David Kassie, the star investment banker at the centre of a messy brawl with Canadian Imperial Bank of Commerce, spoke out for the first time yesterday against his former employer and denied that he ever took confidential information from the bank or raided its staff for his fledgling brokerage firm, Genuity Capital Markets.
CIBC filed a lawsuit last week against Mr. Kassie and five other employees who defected to Genuity, accusing them of plotting a "well-orchestrated and calculated scheme" to recruit colleagues while they were still on the bank's payroll. The legal battle has quickly morphed into one of the most salacious Bay Street soap operas in years, fuelled by dozens of private e-mails between Mr. Kassie and his partners at Genuity.
Mr. Kassie, flanked by his lawyer, Genuity partner Calin Rovinescu, and a public relations adviser, insisted in an interview yesterday that neither he nor anyone else at the firm ever approached an employee at CIBC World Markets, the bank's investment banking arm, to join Genuity. Every CIBC official who expressed an interest in defecting signed a confidentiality agreement stating that they approached Genuity on their own initiative, he added.
"We did not solicit any CIBC employees . . . We wanted to be absolutely above board."
The controversial deal maker also flatly denied that anyone at Genuity took confidential information from CIBC, and his lawyer dismissed the lawsuit as "ill-founded."
Genuity says it issued a memo to ex-CIBC staff instructing them not to take any information with them, and not to ask clients to follow.
Furthermore, Mr. Kassie said that Marie Cordero, a business specialist who CIBC suggested may have copied privileged information onto a compact disc, was in fact compiling an invitation list for the upcoming 100th anniversary of CIBC Wood Gundy.
"This is really in the no-good-deed-goes-unpunished category," Mr. Kassie said of Ms. Cordero's inclusion in the suit.
Despite the bad blood between the two sides, there were some efforts at diplomacy yesterday. One week after he criticized CIBC president Gerry McCaughey in an affidavit, Mr. Kassie said the legal document was not meant to be "a swipe" at the executive, but rather an explanation for the exodus of bank executives to Genuity. As for CIBC chief executive officer John Hunkin, who asked Mr. Kassie to leave the bank last February amid controversy over its entanglement with Enron Corp., the investment banker said: "I have nothing but the highest regard for John. We have a very good relationship, very cordial. For the record, I think he's done a good job."
Part of the fence-mending, no doubt, is an attempt to extricate the upstart firm from CIBC's inflammatory allegations and safeguard its reputation among potential clients. Some have suggested that companies may not want to get involved with Genuity until the crush of media attention subsides.
Mr. Kassie, however, said former and prospective clients have been calling him with support since the legal furor erupted.
"Ethics are the No. 1 thing," Mr. Kassie said. "Obviously, it is troubling for me to read some of this stuff."
Sources close to Genuity said Mr. Kassie was infuriated that CIBC "ambushed" the upstart firm when it served it with the voluminous lawsuit last Monday afternoon. The late arrival gave Genuity less than a day to prepare for a court appearance the next morning and he and his partners were shocked that the bank had included personal e-mails from departed bank executives, some of whom were portrayed bragging about the money they expected to earn at the new firm.
Asked yesterday whether he was surprised by the bank's legal tactics, Mr. Kassie flushed, bowed his head and tersely replied "It has been disappointing."
In addition to Mr. Kassie, CIBC is suing investment banker Dan Daviau, a rain maker in the technology industry, and former mergers and acquisitions head Phil Evershed. Both men resigned last spring, although they technically remained as employees until the end of October, and signed 21-month non-solicitation agreements as part of their severance packages. Former vice-chair Earl Rotman and head trader John Esteireiro, each of whom left in mid-December after the annual bonuses were paid, are also named in the suit.
When Mr. Kassie left CIBC last winter, he toyed with the idea of moving to New York to work for a merchant banking firm. In late June, however, he discussed the idea of creating a new firm with Mr. Evershed and Mr. Daviau. The trio began putting together a business plan in August, and soon after asked Mr. Rovinescu to join the firm.
The idea was to begin to recruit gradually, once the firm was approved by regulators in November. But Mr. Kassie said he and his partners were inundated by calls after several media reports discussed the formation of Genuity.
"Frankly, we were surprised as to how much interest we got. We were also surprised ultimately by how many came."
Genuity chalked up the departures from CIBC as evidence people want to work for a smaller, entrepreneurial brokerage that is owned by its employees.
In his affidavit last week, Mr. Kassie said he was told by many of those leaving that there was a lack of vision and direction at CIBC World Markets -- something he insists was not a veiled dig at Mr. McCaughey, who temporarily stepped in as his replacement.
So far, more than 20 people have left CIBC, many of them senior deal makers, traders, and salesmen. Genuity expects to have 80 full-time staff by the end of this month, 35 of which will be partners with an equity stake in the firm.
The CIBC suit provides reams of e-mail and BlackBerry messages between the officials named in the suit, and there are several references to deleting files or conversations.
Mr. Kassie maintained yesterday that there was no effort to hide anything, instead suggesting that this was confidential Genuity information and none of CIBC's business.
"The planning of Genuity was not meant for CIBC's consumption," he said.
"Interpreting snippets of other people's e-mails is a challenging business."
CIBC cited a "depth chart" in its suit as evidence Genuity was secretly targeting its employees, since approximately 70 per cent of the individuals listed on the chart were from CIBC World Markets.
Mr. Kassie, who devised the chart in August, said it was only meant to be a reflection of different business areas they might pursue at Genuity, and not a recruitment tool. He attributed the prevalence of CIBC names on the chart to familiarity, and said he couldn't recall the names of people in similar positions at other banks.
Mr. Rovinescu suggested the reason that so many of the firms' employees came from CIBC rather than other bank-owned dealers is that people who are giving up secure jobs at a large financial institution have the added reassurance of knowing Genuity's founders.
"People left behind compensation and security to join people like David whom they have respect for. At the end of the day, you want to know you can go tiger hunting with the leadership of the firm."
Alan Lenczner, Genuity's lawyer, said he plans to file a statement of defence within the next 10 days.
Many on Bay Street are betting the two sides will settle their disagreement out of court. Mr. Kassie said he wished Mr. Hunkin or someone else at CIBC had contacted him with their concerns before pressing ahead with the lawsuit. Asked whether he would like to meet with Mr. Hunkin to settle their differences, Mr. Kassie said: "Sure I would love to."
No hard feelings
Genuity Capital founders Calin Rovinescu, left, and David Kassie publicly defend their firm yesterday for the first time since CIBC accused them last week of a 'calculated scheme' to raid the bank's staff. Coached by a lawyer and a public relations adviser, the outspoken Mr. Kassie adopted a new diplomatic tone about his former employer:
'Interpreting snippets of peoples' e-mails is a challenging business.'
'I have nothing but the highest regard of John (Hunkin),' CIBC's chief executive officer.
'Gerry McCaughey is a fine individual who did a terrific job in leading the wealth management group' at CIBC.
'I think CIBC conducts itself with the highest ethical standards.'
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