The Ontario Superior Court of Justice has ruled in favour of Toronto-based Raymond James Ltd. in a lawsuit against former advisor Jayanth Noronha, who was terminated by the firm amid suspicion that he was engaged in off-book dealings with clients.
The brokerage brought a motion for summary judgment in the case, arguing that there was no genuine issue for trial.
In a decision dated Aug. 23, the court ruled Raymond James was entitled to a summary judgment against Noronha, including the repayment of almost $300,000 of a forgivable loan from the firm.
According to the decision, when Noronha left Dundee Wealth Management to join Raymond James in 2011, he was managing approximately $100 million in assets and generating more than a $1 million per year in revenues. Raymond James provided him with a $880,000 forgivable loan to facilitate the transition to the brokerage.
In 2013, an anonymous whistleblower alerted Raymond James that Noronha, or his subagents, were trading in off-book investments and taking secret commissions.
“Noronha admitted to off-book investments but did not disclose the details. [Raymond James] concluded that there was a reasonable likelihood that he was conducting improper off-book investment activity. [Raymond James] felt that it had no alternative but to terminate the agency agreement,” the court decision states.
Noronha subsequently moved to another firm, but in 2014, faced disciplinary allegations from the Investment Industry Regulatory Organization of Canada (IIROC). In 2017, an IIROC hearing panel found he violated IIROC rules. The panel ordered Noronha be permanently banned and pay $669,500 in penalties and disgorgement.
The court agreed with Raymond James that a trial was not necessary. “The IIROC proceeding confirm that [Raymond James] had good reason and had properly terminated the agency agreement. If Mr. Noronha suffered damages as a result of the deterioration and loss of his book of business, he cannot blame [Raymond James] for those losses,” the decision states.