ANGRY MOTHER-IN-LAW2008-04-11 15:22 ET - Street Wire
by Mike Caswell
It is hard to see Kelowna stockbroker David Smith having Christmas dinner with his 77-year-old mother-in-law this year. He has made her so angry she is suing him and his employer, Northern Securities Inc., for mismanaging her stock account.
The suit, filed on April 8, 2008, in B.C. Supreme Court, identifies his mother-in-law as the widow Lois Sookochoff. Ms. Sookochoff has found many shortcomings in the management of her account, and makes serious allegations against Mr. Smith and Northern, including a claim that he managed her account to maximize his commissions.
According to the suit, Ms. Sookochoff inherited a portfolio of investments after her husband, a urology specialist, died on June 1, 2004. Prior to his death, Dr. Michael Sookochoff made all decisions on the portfolio. The suit does not say if the doctor had enlisted Mr. Smith's help with his investments. Ms. Sookochoff says she only had minimal knowledge of investing.
In August, 2005, Ms. Sookochoff moved her portfolio to Northern, to be managed by Mr. Smith, who had recently moved there from Canaccord. Ms. Sookochoff says she relied on Mr. Smith's advice, and he cultivated and obtained her trust.
Many are the ways in which Mr. Smith might have improved his brokerage skills, according to the claim. Ms. Sookochoff says that he managed her account in a manner inconsistent with her investment objectives, and failed to ensure that it was not concentrated in inappropriate investments.
Making sure that no sin goes unmentioned, Ms. Sookochoff restates her allegation three more times, with slightly different emphasis and wording. She says he failed to explain the risks associated with her account; he failed to give her adequate warning of the risks associated with investments he caused her to purchase; and he failed to manage her account in a manner which would provide a reasonable rate of return.
Lest that be insufficient the angry mother-in-law further claims that Mr. Smith "managed the plaintiff's account in a manner designed to generate commission income for himself and/or Northern, without regard for the needs, means and investment objectives of the plaintiff." She also claims that Northern failed to properly supervise him.
Coming at earlier points in a slightly different way, she says Northern and Mr. Smith owed her a duty of care and a fiduciary duty to establish investment objectives appropriate for her age. They also owed her a duty to manage her investments in a manner suitable with her financial needs. Northern owed her a duty to supervise Mr. Smith, and to prevent him from engaging in inappropriate, unauthorized and unsuitable transactions.
Ms. Sookochoff says she will provide particulars of the alleged breaches of duty further into the case, following disclosure of relevant documents and of examinations for discovery. She says she suffered a loss of investment, principal and interest, and a loss of opportunity to invest.
Ms. Sookochoff is seeking general, special and punitive damages, plus interest and court costs. She is represented by David Goult of Bull, Housser & Tupper.