even though Migirdic admitted to CIBC prior to his 2001 termination that the Markarians were the subject of his fraud and that they were totally unaware.

Judge Senécal called CIBC’s conduct “reprehensible,” saying it “cruelly failed” in its duty to protect its clients and supervise its employee. In August, 2006, the bank settled out of court with at least six other former clients of Migirdic. Terms were not disclosed and CIBC spokesman Rob McLeod declared “the matter is closed.”

Closed and forgotten, if indeed investors in English Canada even knew of the case in the first place. Few outside Quebec are, because until now the court decision and related documents were available only in French. The only prominent English-language coverage of the case was by Montreal Gazette reporter Paul Delean.

In reading judge Senécal’s decision, I was struck by how Migirdic was able to exploit the trust his clients had in him for more than five years. Some of this stemmed from the impressive “vice-president and director” title conferred on him soon after the Markarians became clients.

Year after year, when Haroutioun questioned the annual disclosure of the mysterious “guarantee,” Migirdic dismissed the query with a simple statement it was “a mistake” he’d soon fix.

One thinks of the Peanuts cartoon strip, where the hapless Charlie Brown forever takes another run at the football Lucy always yanks away.

The case raises broader questions about compliance procedures at the big brokerages and their oversight by self-regulated organizations. Reviewing Migirdic’s “numerous faults over the years,” judge Senécal says many were repeated. “It is incredible that, despite their size, none of the faults were discovered by the Compliance Department or anyone else at CIBC.”

The other troublesome aspect is why the IDA or Quebec Securities Commission took no action against CIBC or those behind the fraud. Judge Senécal notes that in February, 2001, Migirdic admitted his fraud to CIBC Wood Gundy president Tom Monahan.

Kyle says Monahan was also on the IDA’s board of directors from June, 2003, to June, 2005, and chair of the IDA’s Retail Sales Committee. Two years later, in April, 2004, the IDA found Migirdic guilty of 24 counts, including forgery, 11 of them related to the Markarian case, and prohibitied him from membership. It also fined him $305,000. (He never paid).

However, judge Senécal added, “no criminal charges were ever laid against him. Moreover, there was never any complaint or sanction against CIBC.” Judge Senécal said CIBC persisted in refusing the acceptance of fraud contrary to the facts and all common sense, seizing the Markarian’s assets and forcing a five-year court proceeding.

At one point a CIBC compliance officer suggested it should absorb the Markarians’ losses but this was never implemented. Judge Senécal concluded “CIBC thus became the accomplice in Migirdic’s fraud and did everything in its power to benefit from it directly.”

Kyle’s site poses the question whether the IDA and QSC felt their supervisory roles were exercised properly. When he raised this at last week’s Investor Forum in Toronto he says he was told in private the IDA is now investigating the case.

Chevreau blogs at www. wealthyboomer.ca


jchevreau@nationalpost.com




"CIBC must assume responsibility for the fraud.”
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Postby admin » Mon Nov 03, 2008 6:35 pm

a bit dated, but this news article has been loafing around my in basket for a while:

From Globe and Mail Feb 1, 2007, page B3. "SEC CHARGES EX-OFFICIALS OF CIBC OVER FUND TRADING", by Sinclair Stewart

The article describes an "improper fund trading scheme" that the SEC alleged went on and charged and arrested Paul Flynn with two counts of grand larceny for allegedly helping hedge fund clients make illigal trades that cost mutual fund investors millions of dollars.

According to SEC allegations, mutual fund companies sent over 1,000 letters to CIBC and the brokers complaining about abusive trading, but the warnings went undeeded.

It (the SEC) claimed CIBC brokers defrauded hundreds of mutual funds and their shareholders.

Advocate comments............No criminal investigation in Canada. No charges. It might be seen that Canada has "no regulation" instead of calling it "self regulation". I also cannot remember, but I recall reading a while back of CIBC paying something like $100 mil fine to SEC to keep an employee or two out of jail in the US. I will try and find and update that when I run across it in the basket.
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Postby admin » Mon Nov 03, 2008 6:32 pm

CAN YOU BUY YOUR WAY OUT OF JAIL TIME?


This morning over my coffee I read an article in the Toronto Star (one of the two papers to which I subscribe). It was an article about an Ex-CIBC managing director who had criminal charges dropped after CIBC agreed to pay $125 million to settle claims by Spitzer and the SEC.

