A former advisor who was embroiled in litigation with his former firm that expanded into sweeping claims against the big banks, various regulators, accounting firms, governments, lawyers and media outlets — alleging widespread misconduct in the financial industry — had those claims tossed out by the Supreme Court of British Columbia, for now.
A case that began as a dispute over a $1-million loan from CIBC Wood Gundy to a former advisor at the firm, Murray Bockhold, grew into a complex series of claims brought by Bockhold against 58 defendants (both companies and individuals).
According to the court, those claims allege that the various defendants either committed, or failed to prevent “financial misfeasance” — including naked short selling and market manipulation — that has caused substantial losses, and harmed investor confidence and the capital markets.
“Simply put, the bankers are alleged to have engaged in fraudulent financial practices in the nature of naked short selling and illegal algorithmic market manipulation. Regulators and governments are alleged to have failed to prevent these practices from occurring and to punish their perpetrators, even though Mr. Bockhold alerted them to the wrongdoing,” the court noted. “Accountants and media organizations are said to have been complicit because they, too, did not act upon and publicize Mr. Bockhold’s warnings. Lawyers who have acted for these entities are also accused of misconduct.”
Those allegations have not been proven.
The defendants applied to have the claim dismissed on various grounds, “including that it does not disclose a reasonable cause of action, is unnecessary, frivolous, vexatious, prejudicial, embarrassing and an abuse of process.”
According to the court’s decision, there’s “no dispute that Mr. Bockhold’s counterclaim must be struck in its current form. The only issue is whether I should exercise my discretion to grant him leave to amend it.”
On that count, the court refused leave to amend the claim, finding that most of his claims don’t have anything to do with the original dispute between Bockhold and his former firm.
So, the court ordered that his claim is struck down without leave to amend it — however, it did note that it remains open for him to revive his allegations in a fresh claim.
“[I]f Mr. Bockhold wishes to commence a new separate action based solely on the financial misfeasance allegations, he is not precluded from doing so by this judgment,” the court said.
However, it also advised him to, “reflect carefully on his next steps.”
“Mr. Bockhold has been put on fair notice of the kinds of arguments that he may face if he chooses to pursue further litigation in relation to these issues,” the court said. “While I have not opined conclusively on them here, many of these arguments appear to have merit.”
The court also noted that some of Bockhold’s claims likely aren’t viable as civil claims, and that it’s hard to see “how the myriad of allegations made by Mr. Bockhold could be cogently organized into recognizable causes of action against each of the defendants by counterclaim individually.”
As a result, it’s essential that Bockhold “seek legal advice before proceeding,” the court said.