Supreme Court of Nova Scotia Hfx. 322441
The Class Action:
The Class Action was started in January, 2010 by Gayle Crooks, Karen McGrath and Archie Gillis as representative plaintiffs on behalf of individuals who were affected by a margin calculation error in their accounts that went unnoticed from July 24, 2008 to October 9, 2008.
On May 11, 2011, the Supreme Court of Nova Scotia certified the claim as a Class Action. The decision can be found by clicking the following link:
Now that the case has been certified as a Class Action, it has changed from three individuals suing CIBC to over one hundred people suing for their collective losses. The Class is defined as:
“any client or former client (including present and future representatives of deceased members of the class) of CIBC Wood Gundy operating in Halifax, Nova Scotia, who held an investment account as of July 24, 2008 that used uncovered equity options on a security called iShares MSCI Emerging Markets Index (“EEM” an Exchange Traded Fund) to carry out their investment strategy”
Update – April 8, 2015
The Decision of the Nova Scotia Court of Appeal in the Donald Matheson case has been received. This Decision sets out the process which must be followed to prove the damage suffered by any investor who made investment decisions, sell, buy or hold, while being provided with incorrect information on available margin by CIBCWG(“Bank”). The Bank took the position that such investor must prove what decisions she would have made if correct information had been provided.
On behalf of the Mathesons we took the position that it would be pure speculation and fictional to proceed in that manner. Each party produced an expert who provided opinions supporting the respective parties. There were authorities which supported each of these positions, and unfortunately the C.A. adopted those that supported the Bank.
This Decision obviously has relevance to the presentation of the evidence at the Trial on behalf of the various class members. We will be considering the type, and depth of evidence required in order to meet the burden set out in the Matheson Decision. We will consult with various knowledgeable people and also consider whether expert evidence will be required, and identify the appropriate person to provide such evidence. The Trial time will now be longer than anticipated, as will the preparation time, but the task can certainly be handled.
We will be meeting with the Class Committee members to review the Decision and discuss the steps to be taken going forward. At that time we will discuss, and determine whether a meeting of all Class members should be scheduled.
Update – October 28, 2014
We wanted to take this opportunity to update you on the class action against CIBC. Over the past number of months, we have not had any major developments as we are awaiting some procedural rulings from the Court. We did, however, receive a partially successful decision for an individual investor affected by the EEM error who chose not to be a member of the class. That decision has been appealed and the hearing before the Court of Appeal will take place in late November.
In the meantime, you do not have to do anything to remain a member of the class and we will continue to update you as the case proceeds. If, however, your address or other contact information has changed, please provide the new information to us so that we may update our records.
Update – April 2014
There have been a number of procedural motions heard by case management judge, Justice P. Duncan regarding the exchange of documents in the proceeding and also relating to scheduling.
The trial is currently set to be heard in the winter of 2015. Another scheduling conference will take place before Justice Duncan on June 19, 2014.
Why Is The Case Taking So Long To Proceed?
The issues in this case are unique and somewhat complex. We have been working through various motions in the court to get to the trial dates.
Do I Have To Do Anything To Participate?
As in the beginning, if you held EEM options in 2008, you are automatically a member of the class and you do not have to actively participate in the proceeding.
What If I Am An Executor Of The Estate Of A Class Member?
The class definition includes estates and assigns. The estate is therefore a recipient of any award that may be obtained.
How Do You Participate In The Claim?
If you fall within the definition of the Class, you do not need to do anything to participate as you are automatically included in the Class Action. Each individual member of the Class will receive notice of the claim and an opportunity to opt out of the litigation should the individual not wish to participate. Details as to how you opt out of the litigation will be included in the individual notice.
What Is The Action About?
On July 24, 2008, “EEM” split three for one and CIBC did not ensure that the calculation of available margin in client accounts was adjusted accordingly. As a result, from July 24, 2008 (the date of the EEM stock split) until CIBC identified the error on October 9, 2008, the reported margin requirement on the EEM option positions held in client accounts was too low.
The Class Action challenges the manner in which CIBC dealt with the error and claims that the adjustments made in client accounts did not compensate clients fully for the losses caused by the error. The action also seeks punitive damages against CIBC for the manner in which it handled the error.
Do I Have To Pay Legal Fees?
No. You do not have to pay any direct legal fees out of your own pocket to become involved in the claim. If the case is not successful, no legal fees will be charged.
By agreement with the representative Plaintiffs, counsel fees may be calculated at a percentage of any amounts recovered. The legal fees payable to us as counsel to the Class must be approved by the Court. For example, if a settlement, voluntary payment or other benefit is obtained as a result of the Class Action, we will be required to apply to Court for approval of our fee that is consistent with the terms of the agreement reached with the representative Plaintiffs or some lesser amount depending on what the Court decides to be fair.
This arrangement compensates us for the risk we have assumed in advancing the case and performing the legal work without a guarantee of being paid. We do not receive any money unless we are successful and even if the Class Action does not succeed, you are not responsible for any of the lawyers’ fees involved in the case.
Our Database of Class Members:
At present, we are creating a database of individuals who may fit the definition of the Class. You may contact us to assist you to determine whether you are a Class member by contacting us at CIBCclassaction@mcinnescooper.com. When contacting us, please provide:
- Your name;
- Your address and contact information;
- Your CIBC account number(s).
As always, please do not hesitate to contact us at CIBCclassaction@mcinnescooper.com if you have any questions or call Rachel Barnes at 902.425.6500.