Bank of Nova Scotia, commonly known as Scotiabank, is facing a lawsuit from two brothers who were terminated from their stock analyst roles in 2024. The firings, which the brothers claim were unjust, stemmed from an internal investigation into breaches of the bank's personal-trading policy.
The Core of the Legal Dispute
According to court documents, Michael Doumet and George Doumet were fired for cause in May 2024. Michael, an industrial stocks analyst in Montreal with 13 years at the bank, earned approximately $400,000 in total compensation in 2023. His brother George, a consumer companies analyst, earned about $490,000. In their separate applications to the Superior Court of Quebec in Montreal, the brothers allege they were subject to "cavalier" treatment and were dismissed without being provided specific details for the cause.
The bank's action followed a compliance department review. This review found that Michael Doumet was frequently trading in one small-cap stock and was in regular communication with that company's chief financial officer. The situation was further highlighted by an anonymous complaint sent to Scotiabank's whistleblower program in January 2024, a copy of which was obtained by Bloomberg News.
Compliance Department Fallout
The internal probe had significant repercussions beyond the analysts. After Scotiabank engaged the law firm Torys LLP to conduct its own investigation, three senior compliance employees were also dismissed within a week of the Doumets' termination. Four sources familiar with the matter, who requested anonymity, confirmed the dismissals. According to two of these people, the compliance staffers were let go because they failed to escalate the trading concerns identified in the initial review.
Scotiabank has declined to comment on the specifics of the dismissals, citing the ongoing litigation. Spokesperson Katie Raskina stated the bank does not comment on matters before the court. The Doumet brothers did not respond to multiple requests for comment from Bloomberg News.
A Broader Context of Scrutiny
These dismissals and the resulting lawsuit arrive at a time when Canadian banks are under increased scrutiny for their compliance controls. This heightened focus follows Toronto-Dominion Bank's historic anti-money-laundering settlement in the United States. Furthermore, Scotiabank itself has a recent history of compliance issues.
In 2020, Scotiabank agreed to pay US$127.4 million to settle allegations by U.S. authorities that officers in its compliance department failed to prevent precious-metals traders from manipulating markets in a gold-spoofing scandal. Notably, Bloomberg reported last month that the bank is planning to revive the metals-trading desk that was shuttered in the wake of that scandal.
The case between the Doumet brothers and Scotiabank is scheduled for trial next year. The outcome will be closely watched as it touches on internal governance, personal trading policies, and the accountability of compliance personnel within Canada's major financial institutions.
