A story of rapacity, self-promotion and indifference at the expense of others (sound like the advertising scandal? ..but this time in the corporate world...read on).
May 22, 2004
Ketty Papazian was a 76-year-old widow when she put her north-end Montreal home up for sale in April 2002 after her savings were drained by what she believed was misconduct by her broker. She died in November. Her estate is now seeking millions in damages for what one lawyer calls "fraudulent manoeuvres" of former broker Harutyun Migirdicoglu at CIBC Wood Gundy's downtown office.
Two years ago, after her investment account had been emptied by CIBC World Markets Inc. to pay for somebody else's trading losses, 76-year-old widow Kiganouchi (Ketty) Papazian put her house in north-end Montreal on the market.
Then she had an abrupt change of heart.
"She got a very good offer for the house," son Richard recalled, "but then she thought, 'If I sell it, where do I put the money?' She didn't trust banks any more."
Papazian didn't sell. It remained her home until last November, when she died of cancer at age 78.
It was a painful end to a life complicated in its final years by a bitter, drawn-out and still-unresolved lawsuit with CIBC World Markets over what happened to her savings.
Ketty Papazian - and now her estate - wanted reimbursement of the $299,275 that CIBC withdrew from her account.
The estate is seeking $10 million in punitive damages, $400,000 for portfolio mismanagement, restitution for losses suffered from liquidation of her investments and payment of legal costs for what her lawyer called the "fraudulent manoeuvres" of a former broker at CIBC Wood Gundy's downtown office.
The lawsuit, filed two years ago, alleges CIBC was professionally negligent in failing to adequately supervise and control the trading practices of broker Harutyun Migirdicoglu (also known as Harry Migirdic), and abusive in making her liable for huge trading losses run up by people she didn't know.
There is still no trial date set in Quebec Superior Court.
But a lawyer for the Investment Dealers Association of Canada said yesterday Migirdicoglu should be barred for life for a long list of misdeeds.
After an IDA disciplinary hearing in March, the securities industry's self-regulatory body found him guilty of multiple counts of trading without the knowledge or authorization of a client, obtaining account guarantees under pretense, altering investment objectives and risk tolerance on Know-Your-Client forms without consent, knowingly accepting a forged power of attorney and offering a client a $400,000 promissory note to compensate for trading losses without the knowledge of CIBC.
Migirdicoglu didn't deny the allegations, but did not plead guilty.
At his hearing yesterday to receive submissions on a suitable IDA penalty, lawyer Caroline Champagne said the severity of the former broker's breaches of the rules warrants a lifetime ban from the securities industry. She also recommended $370,000 in fines and another $80,000 to cover investigation costs. An IDA panel is expected to make its decision by mid-June.
In connection to other civil actions against Migirdicoglu and CIBC, the IDA said some have settled out of court with CIBC. But lawsuits seeking $5 million for losses and $55 million in punitive damages still are making their way through the legal system. The first is due to come to trial in January.
For Richard Papazian, the death of his mother only strengthened his resolve to see the matter dealt with by the courts. Of Armenian descent, she was born in Greece and lived in Argentina prior to moving to Canada in 1964 with her late husband, Dicran.
When his mother began cancer treatments, he informed CIBC by letter late in 2002. The bank didn't budge.
"When she was in hospital, I had to leave her side twice (for deliberations with CIBC's lawyers) and felt horrible about it. But she told me, 'You have to take care of this. You have to make it right,' " Papazian said.
"We tried every possible way to get back her money without a $10-million lawsuit, but got nowhere. I want to make sure no bank or financial institution acts in this way again."
His mother, whose principal language was Armenian, did not read or understand English well, Papazian said. She had entrusted about $400,000 to Migirdicoglu after her husband died in 1990. Migirdicoglu had looked after her husband's affairs.
In the lawsuit, it's alleged Migirdicoglu had her sign a document in 1993 that unknowingly made her responsible for any deficit in the trading accounts of two other parties - Bedros S.F. Papazian and Aida Papazian - who were not only unrelated to her, but complete strangers.
CIBC's position, as outlined in Superior Court filings by its law firm Heenan Blaikie, is that Papazian was fully aware of the guarantee and that she and her son were "complicit in their own misfortunes."
It claims it acted in good faith, never failed to properly supervise its financial consultants and is not legally responsible for the actions of the broker and any losses suffered by his former clients.