Cibc Class Action | Rochon Genova

Settlement Website

The Claims

The claim, issued with the Ontario Superior Court of Justice, alleges that the defendants engaged in a series of misrepresentations during the class period concerning the extent of CIBC’s total exposure to investments in the failing U.S. subprime residential mortgages market (“USSRMM”). Specifically, it is alleged that CIBC misrepresented the magnitude and level of risk associated with its U.S. subprime residential mortgage investments. In particular, CIBC represented during the class period that its total exposure in USSRMM investments, including both hedged and unhedged investments, was “not a major issue” when, in fact, the bank had exposure to billions of dollars of losses, as was only subsequently disclosed.

Further, CIBC failed to disclose that one of its principal hedge counterparties, ACA Financial, was woefully undercapitalized with an asset to guarantee ratio of “1-180” and was far from able to provide any meaningful hedge protection to the bank’s USSRMM investments.

It is alleged that these misrepresentations, among others, had the effect of substantially artificially inflating the price of CIBC common shares through the class period. Indeed, when CIBC provided more complete disclosure, through a series of partial disclosures regarding its USSRMM investments in late 2007 and early 2008, CIBC common shares fell dramatically. In its Q1 2008 financials, CIBC disclosed write downs of $3.487 billion, $3.379 billion of which were related to the bank’s USSRMM investments. These disclosures contradicted the company’s earlier representations and disclosures during the class period.

The Class

All persons or entities, excluding U.S. residents, who purchased CIBC common shares between May 31, 2007 and February 28, 2008 on the Toronto Stock Exchange, but not Excluded Persons;

Updates

On July 23, 2008, the class action was commenced.
On July 3, 2012, Justice Strathy released his decision denying the Plaintiffs’ motion for leave to assert secondary market claims under Part XXIII.1 of the Ontario Securities Act and for certification of the action as a class proceeding on technical grounds relating to the interpretation of the limitation period found in Part XXIII.1 of the Ontario Securities Act. The Plaintiffs appealed Justice Strathy’s decision to the Court of Appeal for Ontario.
On February 3, 2014, the Court of Appeal released a decision certifying the Plaintiffs’ action as a class proceeding and granted leave to pursue the secondary market claims. The Defendants sought and were granted leave to appeal to the Supreme Court of Canada.
On December 4, 2015, the Supreme Court of Canada allowed the $4 Billion Securities Class Action to Proceed Against CIBC for Alleged Nondisclosure of CIBC’s $11.5 Billion Exposure to the US Subprime Mortgage Market in 2007.
On December 6, 2021, the class action was settled, subject to Court approval.
On January 17, 2022, the CIBC Securities Class Action settlement was approved by the Ontario Superior Court of Justice. The deadline to submit a claim expired on September 16, 2022.