In a recent employment law case decided by the BC Supreme Court, an employee whose employment was terminated after he forged a client’s signature on a document. The employee sued for wrongful dismissal, but the court found that the termination was justified.
The employee was a certified investment consultant licensed to sell mutual funds and insurance products. He had previously worked as an investment advisor at a different company, but was hired by the small, full-service financial services firm (which eventually terminated him) as an investment advisor in July 2016.
As soon as the employee started working for his new employer, he began the process of moving clients’ accounts from his previous firm to the new firm. With respect to one of the clients, he had some email correspondence back and forth about transferring her accounts, in one of which the client stated that she was “happy to sign papers” concerning her account, once she returned from a trip.
However, the day before the client was supposed to return from the trip, the employee forged the client’s signature on several documents which had the effect of liquidating some investments and transferring the client’s account to the employee’s new company.
The employee stated that he thought he was acting in the client’s best interests and he thought the client wanted to move her account to the new firm. The client provided evidence that she did not intend to move her account to the new firm but had not communicated that to the employee yet.
Once the client found out her account had been transferred, she complained to the employee’s new firm, which investigated and ultimately decided to terminate the employee. His employment was terminated in September 2016.
The employee admitted the forgery, but claimed there were extenuating factors:
He stated Dr. Ogilvie had agreed to sign documents in advance of the forgery, she benefitted $4,000 from the liquidation, he had altruistic intention, received no personal benefit and did not attempt to conceal what happened.
The question that the court had to decide was “whether the nature and degree of the dishonesty in all of the circumstances of this case warranted dismissal.”
The court concluded:
[86] Using the various formulations of the test at para. 48 of McKinley: Did Mr. Movassaghi’s actions go to the core of the employment relationship? Did they violate an essential condition of the employment contract? Did they breach the faith inherent to the work relationship? Were the actions fundamentally or directly inconsistent with Mr. Movassaghi’s obligations to Harbourfront? I conclude that the answer to all of the questions is yes.
[87] Harbourfront operates in the financial services industry. Cornerstones of that industry are trust and acting with a client’s consent. Forging a client’s signature is fundamentally inconsistent with both of those. Not reporting the forgery until after the client complained is inconsistent with both of those. In an industry where clients put their trust in financial services firms, Harbourfront must be able to put trust in its employees. Harbourfront employees are given autonomy on the “front end” to run their practices. Autonomy requires trust. The terms of the Employment Agreement, the terms of the Conduct Manual, and the published position of IIROC on forgery all attest to the importance of obtaining consent of a client and the seriousness with which forgery is viewed.
[88] At the time of his termination, Mr. Movassaghi had transferred to Harbourfront $8.6 million of assets to manage, and I find would likely have brought other assets. When Harbourfront terminated Mr. Movassaghi’s employment, Mr. Movassaghi could no longer work as an investment advisor unless he found another firm willing to sponsor him, and was at risk of losing his client base. However, these were not the result of Harbourfront’s actions, but the result of Mr. Movassaghi’s forgery. He eventually was barred from registration for eight months, and he agreed that sanction took into consideration the time he had already not been employed as an investment advisor.
[89] Given that Mr. Movassaghi could not work as an investment advisor and was at risk of losing his client base, should Harbourfront have continued to employ him, and thus be responsible for someone who has forged a client’s signature? In my view that answer is no. The employment relationship was irreparably fractured. In my view, Harbourfront did what it could to assist Mr. Movassaghi. Mr. Popescu contacted two individuals for Mr. Movassaghi. He testified they would have helped Mr. Movassaghi transfer his clients to another firm. Mr. Movassaghi could have elected to have his shares in HIH repurchased at the internal share price of approximately $30,000. Instead, because Mr. Movassaghi mistakenly thought he could resolve the IIROC matter within a very short period of time, he failed to make an election after extensions of time granted by Harbourfront.
[90] It follows that I dismiss Mr. Movassaghi’s claim for wrongful dismissal. I therefore need not address the quantum of damages in lieu of notice or mitigation.
The court also ordered the employee to repay about $14,000 in advance commission and other expenses and payments that the company made on his behalf before he was terminated.