This is $125 million of shareholder's money paid to cover up wrongdoing at the top. No "rogue broker" this one.

As a subscriber I did a search of thestar.com thinking I could e-mail this intriguing article to others. But I could not find the article on the Star website, although another article on the same page D7 "Ex-broker barred, fined" about Octagon Securities broker Barry Leung appeared on the website.

I guess the Star believes the web readers are more interested to read about small fry being fined $100,000 and banned (this ensures the fine will not be collected) than reading about one of our prominent banks spending $125 million of shareholders money to cover up the criminal activities of the former managing director of CIBC.

However I did find an article on another website and append a copy. The following is an excerpt.

"Mr. Flynn was charged with five felonies, including two counts of grand larceny, for allegedly

bankrolling a pair of hedge funds that engaged in illegal late trading and "deceptive" market timing

of mutual funds. At the time, Mr. Spitzer's office accused him of stealing more than $1-million

from mutual fund investors. ...

CIBC, which struck a twin settlement with both Mr. Spitzer and the SEC, also declined to discuss

the matter. The bank promised to pay $100-million in restitution to investors, and an additional

$25-million in penalties, to settle allegations it knowingly financed hedge funds involved with

manipulative trading practices.

It reminds me of the time the major papers in Toronto seemed to believe that two small investors taking BMO Nesbitt to court over Bre-X (once touted as scam of the century) would not be of interest to Canadians most of whom suffered some degree of loss due to that fiasco. The two Ottawa evening papers covered the court case on the first day but then fell strangely silent the next day.

Stan

Stan I. Buell
Small Investor Protection Association
P.O.Box 325, Markham, ON, L3P 3J8
Tel: 905-471-2911
e-mail: stanbuell@sipa.to
website: www.sipa.ca
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Postby admin » Mon Nov 03, 2008 6:30 pm

Globe and Mail National, Editorial,
Thursday, August 4, 2005

How CIBC pays for its Enron file
CIBC has made its peace with Enron's investors. Now it has its own shareholders to answer to.
The country's fifth-largest bank agreed Tuesday to pay $2.4-billion (U.S.) to settle its part of a class-action lawsuit filed by investors in the energy-trading giant, which collapsed under a scandalous mountain of fraudulent accounting in 2001. The settlement allows the bank to avoid any outright admission of guilt, but the sheer size of it stands as silent acknowledgment of CIBC's complicity as one of the bankers that helped finance Enron's corporate web of deception.
The lead plaintiff in the lawsuit is the University of California, a stark reminder of who was really hurt by Enron's collapse. The university had invested funds earmarked for its employees' pensions. Many other pension funds, and mutual funds investing private investors' retirement savings, saw their money evaporate.
CIBC, too, counts the country's largest pension funds and mutual funds among its biggest shareholders. The bank, like all Canada's big banks, is considered a blue chip stock, the kind of strong, stable investment that any major portfolio would want to own. Yet CIBC went overboard in pursuing an aggressive, reckless investment strategy with Enron that exposed the bank to massive risks not in keeping with the kind of safe, reliable stock its shareholders reasonably believed they owned.
For a time" those shareholders benefited from the bank's approach. CIBC's stock price has doubled in the past three years, and its dividend payments have doubled since the end of2000. But the massive Enron settlement stands to undo all that. The cash drain will likely put a stop to dividend increases, and has cut the bank's growth prospects off at the knees. Shareholders are already paying. CIBC's stock lost almost 8 per cent yesterday, wiping out more than $2-billion (Canadian) of shareholder value in a single day.
And where is the man responsible? John Hunkin, who was at the helm when CIBC jumped into bed with Enron, announced his retirement five weeks ago; last Friday was his last day. Conveniently, he wasn't around to face the music when his successor, Gerry McCaughey, announced the settlement.
Mr. Hunkin has retired a very wealthy man, thanks in part to his aggressive business approach that has now cost the bank, and its investors, dearly. In his six years in charge, his average annual compensation was $7.3-million, including more than $13 - million last year. In 20QO and 2001, the two years in which CIBC was embroiled with Enron, Mr. Hunkin pulled down $6million in bonuses and another $5-million in CIBC stock awards.
It's unfortunate that Mr. Hunkin didn't stick around to face his shareholders and own up to the costly mistakes made on his watch. And it's unacceptable that he should profit so handsomely from a strategy that may have crippled the bank for years to come. He can't undo what has been done, but he can at least do the right thing: return the bonuses for the years when his leadership led the bank to its disastrous dance with Enron.
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Postby admin » Mon Nov 03, 2008 6:28 pm

