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Markarian v. CIBC World Markets Inc.

[2006] J.Q. no 5467

In a landmark case, Montreal Superior Court Judge Jean-Pierre Senècal 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.

Senècal 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.

Harry Migirdic, also known as Harutyun Migirdicoglu, whose mishandling of client accounts led to losses in the millions, tries to conceal himself from a photographer at the Palais de Justice in January 2005.

Extracts from Judge Senècal's decision.


He (Migirdic) even wrote that for the Bank authorities in his "confession" of February 26, 2001, which brought all his fraud into the light of day. He reiterated it to the Bank authorities during the meetings of March 1 and 5, 2001.


The Bank argued that Migirdic is a liar and a cheat and cannot be believed


...  CIBC was thus complicit in the fraud and actually benefited from it.  Protecting clients was less important than protecting itself.


In the opinion of the Court, the conclusions of the Court in Marseille v. Bourque and Valeurs mobilières Desjardins27 apply here:

The defendant ... is liable for its employee, since it exercised no control whatsoever over his actions. What is much more important, the Court notes a laxness in establishing measures that would enable the defendant to verify the actions and decisions of its brokers.


The defendant seriously failed to fulfil its obligations as a mandatary to watch over for the interests of its clients and protect them. CIBC's supervision proved ineffective and, at certain times, non-existent. But there were many signs that should have prompted energetic intervention and controls. The defendant's failures led the plaintiffs into the trap laid for them.


ClBC must be found liable for the fraud to which the plaintiffs fell victim. It is
liable for it not only indirectly, but directly.


...on February 26, 2001, Migirdic contacted Tom Monahan in order to confess all his fraud and give Monahan the names of all the defrauded clients.


Daniel Bowering, Compliance Department officer, was mandated by CIBC to investigate Migirdic's fraud and he testified. He wrote to his bosses at the end of his investigation that the firm should probably absorb the Markarians' losses, given all the irregularities committed by Migirdic, Migirdic's statements, the Markarians' statements and all the information revealed in Bowering's investigation. Bowering's recommendation was not followed.


So why was everything blocked? Why were the false guarantees exercised? Why did CIBC seize the Markarians' assets?


Because Tom Monahan, the president of CIBC Wood Gundy, decided that was what to do.


Monahan acknowledged that Migirdic's fraud justified his dismissal. He acknowledged that it did not, however, prevent ... the guarantees from being executed.


By acting as it did, the defendant truly violated the Markarians' right to the peaceful enjoyment and free disposition of their property. And they did so unlawfully and intentionally.


CIBC thus became the accomplice in Migirdic's fraud and did everything in its power to benefit from it directly.


To date, CIBC has not been sanctioned either for Migirdic's fraud or for its conduct after the fraud was discovered. It will be obligated to restore what does not belong to it, but that is not a sanction. Nor is interest a penalty, since it is simply consideration of the passage of time and an updating of the debt. CIBC's stubbornness and its contempt for the Markarians' rights will cost it $100 000 (in moral damages), plus the cost of the proceedings (and perhaps a little negative publicity, nonetheless quite limited in time). That is very little for a company the size of the defendant and it is wholly insufficient to deter it and the other brokerage firms from abusing their clients as was done here.


...CIBC invented "reasons" to use documents that were worthless because they were fraudulent, and thereby have the Markarians bear the losses it should have borne itself....

-Superior Court Judge Jean-Pierre Senècal

So why hasn't  L'autorité des marchés financiers (the Quebec Securities Commission) or the Investment Dealers Association of Canada taken action against CIBC World Markets and those individuals who were 'accomplices' in the fraud???  Why haven't they reported this to the police???  Does the IDA believe that the supervisory role was exercised properly?  Or is it because they would lose a member of their Board of Directors and that it would reflect poorly on the IDA? 

The IDA claims that this case has been reported to the police.  Really? I doubt it very much, even though the IDA knew the documents were forged as per CIBC World Market's admittance as mentioned in the IDA public release.  Why didn't CIBC World Markets go to the police as well?  Why didn't they just settle with the Markarians in 2001 instead of forcing the Markarians through 5 years of 'hell'?

CIBC World Markets withdrew their appeal and paid the $1.5 million in punitive damages one month after the court decision.

As at October 24, 2007, the IDA says that they are, again, investigating. 

