Ontario judge finds firms committed breach of trust against 200,000 registered account holders
A near-14-year-old class action against three BMO companies has ended with a finding that the firms committed breach of trust and breach of fiduciary duty against approximately 200,000 individuals by pocketing undisclosed fees amounting to $102.9 million.
The case involved individuals residing in Canada who held registered accounts with BMO InvestorLine and BMO Nesbitt Burns such as RRSPs, RESPs, and TFSAs.
As noted by a statement from Paliare Roland Rosenberg Rothstein LLP, which represented the investors, the Superior Court of Justice in Ontario found in January that the firms imposed hidden mark-ups on exchange rates charged to investors who had currency conversions performed between June 14, 2011 and September 6, 2011 at BMO InvestorLine and between October 1, 2002 and September 6, 2011 at BMO Nesbitt Burns.
According to the court, the firms’ failure to disclose the mark-up means that they breached their own trust agreements and their fiduciary duty.
“I see this as a real victory for customers of these BMO companies,” James R. MacDonald, a representative plaintiff in the case, said in the statement. “They trusted these BMO companies with their hard-earned money. The decision is the result of over a decade of work to bring justice to the many people in the Class against these large financial institutions.”
“The decision underscores the importance of the BMO companies' trust obligations, and shows the effectiveness of class actions in addressing such systematic breaches,” said Odette Soriano, one of the lawyers representing the class.
The BMO companies have been ordered to disgorge the profits generated on the undisclosed fees, with the precise amount to be determined on a reference. In the decision, Justice Edward P. Belobaba noted that the court found “no evidence of any malicious, oppressive or high-handed conduct.”
Taking issue with the court’s interpretation of its agreements, BMO said it plans to appeal the decision. “We intend to appeal,” BMO spokesperson Paul Gammal said in a statement to the Financial Post. “We pride ourselves on being transparent with our clients and work hard to provide them with the clear and relevant information they deserve.”