5
Sep

Manulife class action suit in Canada

Bay street suing bay street - So there's been a class action suit launched against Manulife by a bunch of crazed and angry investors.  Well, they're angry anyway, the crazed part is my personal opinion :).

The gist of the suit is that Manulife didn't disclose their exposure and losses during the market crashes of 2008.  I expect that by extension, investors put their (or more likely, other peoples' ) hard earned money into Manuilife stock after a careful evaluation of the numbers.  Since 'the numbers' were apparently off, the investors ended up with a bad investment.

It's worth noting that the financial post article I linked to above doesn't conclude that Manulife actually failed to disclose the loss.  I trust that's either been proven, or will have to be proven by the suit.

The second thing they don't show in the article is whether these investors actually lost anything.  Quoting the article which seems to be quoting the suit, they said "The claim also seeks common law damages for negligence, negligent misrepresentation and unjust enrichment".  Wait, what?  They're suing because Manulife was bad, not because they lost money?  How does that make any kind of sense?

What's worse is, the news of this lawsuit will almost certainly depress Manulife's share prices, if it hasn't already.  Investors suing over bad performance, causing further bad performance.  Aaaalrighty then. One might wonder if these investors didn't sell just prior to launching the suit, knowing the price would drop based on their actions - and if so, is that actionable against them?  Manipulating stock prices like that?

Of course, for the average investor, basing your decisions on false information should be actionable.  But is that who's doing the suing here?  You know better than that - this is Bay street suing Bay street.  The lawsuit is being handled by Siskinds LLC, lawyers with a client list of large firms as long as your arm.  'nuff said about lawyers on this one I'm sure.  And the lawsuit was launched by The Ontario Ironworkers Pension Fund.  Sure enough, they proudly proclaim they own a 12,500 square foot building for 'investment purposes', yet the 15 people employed by the pension fund occupy the entire building.  Hey, I'm just saying, that sounds like maybe the SECOND bad investment decision you've made recently. Buy a building in Toronto, then rent it to yourself for investment purposes :facepalm:.  More like 15 people taking up a 12,500 square foot building in Toronto seems pretty posh to me.  Check out the google street maps view. (spin around the streetview, it's the red brick building on the corner - that's taken up by 15 people only?)  In any event, pension fund bashing aside, this is hardly a mom and pop scenario.   The second entiy named is Leonard Schwartz.  Turns out, he's a dentist.  Now I love dentists as much as the next person :) but clearly, they're using entities that are hardly the average person.  This is big money suing big money and it's probably about big money.

The lawsuit would also make it seem like Manulife deliberately lied - does anyone believe that?  I don't. You might also conclude that Manulife was way overexposed somehow, and again, I don't buy that.  Unlike most publicly traded entitites, Manulife is a life insurance company and that means their investments are regulated and monitored by the government - they're not allowed to be too heavily exposed.  And how's the government doing on that job?  Look around, our financial system is the most solid in the world - and that includes Manulife.

The reality is, you can't trust publicly available information in many cases, particularly if it's provided by the entity itself.  Such information is going to be biased, even if inadvertently.  And most active investors who are individuals are going to be basing their investment decisions on factors nowhere near as complex as underlying investments of the company.  That's only done by big pension fund managers seeking to justify their decisions and offload repsonsibility.  And that's why this class action lawsuit ain't a class action, it's just bay street suing bay street.

Comments

  1. Bev.winseck says:

    I'm a small investor who lost about 1/3rd of my life savings at age 65. Do I have any recourse or is it just for the big guys?

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