Really ??... that would strongly suggest that their investigation in 2004, when Migirdic was banned from the industry, was severely deficient in only singling out the broker.

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 where is Tom Monahan today???

"At CIBC Wood Gundy, we are committed to providing Canadians with the highest level of investment advice, products and services."

- Tom S. Monahan, Head of CIBC Wood Gundy

April 2008



IDA to stop issuing bulletins on disciplinary judgments

06 November 2007

"... the association will now make all hearing panel judgments available on the Web site in both French and English."

As a national association, I would have expected no less...too bad they have to be embarrassed into doing it.


Markarian v CIBC World Markets Inc., [2006] J.Q. 5467


01 August 2007


14 June 2006

Papazian v CIBC World Markets Inc., [2003] J.Q. 512759


01 August 2007


30 May 2003


Letter from J. MacDonald to RCMP

27 August 2007

28 November 2007

Letter from J. MacDonald to IDA

24 August 2007

Letter from R. Kyle to RCMP/IMET

07 September 2007

03 October 2007


 24 October 2007

ROBERT KYLE:  I’d like to pose this question to Mr. Wilson to start with and then MFDA and the IDA in that order if I may. When findings are made in a civil proceeding stating that an SRO member and an employee of that SRO member are complicit in and responsible for fraud what action is incumbent upon the SRO or the OSC to take against both the member and the employee of that member? In fact, I’m not going to mention the names in this particular case, because we’ve been asked not to, but this case involves a bank-owned dealer and the President of that bank-owned dealer.

MR. LARRY WAITE: Well, I, I, I could, I, I, I can start with that. I mean, we have, one of our rules are that, that our members must report cases of fraud and, and, that you just mentioned and, and, and those cases, and, and they’re reported electronically, the same as they are with, with the IDA, and in those cases they would go direct, they go to our Enforcement Branch where they’re investigated like any other complaint, and, and, and if the evidence is there then they would, would take an enforcement proceeding, go to a hearing, and, and impose whatever sanctions are appropriate in the circumstances.

We are aware of that. We, when we go in and do compliance reviews we check to make sure the member is reporting those kinds of events and we would take them seriously and look at them and I, and I believe the IDA system’s the same as ours. In fact, we copied the IDA system with respect to the electronic reporting, so it, it...

QUESTION: But this is from a civil proceeding, not from (inaudible).

MR. LARRY WAITE: They have to be reported as well.

MODERATOR: Mr. Wilson, do you want to take a run at that? You were...

MR. LARRY WAITE: Well I, as I, sorry, as I said, the action we would take is, is we would treat it like any other investigation. We would investigate the matter, they would, they would gather evidence, look at whatever happened in the civil proceeding and, and then make a, a decision of what the appropriate action to take, whether it’s a full-blown hearing with sanctions at the end of that, whether it’s a settlement agreement, whatever, whatever the, the facts would dictate.

MODERATOR: David, did you want to take a run at it?

MR. DAVID WILSON: Well, I think it’s really an SRO-focused questions, and, and Larry’s handled it.


Larry Waite is the President of the Mutual Fund Dealers Association (MFDA) and answered for both the MFDA and the IDA.

For a full transcript of the Town Forum :


Markarian v CIBC

La CIBC condamnée à payer plus de 3M$ à des retraités

Canoe - Votre Argent avec Serge Létourneau (Avocat)

20 June 2006



Legal Analysis

Woods LLP


Nicholl Paskell-Mede


Borden Ladner Gervais LLP


In addition, because the Court was of the opinion that CIBC had committed an abuse of the judicial system (by lying in its defence, by hiding essential facts, by obstructing judicial debate, etc.), the Court ordered it to reimburse 75% of the Markarians' extra-judicial fees incurred before trial (an agreement having been made between the Markarians and their lawyer for the trial fees), in the amount of approximately $95,000.



02 December 2007

Quebec case a painful win for investors

02 November 2007

CIBC closes books on Harry Migirdic affair

01 September 2006

La CIBC condamnée à payer plus de 3M$ à des retraités

20 June 2006

CIBC gets what it deserves

19 June 2006

"I'm very vigilant now. I don't trust anyone. Financial institutions are out for themselves. That's why investors have to watch their accounts very closely."

CIBC to pay $3 million to retired couple

15 June 2006

"This helps restore the balance between small investors and financial institutions that try to abuse their positions of dominance," he said.

