CIBC financial advisor’s shady mortgage dealings provide just cause

Mortgages from outside region provided by employee's father and friends artificially boosted performance metrics

CIBC financial advisor’s shady mortgage dealings provide just cause

An adjudicator has upheld the termination of a CIBC financial advisor in Alberta for accepting mortgages he shouldn’t have received to artificially inflate his numbers.

The worker was hired by the Canadian Imperial Bank of Commerce (CIBC) in September 2015 to be a financial advisor in Calgary. The position involved sales of financial products to primarily customers who had their own businesses and expanding the number of clients in his portfolio. He had no instances of discipline on his record.

In January 2018, the worker was transferred to another branch in Calgary. It was a new branch and he was asked to build a new portfolio, as he started with only four customers.

The worker had some trouble meeting his performance targets, so, over the next three months, he received seven mortgages from Ontario and Edmonton for his portfolio. Generally, CIBC mortgage advisors sent mortgages for new CIBC customers to the branch closest to the customer’s home address. However, CIBC didn’t really monitor where or to whom mortgage advisors transferred new mortgage clients, and the seven that the worker received were either sent directly from mortgage agents who were friends of his father or were passed along from his father — who was a branch centre leader at another Calgary branch and had transferred from Ontario when the worker joined CIBC.

Inflated the numbers

The worker didn’t do anything to encourage having the mortgages sent to him, but he knew that the amount of the mortgages was added to the performance metrics of his portfolio and the branch’s performance. He didn’t try to contact any of the Ontario mortgage customers about a meeting or other CIBC products or services, although he tried unsuccessfully to contact some of the Edmonton customers. About two months after the mortgages had been credited to his performance metrics, they were transferred out of his portfolio to branches closer to the customers and for whom it was too late to benefit from the mortgage value in their metrics.

After the mortgages were transferred out of the worker’s portfolio, CIBC received an anonymous letter describing the mortgage transfers from someone who was upset that the worker had gained an unfair advantage from them. CIBC corporate security investigated the matter and determined there was misconduct.

CIBC terminated the employment of the worker’s father for cause on Dec. 10, 2018. The worker was on vacation at the time, so his interview and termination was delayed until he returned. However, the worker learned that his father had been dismissed while on vacation.

CIBC interviewed the worker upon his return and the worker admitted to accepting the Ontario and Edmonton mortgages. He claimed that he had discussed it with his managers and their branches had also benefitted from the mortgages and that his father had received permission from the district vice-president for Calgary North to accept the mortgages from Ontario mortgage agents.

CIBC interviewed the managers and the district vice-president, who all denied approving the mortgage transfers or even that they knew what was going on. The investigator concluded that the worker hadn’t been honest during his interview and the final report recommended terminating the worker’s employment, which CIBC did for breach of trust and violation of its code of conduct — which employees were expected to know and were reminded of in annual training — that stipulated employees should avoid conflicts of interest, act ethically, uphold the law and report any concerns of suspicious behaviour.

The worker filed a claim under the Canada Labour Code, arguing that his misconduct didn’t justify dismissal. He claimed that he hadn’t received a copy of CIBC’s transfer guidelines and he didn’t understand that his conduct was contrary to bank regulations, he had a clean disciplinary record and the consequences of his dismissal were out of proportion to the seriousness of his misconduct — his termination for cause precluded future employment in the banking industry.

Code of conduct known to all bank employees

The adjudicator noted that CIBC had a code of conduct that all employees were expected to know and follow. It wasn’t credible that the worker wasn’t aware of it, since it was an essential element of the banking business and employees were trained on it every year, said the adjudicator. In addition, the transfer guidelines of which the worker claimed he didn’t know were published by CIBC and were available online. It was apparent that the worker was aware of them in his position and, in fact, the scheme to “game the system” by inflating his performance metrics with mortgage transfers likely wouldn’t have worked without a familiarity with the guidelines, said the adjudicator.

The adjudicator also noted that CIBC expected its financial advisors to know their clients so they could provide appropriate products and services. The worker’s accepting of customers from Ontario and Edmonton with no contact with them was contrary to that practice.

The adjudicator found that the worker not only misled his employer by artificially inflating his performance metrics but he also deprived other financial advisors who should have received the mortgages of the opportunity to benefit and CIBC from the prospects of selling additional products and services to the new mortgage customers.

The adjudicator also found that even if the worker had permission from managers to take on the mortgages — which they denied giving anyway — he still should have known his conduct was contrary to policy and a conflict of interest.

“The [worker] participated in and benefitted from a scheme that was harmful to his employer’s interests, unfair to his co-workers, contrary to the code of conduct and just plain dishonest,” said the adjudicator. “If it was done with the knowledge and consent of his manager, it would not excuse the [worker], rather it would expand the number of persons whose conduct warranted discipline.”

The adjudicator determined that the worker’s misconduct included conflict of interest, breach of trust and dishonesty. All of these elements went “to the core of an employment relationship in the banking industry” and were serious enough to skip any progressive discipline. In addition, the misconduct took place over a period of time and the worker gave no indication he appreciated the seriousness of it, the adjudicator said in upholding the termination.

For more information, see:

  • Pahwa and Canadian Imperial Bank of Commerce, Re, 2021 CarswellNat 401 (Can. Lab. Code Adj.).

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