Bank of Montreal Settles Optionable Suit Over Gas Losses

Dec. 3 (Bloomberg) -- Bank of Montreal reached a $200,000 settlement with Optionable Inc. over claims the brokerage helped conceal large losses caused by one of the bank’s natural-gas options traders.

Optionable and three former employees agreed to settle Bank of Montreal’s claims that they helped the former trader, David Lee, hide C$680 million ($638 million) in losses from the bank, Optionable said in filing today with the U.S. Securities and Exchange Commission.

The settlement comes as Bank of Montreal, the fourth biggest Canadian bank by assets, is seeking to drop its claims against former Optionable Chief Executive Officer Kevin Cassidy, who is serving a 30-month prison sentence in the U.S. after pleading guilty in 2011 to a related conspiracy charge.

Optionable, based in New York, and Cassidy claimed that Bank of Montreal filed the lawsuit in an attempt to shift blame for the trading losses from its own employees. Cassidy is opposing the bank’s request to drop its claims against him, because the request doesn’t exclude the possibility the bank may refile the case.

Bank’s Request

Cassidy said in court papers filed last week that Bank of Montreal agreed to drop its suit after more than four years only when a federal judge ordered bank employees to give pretrial testimony. U.S. Magistrate Judge James Cott in Manhattan also held open the possibility he would order the bank’s chief executive officer, William Downe, to testify.

Paul Deegan, a spokesman for the Toronto-based bank, declined to comment on the settlement.

Bank of Montreal settled a potential C$680 million claim for “a pittance,” said Cassidy’s lawyer, Lawrence R. Gelber, “rather than risk producing its officers and employees for court-ordered depositions.” 

“If you have a real diamond, why would you sell it for the price of spinach?” Gelber said today in an e-mail.

The case is Bank of Montreal v. Optionable Inc., 09-cv-07557, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bob Van Voris in federal court in Manhattan at

To contact the editor responsible for this story: Michael Hytha at