"Financial institutions have deep pockets. With many more resources than their clients, they can try to exhaust them. The worst that could happen was being forced to return the money. Now, there's more at stake.

"The message is clear - don't abuse your dominant position to crush people."

More than they could chew

15 June 2006

"Why should he (Markarian) be responsible for everything, because he's a sophisticated businessman, and not Wood Gundy, with many more sophisticated employees?"

After seizures, couple had $2.54 in CIBC

15 June 2006

About $1.4 million was placed with CIBC Wood Gundy. After the brokerage seized and liquidated their holdings to pay off the trading losses of people they didn't know, they had all of $2.54 left at the CIBC.

Lawyer is investors' pit bull

19 November 2005

It's not unusual for disgruntled investors to get the cold shoulder - and occasionally a threat of prolonged legal action - when they ask for restitution or explanations, he said. That's just the way the game is played.

Ces courtiers qui veulent votre bien…

01 August 2005

Hunkin era stumbles to a close at CIBC

30 July 2005

CIBC World Markets tied for first (with TD Waterhouse) in the number of complaints against investment dealers in 2003, and was a close second to Merrill Lynch Canada in 2004.

CIBC names Hunkin's successor

29 June  2005

CIBC adviser red-flagged, trial told

03 June 2005

The CIBC compliance manager who did the grilling, Guenther Kleberg, told a Quebec Superior Court yesterday he wanted to "throw the book" at the adviser, Harry Migirdic, because Migirdic repeatedly violated company policy through various trade practices and took too much time to update client records.

The superior, Tom Noonan, answered that he did not believe Migirdic would intentionally commit fraud. Noonan recommended fining Migirdic $20,000. He was eventually fined $30,000.

"What do you think of Noonan's (comment) that the only thing FCs (financial consultants) understand is money?" presiding Judge Jean- Pierre Senecal asked Kleberg.

"There is an element of truth to this," Kleberg answered.

Guarantees exercised in good faith

28 May 2005

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 (CIBC counsel) 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.

Judge scorches CIBC branch manager

27 May 2005

"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?"


"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."

Punish CIBC, court told

26 May 2005

The CIBC offered them a settlement of $1.5 million just before the trial, which they declined.

"If they were here for themselves, they'd have taken the $1.5 million," Gagne said. "They're here because they don't want a story like this to be repeated."

CIBC not diligent

25 May 2005

"If Mr. Markarian had the misfortune of being duped by Mr. Migirdic, he's not alone," the lawyer noted, rattling off a list of names that included CIBC Wood Gundy's branch manager, Tom Noonan, and several members of the CIBC compliance department who failed to follow up on questions raised about Mirgirdic's accounts and trades over the years.

'We will probably have to eat this one'

26 April 2005

(Daniel Bowering) 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.

CIBC Wood Gundy blames client

16 February 2005

CIBC wanted to settle, court told

15 February 2005

We were victims, too, CIBC says

09 February 2005

'I was counting on that'

25 January 2005

Broker broke promise, court told


20 January 2005

Not even a letter sent to CIBC president John Hunkin, to which was attached a letter signed by Migirdic admitting his misdeeds, was enough to block the seizure, Papazian said.

If somebody is aware of a crime, but neglects to report it, are they complicit in that crime?

Ex-CIBC broker tired of deceiving bosses

19 January 2005

CIBC broker never told couple about guarantee

18 January 2005

At CIBC, oblivious guarantor fell ill

12 January 2005

Retiree, CIBC in court battle

11 January 2005

CIBC suit begins

11 January 2005

What is CIBC division doing to protect clients?

17 July 2004

IDA Bulletin


09 July 2004

"In September 1997......(w)hen CIBC refused the forged power of attorney, Harry Migirdic went to London, England to obtain the signature of the beneficial owner of the account of Y Ltd. on the power of attorney." (see page 5. "Forged Document")

So why didn't the IDA or CIBC report the forged document to the police upon discovery?

Ex-broker barred for life

30 June 2004

Ex-CIBC broker banned for life

30 June 2004

IDA Penalty Decision

(French only)

14 June 2004

Widow 'didn't trust banks'

22 May 2004

Fired broker unrepentant

22 May 2004

"Its preliminary report said more than 20 clients, many of them elderly, had complained to CIBC about his conduct"

IDA Disciplinary Decision

(French only)

16 April 2004