Canada: When Banks Fire For Dishonesty, They Have A Duty To Get It Right

Last Updated: May 16 2014
Article by Howard Levitt

Bank employees have a higher duty of trust than the rest of us. For most employees, courts consider whether the alleged dishonest conduct balanced with their entire history is cause for discharge. No such contextual analysis is done for bank employees. If they commit any act of dishonesty, fraud, theft or even one with an intention of wrongdoing, their legal fate is sealed.

But, as Justice Randall Wong of the B.C. Supreme Court found: "This higher standard creates a higher responsibility on banks to get it right when leveling cause. Because a finding of cause in the banking industry, more than in any other sector, is truly a career ender."

If the employee's conduct results from an honest mistake, error in judgement or a lack of training, so that there is a lack of fraudulent intent, cause will never be found.

Chinese immigrant, Guiyan Ogden, would have been a dream employee for any investment house. She moved to Canada in 2000 to obtain an education. When she started her B. Comm degree, she spoke little English and almost failed her courses. At graduation, she was top of her class.

She started working for CIBC in 2004 and by 2011 — the year she was fired — had a client portfolio of nearly $250-million, mostly from the Chinese community.

In the middle of the night, Ogden received a panicked call from a client, Xuelan Xu, who needed $50,000 wired from a Chinese bank to close on a $5.7-million home the next day, otherwise the deal would collapse. She asked for and received Ogden's account number to wire the money to her. Ogden transferred the money into Xu's account the following day.

Paying out of your own account to help a client is normal business practice in China and with the call coming in the middle of the night, there was no one to ask. Unbeknownst to her, her actions contravened the spirit of CIBC's Code of Conduct because it commingled client and employee funds.

This came to her employer's attention months later and the bank's investigator, Kim Clark, a former RCMP officer, was called in to question Ogden. The rumour at CIBC was, if Clark interviewed you, you were about to be fired.

In his interrogation, Clark failed to ask about the circumstances of that night or, more significantly, whether Ogden even knew at the time that what she did was wrong. During the investigation, Ogden was allowed to continue to deal with clients and funds. As the Court noted, this confirmed the matter was "not such a violation of trust that a continuing relationship was impossible."

The court noted the alternatives to dismissal — a warning letter, suspension or conflict of interest training, saying Ogden had not shown she was beyond rehabilitation.

Even if CIBC wished to dismiss her, Justice Wong said, it still had alternatives, such as providing her opportunity to resign, terminating her without cause or paying her for the work she had performed which, under the bank's policies, was now forfeited.

There was no clear rule she had violated and no actual conflict of interest, only a potential one. Ogden had made no attempt to conceal the transfer. At worst, the court concluded, she had made an honest mistake.

The court also took exception to the bank's conduct:

"CIBC defended its actions with bald assertions and when those assertions were proved wrong or seemed problematic, they qualified, shifted and changed their stories."

This provides a textbook case on what employers should not do in defending a dismissal claim. Aggravated damages, still to be assessed, were awarded to Ogden for reasons including:

  • CIBC moved forward her interview with Corporate Security to avoid paying her quarterly commissions, which she had already earned;
  • The bank failed to provide reasonable opportunity to provide a full explanation of what occurred. Clark cut her off, claimed to get acknowledgements that she had not made, and was not interested in her explanation.
  • The information as to her disciplinary history provided to CIBC's decisionmakers was inaccurate;
  • CIBC played upon her heightened vulnerability.The bank knew Ogden's husband had a serious medical condition, she was about to go on maternity leave, and she stood to loose more than $250,000 of earned payments if terminated for cause.
  • After she left, the bank wrote a baseless letter accusing her of disparaging CIBC and attempting to divert her customers;
  • They failed to advise her of the allegations of cause;
  • They had her pack up her things in front of clients; and
  • Most egregiously, the court found the bank had seized upon a single error of judgement to end her career. Paula Vanni, Ogden's supervisor, knew her biggest producer was considering leaving, which would significantly reduce Vanni's rating and bonus.

Justice Wong said Vanni was motivated to fire Ogden to retain her portfolio. In firing her for cause, CIBC had to file a notification with the regulator, ensuring no other bank would hire Ogden. Therefore, her clients could not go with her.

Damages are still to be assessed. If CIBC is smart, it will quickly and quietly settle.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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