I would expect that the Canadian banks will be more concerned about doing legal and ethical business, after today's record high settlement by the CIBC with the investors of Enron. CIBC's settlement works out to be approximately $2.92-billion (Canadian), almost 50 per cent more than the $1.99-billion in profit the bank earned in fiscal 2004. CIBC said the charge will lower its Tier 1 capital ratio to 7.5 per cent as of July 31, above the regulatory requirement of 7 per cent for a well-capitalized financial institution, but below the bank's goal of 8.5 per cent or higher. CIBC estimated that earnings will restore its Tier 1 capital ratio to 8.5 per cent or higher by mid-2006.

It is estimated that individual investors suffer over $1 billion of investor losses due to fraud and unsuitable advice by financial advisors, a significant proportion of which work for the bank owned dealers. Finally, investors are getting some restitution for their losses caused by malfeasance, but it took a U.S. class action and the funding of huge American institutional investors to accomplish this. If Enron were a Canadian company, CIBC would not have been investigated by Canadian regulators and investor restitution would not likely have occurred.

The Canadian securities enforcement and justice systems governing white collar crime needs to be fixed. It is unlikely that the new heads of the OSC and ASC will be the catalysts for the dramatic restructuring required, since they are an investment banker and a securities lawyer with no record of actions taken to protect individual investors in their previous roles.

CIBC to pay $2.4-billion (U.S.) in Enron settlement
By SINCLAIR STEWART

Tuesday, August 2, 2005 Updated at 4:41 PM EDT

Globe and Mail Update

Canadian Imperial Bank of Commerce has agreed to pay $2.4-billion (U.S.) to resolve allegations it aided the collapse of Enron Corp., a massive settlement that will cost the bank more than its entire profit last year.

The CIBC settlement represents the biggest win so far for former investors of the disgraced energy trader, who have filed a $25-billion class-action lawsuit against several of the most powerful financial institutions in the United States and Canada.

The bank said shortly after 4 p.m. that the settlement “does not include any admission of wrongdoing” by the bank. CIBC also said it “agreed to the settlement solely to eliminate the uncertainties, burden and expense of further protracted litigation.”

The bank said it will take a pre-tax charge of around $2.8-billion (Canadian), or $2.5-billion on an after-tax basis, in the current quarter ended July 31 to cover this settlement and its remaining Enron-related legal matters.

Earlier this summer, J.P. Morgan Chase & Co. paid $2.2-billion (U.S.) to end its involvement in the lawsuit, while Citigroup Inc. paid $2-billion. A host of other banks and brokerages, including Toronto-Dominion Bank and Royal Bank of Canada, have yet to reach an agreement.

A spokesman for the University of California (UC), which is the lead plaintiff in the suit, declined to discuss the matter after globeandmail.com first reported the settlement on Tuesday. It was formally announced later on Tuesday.

“With this CIBC settlement, UC has now recovered more than $7 billion for investors — more than any other securities case in history,” James Holst, the university's general counsel, said in a statement. “We are especially pleased with the amount of this latest settlement, which exceeds both the Citigroup and J.P. Morgan Chase settlements.”

For CIBC, the Enron settlement is a costly and painful culmination of various regulatory problems that have afflicted the bank in recent years. In late 2003, the bank paid $80-million to U.S. regulators to settle allegations it aided and abetted the accounting fraud at Enron. Two weeks ago, it struck a $125-million deal with the U.S. Securities and Exchange Commission and New York State Attorney General Eliot Spitzer to settle its alleged role in a mutual fund trading scandal.

This latest settlement is expected to wipe the slate clean for newly minted chief executive officer Gerry McCaughey, who officially replaced John Hunkin today.

“A key priority for us is to resolve this case and substantially reduce our litigation risk,” Mr. McCaughey said in a statement. “By settling this case and maintaining what we believe are adequate reserves for our remaining Enron related legal issues, we can better focus our energies on our other priorities.”

CIBC's settlement works out to be approximately $2.92-billion (Canadian), almost 50 per cent more than the $1.99-billion in profit the bank earned in fiscal 2004. The bank is still named in a separate suit filed by the company itself against several of its lenders and banking partners. RBC settled its part in this suit last week for $49-million. The bank will pay $25-million to Enron, and an additional $24-million to advance its bankruptcy claims against the company.

