Congratulations CIBC!! According to WIKI, CIBC wins the
"Naughtiest Canadian Bank" in a landslide!
Settlements and controversies
On December 22, 2003, the United States Security and Exchange Commission (SEC) fined CIBC US$80 million for its role in the manipulation of Enron financial statements. This consists of $37.5 million to repay ill-gotten gains, a $37.5 million penalty and $5 million in interest. The money is intended to be returned to Enron fraud victims pursuant to the Fair Fund provisions of Section 308(a) of the Sarbanes-Oxley Act of 2002.[17]
The SEC also sued three of CIBC's executives. CIBC Executive Vice President Daniel Ferguson and former CIBC Executive Director Mark Wolf agreed to settle for US$563,000 and US$60,000, respectively. Ian Schottlaender, former managing director in CIBC's corporate leveraged finance group in New York initially contested the charges[18] but on July 12, 2004 he agreed to pay US$ 528,750 as well as be barred from serving as an officer or director of a publicly traded company for a period of five years.[19] Under these agreements the individuals neither admit nor deny wrongdoing.
The SEC complaint charges that "CIBC and the three executives with having helped Enron to mislead its investors through a series of complex structured finance transactions over a period of several years preceding Enron's bankruptcy." The agreement reached between the SEC and CIBC permanently enjoins CIBC from violating the antifraud, books and records, and internal control provisions of the federal securities laws.[17][18]
On August 2, 2005 CIBC paid US$2.4 billion to settle a class action lawsuit brought by a group of pension funds and investment managers, including the University of California, which claims that "systematic fraud by Enron and its officers led to the loss of billions and the collapse of the company."[20]
[edit]Market timing
On July 25, 2005 CIBC confirmed it would pay US$125 million to settle an investigation into its role in the 2003 Mutual-fund scandal. Linda Chatman Thomsen, director of the SEC's division of enforcement, said, "by knowingly financing customers' late trading and market timing, as well as providing financing in amounts far greater than the law allows, CIHI and World Markets boosted their customers' trading profits at the expense of long-term mutual fund shareholders."[21] Under the settlement, CIBC neither admits nor denies the allegations.
[edit]Visa cardholders
On August 27, 2004 CIBC confirmed that it would settle a class-action lawsuit on behalf of CIBC Visa cardholders. The plaintiffs, represented by Paul Pape and Harvey Strosberg of the Toronto law firm Pape Barristers, alleged that the conversion of foreign-currency transactions resulted in an undisclosed or inadequately disclosed mark-up.[22] After having been approved by an Ontario Superior Court judge, CIBC announced on October 15, 2004 that the settlement will result in the bank paying $13.85 million to its cardholders, $1 million to the United Way, $1.65 million to the Class Action Fund of the Law Society of Upper Canada (Ontario), and $3 million in legal fees.[23] The bank also announced that it has not admitted any liability and is settling to avoid further litigation with its cardholders.
[edit]Voluntary refund of erroneous charges
On May 20, 2004 CIBC announced that it would refund $24 million to some of its customers as a result of erroneous overdraft and mortgage charges which were discovered in the course of an internal review. "This is being done as part of CIBC's effort to correct its error and to ensure that it distributes to customers all of the money it received in error," the bank said.[24]
In another similar incident, CIBC announced on April 27, 2006 that it's refunding an additional $27 million to about 200,000 clients who were overcharged for certain overdraft fees and other borrowing transactions, some of which date back to 1993.[25] In cases where clients were undercharged, the bank decided not to seek reimbursement.[26]
[edit]Privacy
On April 18, 2005 the Privacy Commissioner of Canada expressed disappointment in the way CIBC dealt with incidents involving the bank misdirecting faxes containing customers' personal information.[27] One involved misdirecting faxes to a scrap yard operator in West Virginia from 2001 to 2004. The misdirected faxes contained the social security numbers, home addresses, phone numbers, and detailed bank account data of several hundred bank customers.[28]
The second incident involved a Dorval businessman and allegedly took place from 2000 to 2004.[29] In both cases, the commissioner noted that the bank did not inform the affected clients, whose personal information was compromised, until the incidents became public and an investigation was underway.[30]
A few days after the story broke on CTV News and The Globe and Mail, CIBC announced that it had banned its employees from using fax machines to transmit any documents containing confidential customer information.[31]
On January 18, 2007 CIBC Asset Management announced that the personal information of about 470,000 current and former clients of Talvest Mutual Funds, a CIBC subsidiary, had gone missing. The information may have included client names, addresses, signatures, dates of birth, bank account numbers, beneficiary information and/or Social Insurance Numbers.[32] The incident emanated from the disappearance of a hard drive containing information on "the process used to open and administer" customer accounts as it was traveling between the bank's Montreal and Toronto offices.[33] The Privacy Commissioner of Canada stated, "Although I appreciate that the bank notified us of this incident and that it is working cooperatively with my Office, I am nevertheless deeply troubled, especially given the magnitude of this breach, which puts at risk the personal information of hundreds of thousands of Canadians." She immediately launched a privacy investigation.[34]
[edit]Employee overtime
In June 2007, CIBC was named in a $600 million class-action lawsuit regarding the lack of overtime pay to its customer service staff. The case was recently dismissed by Madam Justice Joan Lax of the Ontario Superior Court where she stated the evidence "provides no basis in fact that there is a systemic practice of unpaid overtime at CIBC." [35][36] The lawsuit was originally launched by Dara Fresco, a head teller at the bank, who was being represented by the law firms Roy Elliot Kim O'Connor LLP and Sack Goldblatt Mitchell LLP.[37]