Home Featured Federal Court upholds firing of RBC investment planner who manipulated client transactions to gain nearly $100,000 in unearned compensation

Federal Court upholds firing of RBC investment planner who manipulated client transactions to gain nearly $100,000 in unearned compensation

by HR Law Canada

The Federal Court has upheld an adjudicator’s decision that the Royal Bank of Canada (RBC) had cause to dismiss a long-serving worker for misconduct related to unauthorized transactions.

JM, an 18-year employee at RBC who was an investment retirement planner, faced scrutiny after audits revealed she had manipulated client transactions to gain nearly $100,000 in unearned fees, bonuses, and commissions.

The case came to light in 2017 when RBC detected numerous policy violations by JM, leading to her immediate dismissal in July 2018. She claimed unjust dismissal, but an adjudicator at the Canada Industrial Relations Board upheld the bank’s decision, finding termination for cause was justified and that she had been given sufficient notice.

JM’s role at RBC involved managing client investments, where she was expected to adhere to strict ethical standards outlined in the bank’s Conduct Code and Compensation Guide. However, investigations found that she had bypassed automated processes for rebalancing client funds, engaging in manual transactions that falsely inflated her compensation.

The Adjudicator emphasized the seriousness of her actions, stating, “RBC was entitled to lose confidence in the trustworthiness of (JM) and to conclude that her conduct irreparably destroyed the heart of their employment relationship, which at its essence required honesty, integrity, and trust.”

Further, the decision underscored JM’s disregard for the rules, as she continued her misconduct even after receiving a clear warning from RBC’s Branch Compliance Officer. Her lack of responsibility and evasive testimony during the proceedings painted a picture of deliberate and knowledgeable breach of trust, it said.

“The nature of her employment responsibilities and her entitlement to compensation were clearly expressed in the Code and the Guide, which she confirmed annually that she had read and understood. Instead, she chose to carelessly and recklessly disregard the Code and Guide and to put her own interests first,” the Adjudicator said.

“The evidence of the manner in which she did it also makes clear that, to actually do what she did required a sophisticated awareness of the RBC payroll and compensation system, which reveals she must have known and understood what she was doing.”

The court’s ruling highlighted the principle that egregious misconduct, particularly in financial institutions where trust and integrity are paramount, can warrant immediate termination without progressive discipline.

The Federal Court noted the Adjudicator had found no mitigating circumstances, RBC never condoned her conduct, and she was “treated fairly throughout,” it said.

“In addition to being unsupported and uncorroborated, (her) testimony was cavalier, disingenuous, and unresponsive. Her answers to questions were evasive and contrived, and she was wholly devoid of credibility,” it said.

As a result, the application for judicial review was dismissed, and costs were awarded to RBC “with the mid-range of Column III of Tariff B.”

For more information, see Morton v. Royal Bank of Canada, 2024 FC 311 (CanLII).

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