CIBC said the charge will lower its Tier 1 capital ratio to 7.5 per cent as of July 31, above the regulatory requirement of 7 per cent for a well-capitalized financial institution, but below the bank's goal of 8.5 per cent or higher. CIBC estimated that earnings will restore its Tier 1 capital ratio to 8.5 per cent or higher by mid-2006.

Barclays PLC, Credit Suisse First Boston, Merrill Lynch & Co., Deutsche Bank AG and the Royal Bank of Scotland have yet to settle the class action suit.
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Postby admin » Mon Nov 03, 2008 6:27 pm

CIBC pays US$125M in settlement
Satisfies regulators' claims of improper trading in funds

Barbara Shecter
Financial Post


Thursday, July 21, 2005



CREDIT: Peter Redman, National Post
(JOHN) HUNKIN: takes responsibility.

In one of his final acts as chief executive of Canadian Imperial bank of Commerce, John Hunkin yesterday presided over a US$125-million payout to settle claims by U.S. regulators that the bank helped hedge funds make improper mutual fund trades.

Mr. Hunkin will hand the reins of CIBC to his successor, Gerry McCaughey, next month. Observers said yesterday's joint settlement with the U.S. Securities and Exchange Commission and New York Attorney General Eliot Spitzer allows Mr. McCaughey to take the top job with a clean slate.

In an interview with the Financial Post last month, Mr. Hunkin took responsibility for a series of regulatory run-ins and other events that threatened to tarnish CIBC's reputation.

In late 2003, CIBC paid US$80-million to settle claims it aided disgraced energy trader Enron Corp., where a massive accounting scandal led to bankruptcy.

Yesterday's mutual fund settlement, which includes US$100-million in restitution to injured investors plus civil penalties, was not a complete surprise. In its most recent fiscal quarter, CIBC more than doubled an earlier $50-million provision set aside to deal with the probe by U.S. regulators into late and rapid trading. Such trading gives an advantage to some mutual fund investors over others.

But the investigation has been hanging over CIBC for more than a year. In February, 2004, criminal and civil charges were laid against a recently dismissed employee who stands accused of loaning money to known late and rapid traders, and helping them mask the activities.

A subsequent complaint against CIBC alleged that as much as US$1.3-billion was lent to hedge funds known to be late and rapid traders of mutual funds. Yesterday, Mr. Spitzer's office said CIBC is co-operating with "investigations of the conduct of former CIBC employees and various entities with which CIBC did business."

The bank -- which did not admit or deny wrongdoing in the settlement -- dismissed some employees and stopped providing the targeted financing to hedge funds "as soon as the company was made aware of the matter," Mr. Hunkin said.

"We have added policies and procedures to enhance our abilities to monitor and recognize such activities if they ever were to occur again."

Paul Flynn, who was a managing director at CIBC until his dismissal in December, 2003, is due in court next month in New York on matters related to the allegations against him.

One Toronto-based analyst called the settlement "embarrassing" for CIBC. But he said it is expected to have little impact on the share price because the amount is "insignificant," given the relative size of the balance sheet of Canada's fifth-largest bank.

The formal complaint against CIBC alleged the bank "engaged in various subterfuges and false pretenses to fraudulently disguise or conceal market timing transactions."

In one example, the complaint claimed, CIBC's brokerage approved issuing 50 registered representative numbers to a single CIBC broker, many of which were used to hide the broker's involvement in timing transactions.

The complaint claimed CIBC lent more than US$1-billion to known mutual fund timers, and channelled the money into hundreds of accounts it controlled, where trading activity was rotated to escape detection by mutual fund companies.

The complaint also alleged CIBC aided clients in illegal "late trading," which enables certain investors to profit from information released after the 4 p.m. close of the financial markets.

