A Montreal businessman has lost his bid to sue National Bank of Canada for its role in selling him toxic asset-backed commercial paper.
Quebec Superior Court Justice Richard Wagner has ruled against Hy Bloom's contention that an asset-backed commercial paper (ABCP) restructuring agreement approved last year in Ontario courts goes too far in providing a blanket immunity from lawsuits to ABCP issuers.
Mr. Bloom's lawyers also argued that the immunity does not apply under the terms of Quebec civil law.
One of the conditions of the ABCP restructuring agreement was that the banks and other institutions that sold the paper to investors get legal releases immunizing them from lawsuits.
"I'm plain angry," Mr. Bloom said in an interview yesterday.
"I think the judge is a good judge and he gave this a fair hearing but I don't agree. It's wrong for the banks to get away with this. There are a lot of people here who have really suffered."
Mr. Bloom said he will decide whether to appeal the decision after conferring with his lawyer.
National Bank spokesman Denis Dubé said the institution finds the decision "fair and reasonable."
The $32-billion Canadian ABCP market froze in 2007 as buyers for the paper disappeared amid concerns about exposure to subprime mortgages.
Investors had been sold the paper as a secure, short-term investment.
Mr. Bloom and some of his companies started buying the paper from National in 2006, according to court filings, which also alleged that the bank continued to sell him ABCP even after it learned that its value had become impaired.
National Bank paid a $75-million penalty late last year in an ABCP-related settlement with financial regulators.
It was the largest single amount of the total of $138.8-million in penalties and investigation costs paid by several Canadian financial institutions, including Canadian Imperial Bank of Commerce, HSBC Bank of Canada and Laurentian Bank of Canada.