Estate Planning

Investment Advisor Accused of Exploiting Elderly Client

By Hull & Hull LLP

The recent decision in TD Waterhouse Canada Inc. (TD Waterhouse Investment Advice) v. Little caught my eye earlier this week.  The case did not involve an estate dispute.  Rather, it was an action brought by TD Waterhouse seeking repayment of loans it had made to an employee it later terminated.  

However, the facts surrounding the employee's dismissal were interesting to me.  The employee had been an investment advisor for TD Waterhouse.  At the time he accepted his offer of employment he agreed to TD Waterhouse's standard employment terms, including those set out in its Code of Conduct and Ethics.  

In part, the code of conduct prohibited employees from accepting gifts from clients, accepting an appointment as an executor under a client's will, or holding a power of attorney over a client's financial affairs.   

Sometime after his work with TD Waterhouse began, the advisor accepted a gift of $500,000.00 from a client , a ninety three year old widow with failing health.  There were insufficient funds in her account to clear the cheque, so the advisor proceeded to start liquidating the client's securities and transferring the proceeds to her savings account.  He then deposited the cheque to his own account.  However, internal compliance caught on to what was going on before the cheque could clear.  

In its investigation into the situation, TD Waterhouse learned that the client had also granted a power of attorney for property in favour of the advisor and had named him as executor in his will.  The advisor was then filed by TD Waterhouse on the basis that, at a minimum, he had acted in breach of the code of ethics but that the bank had determined that his actions had been motivated by the desire for personal gain at the client's expense.  

The decision itself involves the bank's motion for summary judgment on its action demanding repayment of outstanding loans.  Nevertheless, it provides an illuminating – and scary – look at the risk of exploitation the elderly can face, even by those who are supposed to help protect their assets.  

Have a great day,

Megan F. Connolly    

Full post as published by Toronto Estate Law Blog on August 27, 2009 (boomark / email).