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Court refuses to allow class-action lawsuit against brokerage firms

The proposed class action estimated that since 1993, discount brokers

👤 Srimathi Sridharan26 Jan 2023 5:35 AM GMT
Court refuses to allow class-action lawsuit against brokerage firms
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Ontario: An Ontario judge has denied a class-action lawsuit against seven Canadian discount brokerages that alleged investors had improperly been overcharged billions of dollars in fees for a service they did not receive.

Ontario Superior Court Justice Edward Belobaba dismissed an application to certify a class-action lawsuit that was filed against online trading divisions of four major Canadian banks as well as those run by HSBC Securities (Canada) Inc., Credential Qtrade Securities Inc. and Desjardins Securities Inc.

The proposed class action estimated that since 1993, discount brokers – including BMO InvestorLine Inc., Scotia Capital Inc., CIBC Investor Services Inc. and TD Waterhouse Canada Inc. – have improperly collected about $5-billion in "trailing commissions," which are fees for providing investors advice, a service discount brokers are not legally allowed to provide.

"In sum, a significant amount of the evidence filed by the plaintiff strongly supports the defendants' position that the practice of paying trailing commissions to discount brokers, although controversial and needing reform, was not illegal or unlawful until the law was changed effective June 1, 2022," Justice Belobaba added.