A judge has rejected a bid for class-action certification by former clients of Richardson GMP who allege they suffered major losses due to code-of-conduct breaches and negligence by a former star investment adviser and the brokerage.
Clients of Adam Woodward and his Calgary-based team at RGMP had applied to have their case heard as a class action, alleging that they and many others suffered losses that added up to millions of dollars after being shoehorned into a risky one-size-fits-all investment strategy.
The $50-million suit names Mr. Woodward, who had been a stockbroker and oil-patch deal-maker until taking leave in late 2015, along with his former supervisor Blair Pytak and Toronto-based RGMP, as defendants. The case, launched by Amanda and Kevin Fisher and Bruce and Christina Johnson in 2016, raised questions about the checks and balances that the brokerage applied to client accounts and the supervision of its advisers.
In her decision, rendered last month, Alberta Court of Queen’s Bench Justice Glenda Campbell ruled that clients’ individual circumstances and investment results were so varied that they could not be considered a unified class. A class action would require individual inquiries of numerous plaintiffs, which undermines the concept of efficiency within a common-issues case, Justice Campbell wrote.
“In the case, the proposed class members inevitably will have to proceed with their individual trials after the common issues trial,” she wrote. “Those with smaller losses may find this is not economically feasible. Litigating individual trials after many years also may not be practical for the more elderly of the proposed class.”
The Globe and Mail has chronicled the story of Mr. Woodward, who had been a big moneymaker during the oil-patch boom years, but descended into addiction and the breakdown of his personal life when the market turned against him and client complaints over losses piled up. He entered an alcohol-treatment program in late 2015, and emerged several months later pledging to admit his wrongdoings. RGMP fired him in 2018.
The judge took note of an industry watchdog’s penalty levelled last year, in which Mr. Woodward was handed a $500,000 fine and lifetime ban, ruling he invested several clients’ money into a number of private energy securities that became virtually unsalable when oil prices crashed. This was regardless of their personal situations and tolerance for risk.
However, she pointed out that the decision by the Investment Industry Regulatory Organization of Canada involved a sample of just seven clients who suffered losses of between 21 per cent and 94 per cent over a period of three-and-a-half years. The proposed class action could have included dozens of current and former RGMP clients who suffered losses. Mr. Woodward’s team’s client list included more than 1,000 households.
Meanwhile, many former clients of Mr. Woodward have already reached settlements with RGMP.
The lawyer representing the former clients expressed disappointment at the decision, but declined to say whether he would launch an appeal or go about filing a number of individual actions on behalf of 75 individuals who had signed up to be part of a class action.
“We’re still considering how best to take the case forward,” lawyer Robert Hawkes said.
Executives with RGMP declined to comment. Mr. Woodward’s lawyer was not immediately available for comment.
The brokerage is currently owned by GMP Capital Inc., Richardson Financial Group and RGMP’s employees. Following the sale of GMP’s capital markets business to U.S.-based Stifel Financial Corp., announced in June, GMP Capital intends to acquire the shares in the wealth management company it does not yet own, it has said.
If successful, the acquisition would follow the aborted sale of RGMP to Toronto-Dominion Bank in late 2016. Mr. Woodward’s case was not specifically cited for the $600-million deal’s demise, but a source familiar with the situation told The Globe the following year that TD was uncomfortable with RGMP’s higher-risk culture.
With a file from Clare O’Hara
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Jeffrey Jones