CIBC is the 13th firm to settle charges of improper mutual fund trading in the past two years, Mr. Spitzer's office said. The investigation has resulted in the return of US$3.2-billion to investors
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Postby admin » Mon Nov 03, 2008 6:02 pm

In the old days when a bank was involved in crime its reputation was sullied and sometimes as in the case of Salomon brothers they were forced to sell out. CIBC has been involved in the biggest corporate scandals to a greater extent it seems than the other Cdn banks. Here's a small sampling:


http://www.sfgate.com/cgi-bin/article.c ... =printable

http://www.pittsburghlive.com/x/tribune ... 82116.html

http://www.sec.gov/litigation/complaints/comp18517.htm

http://www.freerepublic.com/focus/fr/618704/posts

http://www.freerepublic.com/focus/fr/634128/posts (tax evasion)

CIBC World Markets admits to securities violations Reuters, February 27, 2003
CIBC World Markets admitted on Thursday it violated securities regulations when it failed to disclose in a series of research reports its brokerage and banking relationship with Shoppers Drug Mart. World Markets admitted it violated securities regulations when it recommended buying Shoppers stock in equity research reports between December 2001 and February 2002 that failed to disclose that it was the lead underwriter in Shoppers' initial public offering.

http://www.comer.org/2004/roost.htm
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Postby admin » Mon Nov 03, 2008 6:01 pm

"Canadian Imperial Bank of Commerce was fined $496,958 (U.S.) by the Securities and Exchange Commission Monday for breaking federal rules governing political contributions." (G&M)
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Postby admin » Mon Nov 03, 2008 5:55 pm

ALBERTA TREASURY BRANCH EXECUTIVES REWARD THEMSELVES FOR BAD INVESTMENTS


Alberta Treasure Branches fiddling the figures to pay executive bonus's of $26.1 million.

Despite having to write down ABCP investment losses, they included the imaginary interest from these investments to calculate their bonus.

Alberta auditor general report for 2008 includes two interesting pages about the ATB bonus scheme.
see

http://www.oag.ab.ca/files/oag/Oct_2008_Report.pdf
pages 125-126

The auditor found that ATB management included interest returns on frozen investment paper in their calculations towards meeting management bonus targets, despite knowing that interest in frozen investment paper has not been paid and it is not certain that interest will be collected.

The inclusion of this imaginary interest allowed $26.1 million worth of bonus to be paid despite ATB policy that states that "if net income was below 50% of target income, then no variable pay (bonus's) would be paid."
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Postby admin » Mon Nov 03, 2008 5:35 pm

Markarian c. Marchés mondiaux CIBC inc.

[2006] J.Q. no 5467



14 June 2006

http://www.jugements.qc.ca/php/decision ... 475F5C1C04

In a landmark case, Montreal Superior Court Judge Jean-Pierre Senecal awarded more than $3 million, including $1.5 million in punitive damages, to retirees Haroutioun and Alice Markarian, who had unwittingly guaranteed the trading losses of people they didn't know at the behest of their former CIBC Wood Gundy broker, Harry Migirdic. The brokerage invoked the guarantees to seize $1.4 million from the Markarians in 2001, leaving $2.54 in their accounts. Senecal called CIBC's conduct "reprehensible" and said it "cruelly failed" in its duty to protect its clients and supervise its employee. CIBC subsequently settled out of court with several other former clients of Migirdic, who was terminated in 2001.


--------------------------------------------------------------------------------

He said the brokerage appropriated the money illegally, treated the Markarians in an arrogant and "degrading" manner and "cruelly failed" to control and supervise its employee.

"CIBC must assume responsibility for the fraud of which (the Markarians) were victims," Judge Senecal said. "It was responsible not only indirectly, but directly."

"The brokerage's behaviour was both reprehensible and irresponsible."

-Superior Court Judge Jean-Pierre Senecal

Bank to pay $3 million to retired couple; Montreal Gazette, June 15, 2006


--------------------------------------------------------------------------------

So why hasn't the Investment Dealers Association or L'Autorité des marchés financiers taken action against CIBC World Markets???

Why have the police not taken action in this fraud? Because our financial industry police's itself, that is why.
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Postby admin » Mon Nov 03, 2008 5:32 pm

Toronto Star

Canada's big banks like monopoly: Paper
Bank of Canada study shows Big Six hold 90% of assets despite entries

August 14, 2007
RITA TRICHUR
BUSINESS REPORTER

Canada's banking sector is "characterized by monopolistic competition" even though the number of banks has risen more than fivefold over the past 25 years, says new research by the Bank of Canada.

The discussion paper, entitled A Note on Contestability in the Canadian Banking Industry, takes a fresh look at whether market concentration has compromised competition in Canada.

"Canada has a highly concentrated banking market," the report says. "The Big Six banks account for more than 90 per cent of the assets in the banking system."

The six biggest banks are the Royal Bank of Canada, the Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce and the National Bank of Canada.

