(March 18, 2010) – A US federal judge dismissed a shareholder lawsuit filed by a pension fund in 2008 against the Canadian Imperial Bank of Commerce (CIBC) and four executives, including CEO Gerald McCaughey.
Following the financial crisis, a number of banks have faced lawsuits relating to an alleged lack of disclosure to shareholders about losses. CIBC has already faced a variety of lawsuits in Canada and the US over how it revealed its subprime exposure to shareholders, the Canadian Press reported.
The Plumbers and Steamfitters Local 773 Pension Fund was seeking class-action status on behalf of investors who purchased CIBC shares in the U.S. between May 31, 2007, and May 29, 2008. The fund accused the bank of securities fraud for making at least 14 misrepresentations during that period, claiming the bank minimized the risk associated with owning mortgage-backed securities.
The Manhattan court Judge William Pauley ruled that even though the Toronto-based CIBC, Canada’s fifth-largest bank, possibly lost billions of dollars from its exposure to US subprime mortgage securities following the credit crisis, its actions were not necessarily fraudulent. Furthermore, according to Bloomberg, he ruled the investors’ allegations weren’t specific enough for the case to proceed, referencing the complaint’s lack of internal CIBC documents and confidential sources.
“CIBC, like so many other institutions, could not have been expected to anticipate the crisis with the accuracy [that the] plaintiff enjoys in hindsight,” said the judge in his decision to dismiss the suit, Canada’s Globe and Mail reported.
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