A Quebec court has authorized a proposed class action against Royal Bank of Canada on behalf of retail investors alleging that it has some responsibility for losses suffered in the Norshield fraud.
The court handed down its decision on a petition from an investor, Sheila Calder, seeking authorization to institute class action proceedings on behalf of all Canadian retail investors who purchased one of the Olympus United Funds Corp. shares between June 27, 1999 to June 29, 2005 and who had outstanding shares as of June 29, 2005, against RBC (TSX:RY) and various subsidiaries.
According to the decision, she argues that RBC essentially took part in setting up the structure by the Norshield Financial Group, “when they knew or should have known that their business partner was defrauding third parties, that is the Canadian retail investors.”
The allegations have not been proven. The court granted the motion, allowing the class action to proceed against RBC and RBC Capital Markets Corp., seeking damages for extra-contractual liability.
But, it dismissed the motion against RBC Dominion Securities, noting that “it appears, on the basis of the proceedings, exhibits and discoveries that [it was] not involved in the fraudulent scheme described by petitioner or in the actual process by her of purchasing Olympus United Funds Corp. shares.”