A group of investors launched a multibillion-dollar class-action lawsuit in an Ontario court Wednesday against the Canadian Imperial Bank of Commerce, alleging misrepresentations about the bank's exposure to the plunging U.S. subprime mortgage market.
Toronto legal firm Rochon Genova LLP said Wednesday that the claim indicates the bank alleged that its total exposure to U.S. subprime loans "was not a major issue" when, in fact, the bank had exposure to billions of dollars of losses.
Lawyer Joel Rochon, who is heading the lawsuit, said CIBC "ignored its legally required disclosure obligations to the detriment of the investing public."
The lawsuit, filed with the Ontario Superior Court, covers investors who bought shares in the company between May 31, 2007 and Feb. 28, 2008.
During that time, the suit says, CIBC common shares were artificially inflated until the bank provided "more complete disclosure, through a series of partial disclosures" about its exposure, filed in late 2007 and early 2008.
"Investors appear to have lost billions due to the bank's misrepresentations and its failure to manage investments prudently," Rochon said in a release.
None of the allegations have been proven in court, nor has the suit received official certification as a class action.
CIBC denied the allegations in a statement Wednesday.
"CIBC is confident that, at all times, its conduct was appropriate and that its disclosure met applicable requirements," said spokesman Rob McLeod.
He declined to make any further comment.
The Canadian bank that has been hit hardest by the credit crunch in the United States, with writedowns of more than $2.97 billion from various credit-related items.
Shares rose $2.82, or 4.7 percent, to close at $62.52 on the New York Stock Exchange.
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