As the Navigant Consulting study recently showed (discussed here), subprime litigation in the United States has surged, with the number of such suits filed (607) now surpassing the number of suits experienced in the savings and loan crisis. Canada, on the other hand, has seen far fewer subprime litigation cases: a total of two, to be exact.
According to the National Post, the subprime cases filed in Canada consist solely of an an ongoing action against CIBC filed by Joel Rochon, and a $29-million settlement in the FMF Capital Group Ltd. suit involving Siskinds lawyers Ray Leach and Dimitri Lascaris. FMF was a U. S. mortgage lender that went public on the TSX and cratered shortly after. The FMF settlement included US$21-million from the FMF companies, $800,000 from tax firm BDO Seidman and $3.75-million from six underwriters, including BMO Nesbitt Burns Inc., Blackmont Capital Inc., Canaccord Capital Corp., National Bank Financial Inc., Sprott Securities Inc. and TD Securities Inc.
Canadian lawyer Dimitri Lascaris of Siskinds states in the article that “Canadian institutions don’t appear to have substantial direct exposure to the subprime market.” He says the “more interesting question is what happens when their exposure to players in the market — financial institutions such as Lehman Brothers — causes Canadian banks to incur massive loses. That can give rise to significant litigation. It depends on quality and clarity of disclosure.”