By Duncan Mavin

Thursday, January 04, 2007

Thousands of Canadian investors have been given the go-ahead to sue several of the country’s biggest banks for tens of millions of dollars over accusations they charge customers unfair and undisclosed fees on certain foreign currency transactions.

Judge Marion Allan of the Supreme Court of British Columbia gave investors the green light to sue the bank-owned brokerages last week by certifying that a suit launched against Merrill Lynch Canada Inc. is a class action.

Mr Lemer is a lawyer for Grant Kovacs Norell in Vancouver who argued for the plaintiffs in the B.C. Supreme Court.

In fact, the Merrill Lynch suit is just one of several currently before Canada’s courts alleging brokerage houses charge hidden “currency conversion” fees to clients that buy and sell securities in denominations other than the Canadian dollar. Those suits in various provincial courts name defendants including BMO Nesbitt Burns Inc., Merrill Lynch Canada Inc., Bank of Nova Scotia and TD Waterhouse Investor Services, said Mr.Lemer.

For example, Stevensons LLP in Toronto has filed statements of claim on behalf of clients in Ontario naming Merrill Lynch and BMO Nesbitt Burns as defendants.

“The [Ontario claims] are exactly the same issues and exactly the same law,” said Harvin Pitch a lawyer with Stevensons. The current “game plan” is to proceed in B.C. initially, said Mr. Pitch.

So far the Merrill suit and another against TD have been certified in B.C.

A Merrill Lynch spokesperson said the bank will defend the litigation “aggressively” and also said the claims “have no merit to them.”

However, B.C. Supreme Court Judge Allan said there are “substantive common issues” related to the complaints of the 15,554 plaintiffs in the Merrill suit, leading to the decision that the investors could sue the bank as a group. Class action suits allow a large number of plaintiffs to launch a lawsuit as one group which is more cost-effective.

It is the second time in less than six months that the foreign currency conversion practices of Canadian financial services providers have come under fire in the courts.

In August, Bank of Montreal was named in a statement of claim alleging the bank earned profits inappropriately at the expense of customers with foreign currency investments in their retirement savings plans.

Lawyers Paliare Roland Rosenberg Rothstein LLP filed a claim for damages of up to $100-million accusing BMO of charging undisclosed fees to customers that buy and sell foreign currency investments in their RRSPs.

The suit is still before the courts, and a spokesperson for Paliare Roland also said the issue “may well go beyond BMO.”

That decision could lead to further similar class action suits against other brokerages in different provinces, said laywers for the plaintiffs yesterday.

The issue could widen out to other jurisdictions and defendants facing similar accusations, said Bruce Lemer.

dmavin@nationalpost.com