CIBC allegedly failed to properly disclose its exposure to subprime mortgages in a move that misled the market and CIBC investors alike, according to testimony from Rotman School accounting professor Gordon Richardson.
In his 65-page review of CIBC, Richardson writes CIBC failed to comply with GAAP disclosure requirements and that information provided concerning credit risk was deceptive.
Richardson is calling for CIBC to restate income from the last three quarters of 2007 and the first quarter of 2008 claiming original figures were overstated.
"CIBC denies these allegations and plans to vigorously defend this action. CIBC is confident that, at all times, its conduct was appropriate and that its disclosure met applicable requirements," said CIBC spokesperson Rob Mc-Leod.
A second testimonial from a securities valuation firm in the US reports CIBC investors lost a maximum of $6.6 billion between 2007 and 2008, the period the lawsuit covers.
The case, part of a class-action suit, is expected to come before the Ontario Superior Court for certification in March 2011.