An investor who spun a $1 million lottery winning into an $80,000 investment portfolio has won some small relief with a $64,000 judgment against his former broker.

The BC Supreme Court has awarded a judgement of $63,676.25 plus pre-judgment interest to Brian Nutt in a suit against CIBC World Markets, CIBC Wood Gundy and his broker, Tim Groenveld.

In his decision, the judge cited an expert witness who testified on Nutt’s behalf. “It is difficult to escape the conclusion that Mr. Nutt’s Wood Gundy accounts were traded too aggressively, owned positions that were too large, owned too great a proportion of risky securities, made inappropriate use of leverage, and deviated markedly from the asset mix mandated by the last KYC form. All of these factors contributed to the severe deterioration of Mr. Nutt’s accounts when other investments of a more suitable nature were experiencing more favourable returns,” testified James Cripps, an analyst and financial planner.

Cripps declared that the handling of Nutt’s account was unsuitable and highly inappropriate, especially for a person of limited investment sophistication and financial resources.

Nutt won $1 million in the lottery in 1979 when he was in his early thirties. He spent or gave away $250,000 and invested the remaining $750,000 through Odlum Brown. He quit his job as a postal worker and lived on his winnings. Nutt spent more money than his portfolio was able to generate in income and his account with Odlum Brown declined to approximately $300,000 at the beginning of 1995.

Nutt turned his investment portfolio over to Wood Gundy in March 1995 when it had a value of approximately $288,000. When he transferred his account away from Wood Gundy in early 1999, his portfolio had a value of only $80,000. He sued the firm and his broker for breach of contract, breach of fiduciary duty and negligence.

A broker may be liable to its client in each of the three ways pleaded by Nutt: breach of contract, breach of fiduciary duty and negligence.

The judge found no breach of contract, but it found that the broker and the firm did owe a fiduciary duty to Nutt, and that he was negligent in some of the trading losses.

“It is obvious from listening to Mr. Nutt that he is lacking in intelligence and only has a rudimentary understanding of securities. I find that Mr. Groeneveld either recognized Mr. Nutt’s deficiencies in these regards or recklessly turned a blind eye to his deficiencies.”

Mary Lou Frazer, CIBC spokesperson, says the bank is pleased that the court found that neither the broker, nor the firm breached its fiduciary duty. “In view of the Court’s findings, we accept that our financial consultant may have been mistaken in his understanding of the client’s wishes. Provided Mr. Nutt, does not appeal the Court’s decision, we will be paying the amount directed in this judgement,” she says.