While the industry remains concentrated, it has undergone significant changes over the past quarter century, the report says.

From 1920 to 1980, Canada had 11 banks. By May 2006, that number had increased to more than 60 in the wake of regulatory changes permitting the entry of foreign competitors.

However, "the entry of the foreign banks has not resulted in a significant loss of market share of the major banks or domestic banks, in general," the report says.

Nonetheless, foreign banks have brought "innovation and competitive pressure that may have influenced the way Canadian banks conduct business."

Bank of Canada analyst Jason Allen and Ying Liu, an economics expert at the Université de la Méditerranée, base their findings on a database of quarterly balance sheet and income statement information for 10 domestic and 15 foreign banks operating in Canada between the second quarter of 2000 to the first quarter of 2006. The assets of banks in that sample account for 97.8 per cent of the total Canadian dollar assets of the sector, the authors say.

The research begins in the second quarter of 2000 to reflect the impact of TD Bank's acquisition of Canada Trust earlier that year – called the last major consolidation in the financial services sector.

The report estimates the banks' competitive behaviour "on the basis of the comparative static properties of reduced-form revenue equations based on cross-section data."

While the authors do not offer an opinion on the controversial issue of mergers, they do suggest that consolidation has received "heightened interest" from researchers and policy-makers of late.

Earlier this summer, a report from the C.D. Howe Institute called on Ottawa to allow bank mergers and lift foreign ownership restrictions, claiming current regulations were hampering competition.

Reform Party founder Preston Manning and former premier Mike Harris have also called for foreign ownership restrictions to be dropped in protected sectors like banking – an issue currently being examined by a federal panel reviewing Canada's competition laws.
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Postby admin » Mon Nov 03, 2008 5:31 pm

From our files: CIBC gets brought down to earth

In a ruling hailed by their lawyer as "a great victory for investors,'' a Superior Court of Quebec judge ordered CIBC World Markets to pay a retired Montreal couple more than $3 million, including an unprecedented $1.5 million in punitive damages. Haroutioun and Alice Markarian sued CIBC after it seized $1.4 million from their accounts in 2001 to cover the trading losses of people they didn't know. They'd unknowingly guaranteed the accounts by signing documents misrepresented to them by their former CIBC Wood Gundy stockbroker, Harry Migirdic. During the 25-day trial, CIBC claimed the guarantees obtained by Migirdic were valid and the Markarians were the agents of their own misfortune by signing them. He ordered CIBC to return the $1.4 million seized, with interest since June of 2001. He granted the Markarians an additional $1.5 million in punitive damages, which their lawyer Serge Letourneau said is to his knowledge the largest amount ever levied in punitive damages against a brokerage in Canada.
CIBC was also ordered to pay $50,000 to each of the Markarians for moral damages, $94,560 of their legal fees and all trial-related expert costs. The judgment even included a clause ordering CIBC to turn over $1.5 million to the Markarians regardless of whether it appeals, because of their advanced ages. Source: http://www.canada.com/topics/finance/st ... 3b&k=68185 Paul Delean, June 15, 2006 If you want a copy of the 115 page judgment (in French) http://letourneaugagne.ca/PDF/markarian ... c_cibc.pdf or try http://www.jugements.qc.ca/php/resultat ... e=23539145 .More on the story at http://www.investorvoice.ca/Regulators/PI/2837.htm
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Postby admin » Mon Nov 03, 2008 5:30 pm

Posted: 30 Jul 2007 05:21 pm Post subject: Banks Rob Client!! Film at Eleven.

--------------------------------------------------------------------------------

NEWS
Last updated at 6:26 AM on 11/07/07
Sentence pending for bank manager who didn't supervise corrupt employee

JENNIFER TAPLIN

They lost their life savings: $500,000. "It ruined our lives," said a woman who didn't want to give her name.

The woman and her husband drove from Cape Breton yesterday to witness a sentencing hearing held by the Investment Dealers Association of Canada for bank manager Frank Youden.

He was charged and found guilty in January 2006 of failing to supervise employee Hugh Bagnell. About a dozen of Bagnell's clients at RBC Dominion Securities in Halifax lost significant amounts of money between 2000 and 2002.

Bagnell was fined $61,700 in 2003 for failing to attend a regulatory investigation, and barred by the IDA.

Yesterday, a three-man panel met in Halifax for a sentencing hearing. They heard from lawyers representing both sides, but they did not give a judgment yesterday. They will release a written decision at a later date.

