Do-it-yourself investors that owned CIBC mutual funds in their discount brokerage accounts between 2003 and 2024 now have six months to make a claim for a share of the $26-million class-action settlement over the funds paying trailer fees to discounters.
Last November, the Ontario Superior Court of Justice approved a proposed settlement with CIBC and CIBC Trust Corp. on behalf of investors that owned the bank’s proprietary funds (CIBC or Renaissance funds) through a discount broker.
The proposed class action alleged that investors were harmed by the payment of trailer fees to discount brokers for services that weren’t provided — given that discount brokers aren’t able to provide advice to their clients, and trailers were ostensibly paid, at least in part, to compensate dealers for providing investors with ongoing advice.
A separate series of class actions has also alleged that clients of full-service dealers are also harmed by the payment of trailers to discount brokers, which reduce the net asset value of their funds too.
Earlier this year, an $11-million settlement dealing with this issue was also approved by the court.
Now, the administrator of the settlement involving discount brokerage clients has opened the process for investors to make a claim to participate in the resolution. Investors have until Oct. 21 to submit a claim for a share of the settlement.
While the total value of the settlement is $26 million, the court also approved about $9.7 million in legal fees (including tax and disbursements), an initial payment to the company that funded the litigation — it’s set to receive 7% of the settlement, after legal fees, with the final amount to be paid after investors’ claims are processed — leaving around $15 million to be shared among the estimated 140,000 investors that are potentially eligible to participate in the settlement.
Under the settlement, which the court said was reached after multiple mediations and “hard fought” negotiations, the fund managers don’t admit any liability, or concede the allegations.