Lawsuit claims bank downplayed its exposure to U.S. residential mortgage-backed securities prior to the financial crisis
CIBC has entered into an agreement to pay $125 million in order to settle a class action lawsuit.
The class action, as explained in a press release from Rochon Genova LLP, was launched against CIBC and some of its former officers.
The lawsuit accuses them of making misrepresentations between May 31, 2007 and February 28, 2008 through quarterly financial statements and MD&A, public oral statements, and filings with regulators about its exposure to U.S. residential mortgage-backed securities ahead of the financial crisis.
U.S. residential mortgage-backed securities were a key catalyst in the financial crisis as many of the underlying assets were riskier than investors had anticipated or were led to believe.
The big Canadian bank has denied the allegations and made no admission of liability or wrongdoing in the settlement agreement. CIBC said it reached the deal to avoid further legal costs and put the matter behind it.
Under the terms of the settlement, investors who purchased shares of CIBC any time from May 31, 2007 up to Feb. 28, 2008 may be entitled to a payment.
The agreement has yet to be approved by the Ontario Superior Court of Justice, which will hold a settlement approval reading set for January 12.
Class members are invited to express any views they may have about the proposed settlement, or note their objections, in writing to the court by January 7.
- with files from the Canadian Press
