When David Berry arrived on the trading floor in 1996, he was 30 years old and pretty much broke. He’d racked up $17,000 in student loans and was on the hook for another few thousand in credit card debt. He even had a collections agency stalker after him.

The first threatening phone call came a few days into his job as a trading associate on Scotia Capital’s Preferred Share Desk. If Berry didn’t get his debt paid up pronto, the collections guy promised, he was going to humiliate him by calling every Rolex-wearing hot shot in Berry’s department until he had a cheque in his hands. It never came to that: Berry’s first bonus was just enough to cover the loan.

Debt would soon be a distant memory. Within two years, he would wheel and deal his way to ruling Scotia Capital’s Preferred Desk and from his throne eventually control 62 per cent of the preferred share market in Canada. “Berry’s trajectory is almost unheard of,” says one of Bay Street’s senior players. “It’s like he went from Model T to rocket in a year or two.”

He was the only institutional trader at Scotia Capital who had a direct-drive deal (also known on The Street as “eat what you kill”), meaning he kept a percentage of the profits he generated. In 2002, Berry claims he netted Scotia $75 million in profits and personally took home $15 million. His desk produced 40 per cent of Scotia Capital’s institutional equity profits, which itself amounted to a significant portion of the entire bank’s net profits. Berry’s 40 per cent was solely manufactured by him and his even-younger assistant, Marc McQuillen.

It’s widely believed that David Berry was Bay Street’s top earner at the time. David Wilson, then vice-chairman of the Bank of Nova Scotia, and chairman and CEO of Scotia Capital, earned just under $7 million that same year. In 2004, Berry had an off-year, earning only $9.5 million, but it was still more than triple what Rick Waugh, president and CEO of the Bank of Nova Scotia, made in salary and bonus. He was raking in enough to snap up one of Rosedale’s most desirable and historic properties and to procure himself the requisite plaything for any young Bay Street multi­millionaire: a Ferrari.

Which is why it was front-page news when Scotia fired Berry on June 30, 2005. The bank alleges that he engaged in inappropriate trading practices—most significantly, that Berry sold some newly issued preferred shares to clients without printing the trades on the stock exchange. Yet the majority of the power brokers contacted for this story (most of whom would speak only on the condition of anonymity) believe the allegations were an elaborate excuse to get rid of Berry. The real reason he was fired, they say, was because he was making a lot more money than Scotia’s top executives (or the top executives at any Canadian bank, for that matter).

“This was all about ego,” speculates one former Scotia manager. “Would Rick Waugh blow a gasket because of how much money Dave was taking home? Some people who know Scotia and understand the culture of Bay Street would say yes.”

In November 2006, Berry launched a $100-million-plus wrongful dismissal suit, which could unfold in court this fall. Though no one from Scotia would speak on the record for this story, sources there say the bank is prepared to use any and all available resources to defend itself, including Torys’ Sheila Block, widely considered Toronto’s top litigator.

At a time when people view the banks’ string of record profits with weary suspicion, Berry’s suit positions him as something of a David to Scotia’s Goliath. The irony is that this unlikely David is the bank’s own creation.

Berry didn’t really understand the intricacies of the preferred share market when he started his job, but his employers figured he was bright and aggressive enough to pick it up quickly. To make sure, he was assigned to work under a senior trader, Tim Hale, who’d been running the Preferred Desk at Scotia since the early 1990s. The desk was then seen as a relatively sleepy corner of the trading floor, but it didn’t take long for Berry to see avenues of untapped potential.

Preferred shares are similar to bonds, except that they pay dividends instead of interest. And while they can be traded like common shares, they get paid out before common shares in the event that the issuing company files for bankruptcy—thus the term “preferred.” However, this elevated status isn’t usually what investors consider their most attractive asset. The real reason those in the preferred market are drawn to it has to do with tax advantages.