Former trader sues Bank of Nova Scotia
Trader David Berry's victory in a battle against market regulators may also hand him a weapon in his next fight, when his $100-million wrongful dismissal suit against Bank of Nova Scotia goes to trial in 2015.
Mr. Berry was let go by Bank of Nova Scotia in 2005, at the same time as regulators were looking into his trading of preferred shares, a market he dominated on his way to annual pay packages worth $15-million. He launched the wrongful dismissal suit the next year, seeking lost compensation and damages. Mr. Berry alleges in his claim that the bank tipped regulators to a potential breach, then fired him over what was really a pay dispute stemming from his refusal to accept changes the bank sought that would have cut his compensation.
Bank of Nova Scotia filed a statement of defence in 2007, along with a counterclaim, in which the bank said that Mr. Berry "successfully hid his conduct from Scotia for a period of time. His misconduct breached fundamental terms of his employment with Scotia and was just cause for his termination."
This week, a panel hearing the case brought by the Investment Industry Regulatory Organization of Canada threw out charges of breaching market integrity rules that had been levied against Mr. Berry. What's more, the panel cast doubt on the idea that Scotia did not know about his trading methods.
"There are also strong differences of opinion whether his immediate superiors knew of his tactics," the panel wrote. "The preponderance of evidence suggests that they did, although this is strongly denied by James Mountain, the head of institutional equity." (Mr. Mountain has long since left the bank.)
The wrongful dismissal case is now set to be heard in early 2015. Unless regulators appeal the judgment successfully, Bank of Nova Scotia won't be able to point to a regulatory finding against Mr. Berry in that hearing.
Moreover, the suggestion from the IIROC panel that the Bank of Nova Scotia knew about Mr. Berry's trading style contradicts the notion that he kept his activities hidden from Bank of Nova Scotia.
The bank will have a chance to present its own evidence on that front in the wrongful dismissal trial. It could not do so in the IIROC matter, as the bank did not have standing.
Ann DeRabbie, a spokeswoman for Bank of Nova Scotia, said that the bank's "position to date is unchanged." The bank is reviewing the IIROC panel decision, she said, and cannot comment further because "this is still a legal matter before the courts."
While this has played out, Mr. Berry has moved on from his days as a bank trader.
He has been unable to get the IIROC registration necessary to work at a securities dealer, and since the matter began seven years ago has been out of the industry. He is now working on other projects, such as a natural gas company that's focused on extracting gas in Eastern Europe.
"The last seven and a half years have been extremely taxing on me and my family," he said Wednesday. "I wasn't able to work in any registered capacity while this cloud was hanging over my head. I am fortunate to have had the resources and so much support from friends and my family, in particular my wife Fiona, to be able to persevere through this incredibly long and expensive process. I am so happy to have closure to this part of the battle and I now turn my attention to vigorously prosecuting my claim against Scotia."