RICHARD BLACKWELL

Wednesday, August 9, 2006

Bank of Montreal has been hit with a class action lawsuit alleging it unfairly charged foreign exchange fees to clients who held registered accounts.

Investor James R. MacDonald filed the suit on behalf of present and former clients who held registered retirement savings plans, registered retirement income funds, and registered education savings plants.

The suit claims $100-million, and asks for an additional $10-million in punitive damages

It alleges the bank and its trust and brokerage subsidiaries converted foreign currency in these RRSP, RRIF and RESP accounts to Canadian currency without instructions from the customers, and without there being a need to do so.

After changes to the Income Tax Act in 2001, these accounts were allowed to hold foreign currency as an investment, the suit alleges.

The bank and it subsidiaries levied an undisclosed conversion fee, the suit alleges.

Mr. MacDonald, and the other class members, were charged a “secret, undisclosed fee” which was automatically withdrawn from the trust accounts after proceeds from each U.S. transaction was converted to Canadian currency, the statement of claim alleges.

The fees are the source of “enormous profits” for the bank and its subsidiaries, the suit alleges, so they “intentionally chose not to change the manner in which they operate.”

The suit was filed in Ontario Superior Court on August 2.