National Bank of Canada Sued by Employees Over Sale to Fiera
National Bank of Canada is being sued by current and former employees of its Natcan asset management unit who argue that the bank unfairly bought them out at a discount before selling the business to Fiera Sceptre Inc. (FSZ)
National Bank, Canada’s sixth-biggest bank by assets, agreed on Feb. 27 to sell Natcan to Montreal-based Fiera for C$309.5 million ($310 million) and a stake in the asset manager. Natcan, also based in Montreal, had more than 45 employees and C$25 billion of assets under management at the time of the sale.
Natcan Vice Chairman Michael Quigley and Marc-Andre Gaudreau, senior vice president of fixed income, are among a group of seven current and former employees suing the bank’s Placements Banque Nationale unit in connection with the transaction. The lawsuit, which doesn’t quantify the amount of damages sought, was filed in Quebec Superior Court on March 27, and a hearing has been scheduled for April 30 in Montreal, according to a court filing.
Claude Breton, a National Bank spokesman, declined to comment. Melanie Tardif, a spokeswoman for Fiera, didn’t immediately return an after-hours voice mail message.
Colin K. Irving, a lawyer listed on the Irving Mitchell LLP website, didn’t immediately return a phone call placed after regular business hours. Irving Mitchell is representing the employees.
Through 9130-1564 Quebec Inc., a holding company, the seven Natcan employees held 13.75 percent of the asset manager, while National Bank owned 86.25 percent, according to the lawsuit.
The executives, who borrowed “significant sums of money” to buy their shares, were all instrumental in the development and growth of Natcan, according to the document.
Fiera’s purchase of Natcan “will have the effect of multiplying the book value” of the holding company shares held by the seven executives “by a factor of over 20,” according to the lawsuit.
Even so, 9130-1564 last month bought out the Natcan holders at book value before the closing of the Fiera transaction, according to the lawsuit. Although Quigley sits on the board of the holding company, “no resolution to that effect was put forward for consideration by the board at any meeting of which he was aware or attended,” the lawsuit states.
“The actions of the defendants are clearly oppressive,” according to the lawsuit.
Under a June 2003 agreement, 9130-1564 had the right to authorize the sale of stock held by any of its shareholders to National Bank, (NA) its Placements Banque Nationale unit or any other shareholder picked by the holding company, according to the lawsuit. The transaction would take place at book value.
According to the lawsuit, Natcan’s employees “never had the opportunity of negotiating” the shareholder agreement, “and its terms were imposed on them.”
As a result, the Natcan employees want the court to order “the buyout of their shares in 9130 at their book value taking into account the value received from the transaction,” according to the lawsuit.
Some of the Natcan employees involved in the lawsuit have been offered positions with Fiera, while others have been dismissed.
The former Natcan employees being offered severance “are prevented from even considering accepting these packages, as they entail a complete waiver of their right to assert their shareholder rights in Natcan,” according to the document.
The case is Quigley vs. Placements Banque Nationale Inc., 500-11-042399-127, Quebec Superior Court (Montreal).
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