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Noah Zivitz

Managing Editor, BNN Bloomberg


Canadian Imperial Bank of Commerce has reached a tentative agreement to resolve a class action lawsuit relating to the lender's disclosures in the lead-up to the financial crisis.

Under the terms of the settlement announced by law firm Rochon Genova LLP Monday night, CIBC will pay a total of $125 million to class members who bought the bank's shares from May 31, 2007 to Feb. 28, 2008. The settlement is subject to approval by the Ontario Superior Court of Justice; a hearing is scheduled for Jan. 12.

The lawsuit claimed that CIBC and some of its former officers misrepresented the bank's exposure to U.S. residential mortgage-backed securities during the class period.

On Feb. 28, 2008 – the final day of the class period cited in the lawsuit – CIBC reported first-quarter results that included $3.37 billion in losses on structured credit products tied to the U.S. housing meltdown. By the time it reported its fiscal 2008 year-end results on Dec. 4 of that year, the losses stemming from the financial crisis had reached $4.9 billion.

Rochon Genova noted that CIBC and other defendants – former CIBC Chief Executive Officer Gerry McCaughey, former CIBC Chief Risk Officer Tom Woods, former CIBC World Markets Chairman and Chief Executive Brian Shaw, and former CIBC World Markets Chief Risk Officer Ken Kilgour -- did not admit any wrongdoing in the settlement and have denied the allegations.

"While we believe CIBC’s disclosure was appropriate and met all applicable requirements, we have reached an agreement to avoid further legal costs and put the matter behind us. The plaintiffs’ claims remain unproven and the settlement is being made without any admission of liability or wrongdoing by CIBC," said CIBC Spokesperson Tom Wallis in an emailed statement Tuesday.

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