TORONTO – Canadian Imperial Bank of Commerce (TSX:CM) says it plans to fight class action lawsuits seeking $4 billion in damages over the bank’s alleged failure to adquately disclose its exposure to the U.S. subprime market.
“We are confident that, at all times, our conduct was appropriate and that our disclosure met applicable requirements,” bank spokesman Kevin Dove said in a email response Tuesday to a court decision allowing the class actions to proceed.
“CIBC denies these allegations and plans to vigorously defend this action,” he said.
Lawyers for plaintiffs disclosed Monday that the Ontario Court of Appeal had reversed a lower court decision and decided to allow three major securities class actions against CIBC go to trial.
The class actions against the bank, its president and CEO, Gerald McCaughey, and other senior directors allege the bank failed to adequately warn investors of its exposure to the subprime market.
The subsequent disclosure of this exposure in December 2007 caused massive losses to shareholders of more than $4 billion, they contend.
The subprime market involved mortgage-backed securities that offered attractive rates of return due to higher interest on the mortgages, but the lower credit quality eventually produced massive defaults.