RICHARDSON Partners Financial Ltd. has been hit with a $19-million lawsuit from a group of mainly elderly clients on the eve of closing its merger with GMP Private Client.
The 38-page statement of claim alleges the Winnipeg- based wealth management company and one of its Toronto advisers, Clarke A. Steele, acted in a "high-handed, arrogant, dismissive, insulting, cavalier, purposefully difficult, irresponsible and indifferent manner" towards the group. That group that filed the lawsuit includes 23 investors, nine personal holding companies and one estate.
The plaintiffs, whose average age is 69 -- one investor is 94 years old -- are claiming damages of $15 million plus punitive, exemplary and aggravated damages of another $4 million.
In court documents, filed in the Ontario Superior Court of Justice last month, it is alleged Richardson Partners Financial Ltd. (RPFL) and Steele owed them a "common law duty of care" to ensure they were given investment advice consistent with their investment expertise and risk tolerance.
The group further alleges their money was invested in securities in which RPFL and/or Steele were earning service and other fees which were not adequately disclosed to the plaintiffs. They also claim the investments were purchased either without instructions or without properly informed instructions.
The statement of claim also alleges the defendants acted as "undisclosed agent or underwriter" on more than $6 million of the clients' investments.
One security, Opti Canada Inc., was particular inappropriate, it is alleged, because it was "related to or associated with" RPFL and/or Steele.
"Richardsons and Steele were in a conflict of interest... (They) were motivated by the opportunity to make a commission," the statement of claim alleges.
None of the allegations have been proven in a court of law and RPFL has not filed a statement of defence yet.
Sue Dabarno, RPFL's chief executive officer, said this is the first client lawsuit in the firm's sixyear history.
"We really don't comment on anything that is in the courts. We are defending it vigorously," she said.
Dabarno said the lawsuit won't have any impact on the closing of RPFL's merger with GMP Private Client, a deal which was announced in July. A subsequent petition reportedly signed by several dozen RPFL advisers who are opposed to the merger, which was originally scheduled to close in October but is now on pace to close Nov. 12, will also not cause further delays, she said.
"We've made some changes and we'removingforward.We'requite comfortable we'll have everybody on board. We have a lot of advisers from other firms knocking on our doors who are very anxious to join us," she said.
Dabarno said the organizational chart of the new firm, to be called Richardson GMP, has not been finalized but she confirmed the majority of the decisionmaking roles, including the new chief executive officer, chief financial officer and chief investment officer, will be based in Toronto. Dabarno, a Bay Street veteran herself, will become executive chairman once the deal is finalized.
She said the company's family wealth planning group and some people in its products and services group will remain in Winnipeg, as will its team of Winnipeg financial advisers. She said a number of the displaced executives and administrative personnel from RPFL's Winnipeg office, which used to total about 20 people, have been moved into other positions with the parent company, James Richardson & Sons, Limited.
She said Hartley Richardson, president and chief executive officer of JRSL, and Sandy Riley, president and CEO of Richardson Financial Group, will assume positions on the board of GMP Capital.
"I see myself still bringing people up to date periodically in Winnipeg. The owners and significant shareholders are still in Winnipeg," she said. RPFL has 74 adviser teams overseeing $7.5 billion in assets under administration while GMP Private Client has 42 investor teams handling $4.0 billion in assets under administration.