Does Market Instability Constitute Grounds To Exonerate An Investment Advisor From Liability?

On September 12, the Court of Appeal of Québec handed down an important decision on the liability of an investment advisor in the context of a financial crisis (London Life Insurance Company c. Long, 2016 QCCA 1434).

The case involves two immigrant investors who retained the services of an advisor. In 2005, they began to entrust the advisor with large sums. When the financial crisis occurred in 2008, the value of their portfolio plummeted. When the investors took a closer look at their portfolio, they discovered that the products they had been sold did not match their investor profile. They considered their losses to be the direct result of poor management by their investment advisor, who defended his actions by invoking the impact of the 2008 financial crisis.