Fired Stock Trader Sued by Employer

February 14, 2007 ( - A Bank of Nova Scotia subsidiary is suing a former stock trader - who is suing his former employer for wrongful dismissal.

In documents filed late on Tuesday in the Ontario Superior Court of Justice, Scotia said it is seeking C$4 million from David Berry, once Scotia Capital’s star trader. Berry was fired in 2005 after Scotia Bank and Market Regulation Services, the Toronto Stock Exchange’s trading watchdog, investigated some of his share dealings.

Berry, who at the time was making as much as $C15 million/year, had sued his former employer for wrongful dismissal – a C$105 million ($90 million) suit, according to Reuters. Now his former employer has countersued – seeking C$4 million from Berry for “the harm and expense his misconduct has caused it.”

Berry Sues

Berry launched his suit in November claiming that the real reason Scotia fired him was because he wouldn’t accept a steep pay cut and that other executives were jealous of him. Berry’s pay package had included a clause that he was entitled to 20% of Scotia’s net earnings in the preferred shares operation.

Bank of Nova Scotia is expected to pay more than half a million dollars as part of a voluntary settlement with trading watchdog Market Regulation Services Inc. (RS) stemming from an investigation into one of the bank’s former star traders, according to the Globe and Mail, citing people familiar with the matter.

Reimbursement Sought

Scotia alleges that some issuers of preference shares had to pay more in commission to dealers than they should have because of some of Berry’s trades. Scotia said it paid out more than C$3.5 million to reimburse the issuers when it discovered this. The paper said Scotia has agreed in principle to a settlement with the regulator and will not be sanctioned for allegedly failing to supervise Berry.

Globe and Mail sources say Berry declined a settlement offer that would have forced him to take a 10-month sabbatical from the industry and pay $450,000 in settlement costs and expenses – and, ironically, his wrongful dismissal suit, among other things, accuses the bank – of failing to supervise him adequately.