The Lethbridge HeraldFront, Friday, September 12, 2003, p. a1
Investment adviser sues RBC Dominion for $13 M
Gauthier, Gerald
By GERALD GAUTHIER
Lethbridge Herald
A local financial adviser, recognized for his business ethics, has filed a $13-million lawsuit alleging his former employer ignored its own ethical standards by secretly charging its clients millions in fees.
Larry Elford, an investment adviser in Lethbridge for 19 years, also alleges RBC Dominion Securities tried to muzzle him when he voiced concern to company management about the improper practices.
His refusal to be silenced, the suit claims, led to the company effectively firing him wrongfully last fall.
The information is contained in a statement of claim filed Aug. 26 with Lethbridge Court of Queen's Bench. Elford is seeking $13.1 million in damages, of which $10 million would be donated by the firm to a charity of his choice. Named as defendants in the lawsuit are RBC Dominion Securities Inc. and RBC Dominion Securities Ltd doing business as RBC Investments and RBC Financial.
The allegations have yet to be proven in court. The firm's Calgary lawyer, Jim Rooney, is preparing a statement of defence to be filed with the court later this month.
"This action will be defended, and we don't see merit in the claim," Rooney said. "It is ill-founded."
Lethbridge lawyer Jim Farrington is representing Elford in the suit.
Elford had been employed with the firm since 1986 when it was then known as Dominion Securities Pittfield. He left the firm Nov. 7, 2002 in what the suit refers to as a "constructive dismissal of the plaintiff which was wrongful" because of management's intimidation and harassment of Elford for raising ethical concerns and its refusal to approve his advertising and promotional materials.
In 2001, while with RBC Investments, Elford was one of two Lethbridge finalists named by the Better Business Bureau in its salute to ethics in business.
The lawsuit alleges the company repeatedly ignored the ethical concerns Elford raised about double dipping - the practice of charging clients transaction fees on top of flat fees when only one or the other should be charged. Those practices generated millions of dollars in transaction fees for the company, the suit alleges.
It also alleges the company and other investment advisers accepted inducements from mutual fund companies to place investments with those companies without notifying clients about those incentives - a practice which is illegal in Alberta.
"When (Elford) attempted to disseminate publicly the fact it was possible to purchase mutual funds without a sales fee, the defendant threatened the plaintiff with disciplinary action if he continued to make such disclosures," the suit alleges.
Failure to disclose such information to clients runs contrary to the company's own published ethical standards which state: "We must operate our business so that every transaction or activity that we are involved in will stand the test of complete and open public scrutiny," the suit alleges.
Also alleged is that the RBC's Lethbridge branch manager tried to intimidate Elford with two memos on May 29, 2002 which threatened sanctions as well as fines and revocation of his securities credentials.
Elford is seeking $3 million in general damages and $100,000 in special damages plus legal costs on top of $10 million in punitive damages, the last of which would be paid to a registered Canadian charity.
It's also alleged after he found employment elsewhere, RBC management and employees made false, derogatory remarks about the circumstances of his departure as well as his business practices.
Category: Front Page; NewsUniform subject(s): Financial products and servicesLenght: Medium, 453 words
© 2003 The Lethbridge Herald. All rights reserved.
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