Trading Probe Led to Firing of Two Scotiabank Analysts in 2024

Two brothers, Michael Doumet and George Doumet, were fired from their positions as equity analysts at Bank of Nova Scotia in 2024 after a compliance review found they violated the bank's personal-trading policies. The brothers are now suing the bank, claiming they were unjustly dismissed and subject to poor treatment. The controversy also led to the termination of three senior compliance employees.

The incident began when the bank's compliance department noted that Michael Doumet frequently traded in a single small-cap stock while maintaining regular communication with the company's CFO. An anonymous complaint sent to the bank's internal whistleblower program in January 2024 prompted further action.

The bank engaged law firm Torys LLP to conduct its own investigation. Shortly after the Doumets were fired, three compliance employees were also let go for failing to escalate the trading concerns.

Why Did This Happen?

Scotiabank cited breaches of its personal-trading policy as the primary reason for the Doumets' dismissals. The bank's compliance department identified the issue, but senior staff failed to act on the findings.

The decision to fire the three compliance employees followed a review of their conduct during the Doumet case. The bank emphasized the importance of maintaining strong internal controls and accountability.

What Are the Broader Implications?

This incident occurs against a backdrop of increased scrutiny for Canadian banks regarding compliance and risk management. Toronto-Dominion Bank faced a major U.S. anti-money laundering settlement in 2020, highlighting the sector's vulnerability.

Scotiabank has also been working to revitalize its metals-trading desk, a move that comes amid ongoing legal and compliance challenges. The bank declined to comment on the Doumet case due to ongoing litigation.

How Did Markets React?

Scotiabank's recent stock activity reflects a mix of market sentiment. The firm downgraded Extra Space Storage (EXR) from Sector Outperform to Sector Perform, citing a weaker revenue outlook for the storage REIT.

The downgrade was based on a new self-storage revenue model that analyzed pricing trends and customer turnover.

Scotiabank also cut its price target for Extra Space Storage from $45 to $39 per share. The move was described as a slight negative for the company.

Extra Space Storage reported a 34.45% miss on its Q3 2025 earnings per share. However, the firm exceeded revenue expectations and promoted Noah Springer to president.

What Are Analysts Watching Next?

Analysts are watching how Scotiabank will address its internal controls and regulatory risk. The bank's recent decision to revive its metals-trading desk adds another layer of scrutiny.

The larger Canadian banking sector is also under focus, with Royal Bank of Canada (RBC) maintaining a dominant position in the market. RBC's global reach and diversified services make it a key player in the industry.

The outcome of the Doumet lawsuit could set a precedent for how banks handle internal trading and compliance violations. Legal experts suggest the case may test the limits of employer discretion in enforcing internal policies.