The Supreme Court of Canada Allows $4 Billion Securities Class Action to Proceed Against CIBC for Alleged Nondisclosure of CIBC’s $11.5 Billion Exposure to the US Subprime Mortgage Market in 2007
The Supreme Court of Canada released a decision this week, dismissing the appeals brought by CIBC and allowing the $4 billion securities class action brought on behalf of CIBC shareholders to proceed to be litigated through to trial.
Through a series of decisions, the Court found that an action brought by shareholders Howard Green and Anne Bell could proceed against the Canadian Imperial Bank of Commerce, its President and CEO Gerald McCaughey and other senior directors and officers to recover damages of almost $4 billion as a result of the alleged non-disclosure in 2007 of CIBC’s $11.5 billion exposure to the U.S. subprime market. It is alleged that the subsequent disclosure of this exposure in December 2007 caused massive losses to shareholders of almost $4 billion. This decision affirms the previous unanimous 5-judge decision of the Court of Appeal of Ontario.
Joel Rochon, a partner at Rochon Genova LLP who acted on behalf of the shareholders stated: “For too long shareholders have been left without an effective remedy. The highest court in our country has paved the way for investors to hold public corporations accountable for misrepresentations and failures to disclose. Even chartered banks are not immune from prosecution.”
Peter Jervis, senior counsel at Rochon Genova LLP stated: “This decision affirms the Supreme Court’s support for investor class actions and will enhance the protection of shareholders’ rights in Canada. By upholding the ability of investors to bring class actions that hold Canadian public companies accountable for misrepresentation, the decision of the Court will also have the effect of strengthening the integrity and international reputation of the Canadian capital markets which will benefit not only investors but all capital markets participants.”
Mr. Jervis also stated that: “We intend to ask the court to set a schedule for this case to proceed to trial as soon as possible.”
SOURCE ROCHON GENOVA LLP