Howard Levitt: RBC pays high price for wrongful dismissal of financial adviser

The Royal Bank of Canada (RBC) headquarters in the financial district of Toronto on April 24, 2025. Photo by Laura Proctor/Bloomberg

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Sometimes I come out a little ahead of the law.

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In my June 19 column, I wrote about a largely overlooked danger for financial institutions that fire financial advisers for cause and then report the alleged misconduct to their regulator.

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In such cases, the employee does not merely lose a job. They can lose their career.

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Once a bank files a notice of termination alleging misconduct, the adviser is unable to work in the industry while the regulatory process unfolds. Meanwhile, clients who need their investments managed do what clients inevitably do. They find someone else.

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And often those clients, having built a new relationship, never return.

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I argued that such terminations are fundamentally different from ordinary wrongful dismissals.

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If a 50-year-old employee is improperly fired and is unemployed for eight months before finding another job at roughly the same salary, her wrongful dismissal damages will compensate her for those eight months.

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A financial adviser can suffer something much worse.

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She can lose the book of business painstakingly accumulated over decades, along with the future referrals those clients would have generated. And, as clients and co-workers learn of their suspension, often assuming the worst, they lose their reputation too.

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Just 11 days after that column was published, Justice Annette Casullo provided a remarkable judicial confirmation of that argument in Silva v. Royal Bank.

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And she put a number on it.

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$1,919,000.

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That was the amount she awarded Silva, a former financial adviser at Royal Bank of Canada, for loss of earning capacity.

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The total award exceeded $2.6 million once 16 months of severance damages, aggravated damages and punitive damages were included.

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The case should terrify employers, particularly those that use outside investigators to build a case for cause.

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Silva was a successful 55-year-old financial professional with a loyal client base.

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Among other things, RBC claimed that she had sent confidential information to her personal email, processed certain transactions before obtaining documentation of authorization and backdated trade documents.

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It treated the allegations as cause-worthy.

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It also reported them to the financial industry regulator.

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There was just one problem.

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Their allegations did not withstand judicial scrutiny.

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Justice Casullo found that the evidence did not establish just cause. The investigation had serious deficiencies. Silva’s explanations were not properly considered. Remarkably, the investigators did not even contact the clients whose transactions were at issue.

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The court found that Silva had no reasonable prospect of employment in financial planning while the regulatory allegations remained outstanding. No one would hire her as she was unable to practice her trade.