Ontario court orders CI, AIC to pay $170M in market timing case dating back to 2006
The liability trial ran across February, March and June 2022, with Koehnen ruling in February 2023 that both CI and AIC had breached their duty to prevent market timing within their funds.
Damages were argued before Koehnen from March 28 to May 16, 2025, with closing arguments heard over three days at the end of July and start of August that year. Combined, the liability and damages phases took 41 trial days: 24 for liability and 17 for damages.
In assessing how much the investors were owed, Koehnen sided with the plaintiffs’ expert witness, Professor Eric Zitzewitz, adopting what’s known as the Next Day NAV method for calculating losses. The judge found this approach properly captured the dilution caused by time-zone arbitrage, whereas the “profits method” put forward by CI’s expert was rejected for measuring the wrong thing entirely, with the court concluding the conditions needed to justify using it hadn’t been met.
CI was ordered to pay $60,480,000 for harm tied to its failure to curb timing activity by accounts the plaintiffs had specifically identified, plus further damages linked to additional accounts Zitzewitz determined had also engaged in harmful timing. AIC’s total came to $37,900,659, covering both the identified and additional accounts found to have caused losses to unitholders.
On top of the damages, the court awarded the class pre-judgment interest at 2.8% annually, along with costs against both fund managers.
