Law in Quebec

News about Quebec legal developments


Norbourg

  • New indemnity fund proposed following out-of-court settlement in Norbourg class-action

    Days after an agreement in principle was reached in the Norbourg class action suit, opening the door for thousands of investors to recover nearly all the money they lost in one of the biggest investment frauds in the country, questions surrounding the efficacy and scope of investor protection provided by the debt-ridden indemnity fund overseen by Quebec’s financial watchdog have surfaced.

    A group of investor advocates, financial professionals, and the body that oversees financial professionals in Quebec are beckoning the provincial government to cast a critical eye on the financial services compensation fund administered by the Autorité des marchés financiers (AMF), a call that Quebec Finance Minister Raymond Bachand seems to have heard. The finance minister recently requested the securities regulator to “see if something different should be put in place, how it should be done, while listening to industry.”

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  • Norbourg: Law firms seeking $11 million

    A couple of days after an agreement in principle was reached in the Norbourg class action suit, allowing thousands of investors to recover nearly all the money they lost in one of the biggest investment frauds in the country, a lawyer warned me that the case was far from over.

    That’s because the $55 million settlement against Quebec’s securities regulator, Northern Trust Co. of Canada, Concentra Trust, accountant Rémi Deschambault and accounting firms KPMG LLP and Beaulieu Deschambault did not cover legal fees. “The judge in the case has opened a can of worms,” told me the class action specialist. “It’s unheard of to reach a settlement without agreeing to the legal fees.”

    The lawyer is right. The law firms that negotiated the settlement are seeking $11-million, representing 20 per cent of the $55-million settlement, in legal fees — and the victims are not happy. Three Norbourg victims are expected to be in court today arguing that the amount is far too much, with one saying that lawyers should be receiving up to five per cent while another asserting that 6.5 per cent is reasonable. “It’s disproportionate,” said François Leblanc, an industrial relations consultant whose family lost hundreds of thousands of dollars in the Norbourg scandal. “In my opinion, 6.5 per cent of the settlement is a reasonable remuneration. They’re calculating $400 an hour, which would give them salaries of $700,000 a year.”

    Quebec Superior Court justice André Prévost is expected to render a decision by month end. “I am conscious that the Norbourg investors have lived through difficult times,” said the judge yesterday. “The conclusion is approaching.”

  • Norbourg class action good business for lawyers

    A couple of weeks after an agreement in principle was reached in the Norbourg class action suit, opening the door for thousands of investors to recover nearly all the money they lost in one of the biggest investment frauds in the country, Quebec’s securities regulator is facing an expensive legal tab.

    The Autorité des marchés financiers (AMF) has incurred $12 million in legal expenses to defend itself in the Norbourg scandal, according to a French-language television network. The law firm Heenan Blaikie ostensibly charged $9.275 million.

    Over the past five years, five government bodies hired the services of private-sector lawyers at a cost of $51.9 million. Investissement Quebec spent $1.2 million, utility giant Hydro-Quebec $9.2 million, the Société générale de financement $9.8 million, the Caisse de dépôt et de placement du Québec $15.4 million — and the AMF $16.4 million.

    Marc Lajoie, head of the Association des juristes de l’État (AJE), a union representing nearly 1,000 lawyers, notaries, and other legal professionals now on strike, does not understand.

    “If they don’t have the money for prosecutors and government lawyers, then they surely don’t have the means to reach out to the private sector to hire people for cases,” Lajoie told me recently. “All we’re asking is that our salaries be pegged to the Canadian average.”

  • Do jail sentences deter future white-collar crimes?

    The courts appear to have heard calls from victims of white-collar crime demanding stiffer sentences against those found guilty of swindling investors.

    In October 2009, Vincent Lacroix, a high-profile Quebec white-collar criminal found guilty of masterminding a $130-million fraud with 9,200 victims, was sentenced to 13 years in jail. A little over a year later, in February 2010, former Montreal financial adviser Earl Jones was sentenced to 11 years in prison, after pleading guilty to two fraud charges related to a $50-million Ponzi scheme he orchestrated.

    But an accounting professor who published a study on occupational fraud is far from convinced that stiff jail sentences on white-collar criminals will prove to be an effective deterrent.

    (more…)

  • Vincent Lacroix criminal trial about to begin

    More than 1,500 people will be parading through the corridors of the Palais de Justice in Montreal over the next three days, summoned as potential candidates in the long-awaited criminal proceedings against Vincent Lacroix, the founder of defunct mutual fund company Norbourg Asset Management Inc., who was sentenced to 12 years in a 2007 civil trial after being found guilty of 51 Quebec Securities Act violations for having defrauded 9,200 investors of $115-million between 2000 and 2005.

    The 42-year old Quebecer, whose sentence was subsequently reduced to eight-and-a-half years and then to five years less a day last month by the Quebec Court of Appeal, faces nearly 200 criminal charges of fraud, conspiracy to defraud, conspiracy to commit forgery, fabricating documents and money laundering laid by the RCMP following their investigation into Norbourg. (more…)

Law in Quebec
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