Communications André Bouthillier inc.

Communications André Bouthillier inc.

March 20, 2006 14:00 ET

Jean-Pierre De Montigny Sues Desjardins Securities for $3.1 Million

MONTREAL, QUEBEC--(CCNMatthews - March 20, 2006) - Jean-Pierre De Montigny, former President and Chief Operating Officer of Desjardins Securities, is suing his ex-employer for $3.1 million representing proper notice, reimbursement of earned but unpaid remuneration and moral damages.

In his suit filed in Quebec Superior Court, Mr. De Montigny maintains that Desjardins Securities never respected its obligations regarding his remuneration and that he was dismissed from his duties by Alban D'Amours, President and Chief Executive Officer of Desjardins Group, without valid reason.

In addition, Mr. De Montigny says Mr. D'Amours did not have the legal authority either to accept his resignation or to dismiss him. In fact, at the time of Mr. De Montigny's dismissal on May 1, 2005, Mr. D'Amours was no longer a member of the Board of Directors of Desjardins Securities and could not legally act as Chief Executive Officer, as he did not have the necessary regulatory approval to do so. Only the Board of Directors of Desjardins Securities or a senior Company officer were legally authorized to dismiss Mr. De Montigny or to accept his resignation. The Board was never informed of this decision until after the fact.

Mr. De Montigny states that he always reached - indeed exceeded - the strategic objectives set in agreement with Desjardins Group while serving as President and Chief Operating Officer of Desjardins Securities from June 2001 to May 2005.

As a result, he notes, Desjardins Securities posted an outstanding performance from 2001 to 2004 under his leadership:

- Revenues increased to $226 million from $104 million;
- Its market share for brokerage services to individuals jumped to
8.5% from 3.9% in Quebec;
- The Company's trading volume on the Toronto Stock Exchange
increased to $47.1 billion from $4.1 billion;
- From June 2001 to June 2005, clients assets rose to $17 billion
from $7 billion.

At the time of Mr. De Montigny's departure in May 2005, Desjardins Securities had become a major brokerage player in Canada, with 1,200 employees - double the number when Mr. De Montigny arrived at the company in 2001.

The facts

Despite his performance and notwithstanding Desjardins Group's clear written commitment, Mr. De Montigny never received the long-term incentive plan that had been agreed to by both parties. After continually leading him to believe that he would receive this remuneration, which is standard practice in the brokerage industry, Mr. De Montigny was eventually offered a new formula that in fact represented a reduction in his remuneration. The problems related to his compensation were present for the entire period of his employment at Desjardins Securities, while Desjardins Group continued to apply a Desjardins-type remuneration formulas rather than practices common to the brokerage industry.

In addition, in early 2005, management of Desjardins Group failed to support Mr. De Montigny regarding a complaint filed by Market Regulation Services Inc.

According to the regulatory agency, Desjardins Securities had committed certain technical violations. On the one hand, Messrs. D'Amours, Pierre Brossard and Pierre Tardif (the latter Chairman of the Board of Desjardins Securities), wanted to see the matter resolved as quickly as possible in order to protect the reputation of Desjardins Group; on the other hand, Mr. De Montigny wanted to bring the matter before the appropriate authorities for a full hearing.

At the time, Mr. De Montigny felt that the penalty proposed by the regulatory agency and the impact on his reputation were disproportionate relative to the alleged violations. The Board of Desjardins Securities confirmed, in a resolution, that a fine seemed inappropriate given that Mr. De Montigny had made the necessary changes and that he was acting in good faith and honestly.

Against his will, Mr. De Montigny agreed to the payment of the fine levied by the regulatory agency, due to pressure from Desjardins Group representatives and Desjardins Securities shareholders and in order to avoid a confrontation between Desjardins Securities and Desjardins Group. He agreed to the payment of the fine because Desjardins Group representatives had assured him that the matter would be managed in such a way that his reputation would not be compromised.

However, contrary to what had been promised, the communications prepared by Desjardins Group focussed on Mr. De Montigny's responsabilities, which affected the relationship of trust. In addition, direct interventions in Desjardins Securities' affairs by representatives of the parent, undermined Mr. De Montigny's authority. Desjardins Securities' business plan was also being questioned.

Frustrated by all of these events, Mr. De Montigny offered his resignation to Mr. D'Amours in March 2005. Mr. D'Amours initially refused to accept Mr. De Montigny's resignation and subsequently put in motion efforts to address Mr. De Montigny's concerns. But Mr. D'Amours changed his mind on May 1, 2005, telling Mr. De Montigny that although he did not believe that his performance justified such a measure, the pressure from the network had become excessive. While Mr. De Montigny was in Mr. D'Amours' office, a news release announcing his "resignation" was issued and his temporary replacement had already moved into his office.

"The offensive and inconsiderate way in which the dismissal was carried out, i.e. without any warning, discussion or possibility for explanations, while Mr. De Montigny's replacement had already been orchestrated, clearly constitutes abusive behaviour by (Desjardins Securities)," the lawsuit states.

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