An Ontario court has granted a motion from TD Bank to dismiss an application by a former employee who alleged that a regulatory settlement for overcharged investors didn’t capture the full scope of the problem.
The Superior Court of Justice granted the motion brought by the firms (including TD Waterhouse Private Investment Counsel Inc., TD Asset Management Inc., and the TD Private Funds Trust) asking the court to strike down an application from former employee Marian Carroll.
According to the decision, Carroll alleged in her application that, when she was a senior compliance officer at the bank, she learned about possible client overcharging in the investment counsel division. Through her internal investigations, the firms reported some of these issues to the Ontario Securities Commission (OSC), she said.
This resulted in a no-contest settlement with the OSC in 2014 that saw the firms pay more than $14 million in compensation to affected clients.
In its decision, the court noted that Carroll alleged the regulatory settlement was inadequate and didn’t capture the full scope of the overcharging.
“It is Ms. Carroll’s view that as a result of TD’s material misrepresentations to the OSC, more than $50 million in undisclosed fees related to TD Private Funds are owed back to clients. Therefore, under the settlement agreement, the PIC unitholders were only paid back a fraction of what was owed to them,” the decision said.
She sought standing to apply for a court order that would, among other things, bring in an independent accounting firm to investigate her allegations.
According to the court decision, TD argued that her application “does not meet the test for either public or private interest standing and that her application is not a ‘reasonable and effective’ means of bringing the matter before the court.”
The court sided with the bank, ruling that there are other ways Carroll’s allegations could be pursued, including with a possible investor class action or by the OSC re-opening the case.
The decision revealed that she filed whistleblower complaints in 2019 to the OSC, the U.S. Securities and Exchange Commission (SEC), the Office of the Superintendent of Financial Institutions (OSFI), and to the bank itself.
“As the OSC already has Ms. Carroll’s 2019 letter containing all of her allegations, it is up to that regulatory body to take any steps it deems necessary,” the court said.
The court also noted that the only information it had about these complaints is a letter from TD “acknowledging her complaint and advising that TD had conducted an internal investigation and found her allegations to be unsubstantiated.”
The court dismissed Carroll’s application, vacated a planned hearing, and ordered that she pay the bank $25,000 in costs.