Fired trader seeks $100 million in damages

There are many ways to become quite wealthy in the financial services industry. Negotiating a hefty compensation package is one way. Suing for wrongful dismissal is another. One former trader has done both.

David Berry, former vice-president and director of Scotia Capital, is seeking $105 million in compensation from his former employer for his June 2005 dismissal. In the suit, Berry claims executives at the bank dumped him out of jealousy over his lucrative contract.

The bank says Berry was terminated with cause, over questionable trading practices.

“I always acted in the best interests of the bank, and I was a loyal and conscientious employee,” Berry asserts in his statement of claim. “Regretfully, I have been forced to take this action to defend my reputation, call the bank to account for its behaviour and recover what I am owed.”

According to a press release issued on his behalf, Berry started with the bank in 1995 and eventually was named head of preferred trading. At the time of this promotion, he claims, Scotia was a bottom-ranked firm in the preferred share market, and he takes credit for its current top ranking, with control over 62% of the market.

For this performance, he was richly compensated, pocketing 20% of the profits earned in that aspect of the business. Over the last three years of his employ, he says the bank brought in about $200 million through his department.

On average, he took home $13 million for each of those final three years. And that’s when his trouble began.

According to Berry, his compensation was the source of “jealousy” among senior executives who earned “significantly” less. When his contract was up for renewal in 2005, the new contract included a retroactive 33% pay cut, along with shared ownership of any losses he generated.

He was asked to waive his right to sue for wrongful or constructive dismissal in the future. The new contract also stipulated that any regulatory infractions would be considered grounds for dismissal with cause.

When he refused to accept these conditions, Berry claims the bank began scrutinizing his past trading record, searching for regulatory infractions. In his statement of claim, Berry says all of his past trades were made according to approved practices and with the full knowledge of the bank’s internal compliance department. Therefore, he alleges, the bank is simply using past trades as a pretext for his dismissal.

According to the statement of claim, Berry was never criticized for his trading practices when the bank fired him.

“Berry’s termination was a result of blame-shifting, corporate self-interest or greed on the part of Scotia Capital, and its inadequate internal compliance, training and education procedures,” his suit claims. He admits that some of his trades are under investigation by Market Regulation Services but points out that no proceedings have commenced against him.

Berry says he was replaced by a lower-cost trader and that as a result, the bank has seen its profits slip in the preferred share market, thereby eroding shareholder value.

The case is now before the Ontario Superior Court of Justice.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com