Union Securities Ltd. of Vancouver has won the bulk of a lawsuit brought by one of its former brokers alleging that the firm improperly compensated his clients out of a reserve account.

Former Union broker Brian Kuhn and his wife, Dana Ratzlaff, sued Union and the firm’s executive vice president, Rex Thompson, alleging that Union improperly covered Kuhn’s clients’ losses from a reserve account established when he joined the firm. Kuhn argued that Union had no authority to do that and by doing so Union wrongfully converted his funds. Union says it had authority to do so, and that even if it didn’t, he never complained about it.

The Supreme Court of British Columbia concluded that Union was entitled to pay Kuhn’s client debts out of the reserve account, because he had signed an agreement to that effect when he joined the firm.

Ratzlaff also claimed wrongful conversion. In an unusual twist, she was a client that married her broker. Ratlaff became Kuhn’s client at Union shortly after he joined the firm in 1996. The relationship later turned romantic, and the two were married in 1998, shortly after Kuhn left the firm.

Ratzlaff alleged that the firm improperly sold certain shares out of her account to pay a debt for other shares that she purchased by way of a transfer from Kuhn’s account. She said it did so without her instructions or consent.

The court found that the firm did have the authority to sell the shares to settle her debts, but that it did not have the authority to sell the shares to cover a $9,417 debt by one of Kuhn’s clients. “Doing so amounted to a wrongful conversion of her funds,” said the Honourable Madam Justice D.J. Martinson in her decision.

Union Securities Web site
www.union-securities.com

http://www.courts.gov.bc.ca/jdb-txt/SC/02/09/2002BCSC0979.htm