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It looked like a perfect match – a star mining banker joins a hungry Bay Street shop looking to raise its game in the resource sector. It ended in a nasty split, with accusations of stolen clients, incompetence and defamation.
The saga finds mid-tier dealer Dundee Securities in a tangled court battle with veteran Bay Street mining banker Bob Sangha, who joined the firm in 2010. Dundee alleges Mr. Sangha and one of his associates later secretly set up a competing firm and solicited Dundee clients, including Osisko Mining, which was embroiled in a high-profile takeover battle this year, according to a lawsuit filed in the Ontario Superior Court of Justice.
Mr. Sangha denies the allegations and accuses Dundee representatives, including one executive, of making false and defamatory statements against Mr. Sangha and his investment bank Maxit Capital Inc., according to the countersuit.
The bitter fight between Mr. Sangha and Dundee provides a window into the cutthroat battle for business in the mining industry. Mr. Sangha is seeking $50-million in damages from Dundee Securities. Dundee is seeking a total of $43-million in damages from Maxit Capital, Mr. Sangha and his associate.
Mr. Sangha was plucked from BMO Nesbitt Burns to serve as Dundee’s managing director of mining banking. Hired to beef up business and raise the profile of Dundee’s mining team, Mr. Sangha brought about two dozen of his mining clients.
Because of his experience, Mr. Sangha’s employment contract said he would receive 60 per cent of the advisory net revenue for the first three years at Dundee and then 40 per cent the following years.
The relationship worked until 2012 when the firm lost its head of capital markets and started shifting the direction of the brokerage without consulting Mr. Sangha, according to his court filing. He then caught wind that Ned Goodman, the chief executive of parent company Dundee Corp. and a well-known mining financier, was in advanced discussions to bring other mining bankers to Dundee – a development Mr. Sangha perceived as a threat to his job.
Ned Goodman and Dundee’s new head of capital markets were considering a new firm-wide compensation model, which Mr. Sangha insisted should be based on performance.
According to Mr. Sangha, his team generated about $60-million in net revenue for Dundee, of which $24-million was paid to Mr. Sangha’s group. Mr. Sangha’s lawsuit says Dundee “did not generate a single advisory assignment for Sangha,” even though he was told that the firm’s client relationships would provide more than a third of his advisory business.
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