The Cape Breton couple said they got "mixed up" with Bagnell in 1998.

"He was from Cape Breton and he came in like a friend, have-a-cup-of-tea kind of thing, sit at the table, and we trusted him."

Now they're working with several other former clients and have hired a lawyer to get their money back.

"I'm going to enjoy (the money) and share it with the children now for all the hell our family went through."

Kathryn Andrews, representing the IDA, suggested Youden receive a four-year suspension, a $50,000 fine and pay for $106,000 in costs.

She pointed out Youden didn't call the clients or check into Bagnell's activities even after red flags were raised.

"There were a number of times the respondent was directed to contact clients, but he did not."

One of the clients was a farmer with little investment knowledge and limited education. His account was drained to $2,000 from $173,000.

"We're seeking a serious penalty because serious issues are involved here," Andrews said.

Nigel Campbell, Youden's lawyer, asked for a reprimand.

"What you're really dealing with here is a judgment error," he said.

A reprimand makes sense because there were no findings of an absence of supervision, it was just insufficient, he said.

His client has a 38-year industry history which is discipline free, added Campbell. Plus Youden is close to retirement, which is an important time where consequences could be particularly impactful. Youden is still working as a bank manager in Halifax.

Campbell also pointed out that Bagnell, not Youden, was the primary actor in this incident.

"There's absolutely no evidence that a severe penalty is warranted to prevent something like this happening again," he said.

The incident was unique and not indicative of his usual behavior, Campbell added.

A penalty in this case is "totally wrong," he said.

jtaplin@hfxnews.ca



NEWS RELEASE

For immediate release

For further information, please contact:

Alex Popovic Connie Craddock

Vice-President, Enforcement Vice-President, Public Affairs

(416) 943-6904 or apopovic@ida.ca (416) 943-5870 or ccraddock@ida.ca

IDA Hearing Panel finds Frank Youden guilty of failure

to supervise

January 9, 2006 (Toronto, Ontario) – A Hearing Panel of the Investment Dealers Association of Canada (IDA), appointed pursuant to By-law 20, has found that Frank Youden, branch manager of RBC Dominion Securities (RBCDS) in Halifax, failed to supervise the trading activity in Approved Person Hugh Bagnell’s accounts, in particular, to ensure recommendations made by Mr. Bagnell were appropriate for his clients and in keeping with their investment objectives. The panel found that Frank Youden acted contrary to Policy 2 and Regulations

1300.1 (c) and 1300.2.

The main issue at the hearing was the reasonableness of the supervisory steps taken by Mr. Youden with respect to Mr. Bagnell’s client accounts. Between 2000 and 2002, Mr. Bagnell was the Approved Person for a number of client accounts, and Mr. Youden was the branch manager responsible for the supervision of Mr. Bagnell. In December 2003, the IDA’s Nova Scotia District Council disciplined Mr. Bagnell for failing to attend and give information in respect of an investigation being conducted by the IDA’s Enforcement Department. He was permanently prohibited from approval to act in any registered capacity with a Member of the IDA and fined costs of $61,700 (Bulletin #3231).

Following a disciplinary hearing held on April 5-8, 2005, and April 12-15, 2005, in Halifax, Nova Scotia, the Hearing Panel released its decision on January 3, 2006. The Panel found that Mr. Youden failed to:

• reasonably supervise Mr. Bagnell’s client accounts;

• adequately address the high turnover ratios in many of Mr. Bagnell’s client accounts, in that he either did not address them at all with Mr. Bagnell or he repeatedly accepted Mr. Bagnell’s explanations in spite of numerous red flags that called for action;

• adequately review a number of monthly statements that generated more than $1,000 commission per month; and

• contact Mr. Bagnell’s clients himself to confirm the suitability of the trading activity in the face of repeatedly high turnover ratios, high commissions, significant losses and trading activity that was inconsistent with the client objectives on file.

A date will be set for a penalty hearing on the above charges.

The Investment Dealers Association of Canada is the national self-regulatory organization and representative of the securities industry. The IDA’s mission is to protect investors and enhance the efficiency and competitiveness of the Canadian capital markets. The IDA enforces rules and regulations regarding the sales, business and financial practices of its Member firms and its approved persons. Investigating complaints and disciplining Members and approved persons is part of the IDA’s regulatory role.
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