Pace Securities | Page 28 | General financial discussion | Discussion forum

Elaine said

Wow Norman- this is interesting- suggesting a judge would rule on theft or fraud based on whether the person needed the money for rent.I guess I should try that.Go steal something because I am in need and know that the judge will empathize with me.
I guess this goes for all the advisors.The judge will sympathize with them because they need to make payments on that nice new Tesla they bought.And they ,too ,have a mortgage-so maybe the judge will say I need to give them more money.

That's not the case! You are mixing criminal and civil law.

In criminal law, it is guilty or not guilty. Jail or not jail. There is no 20% guilty, 80% guilty, and so on.

When one is trying to recover money, instead of put someone in jail, it is civil law. That's where the 0% to 100% responsibility comes in.

If my car is damaged because I drove accidentally into someone's house and I sue the homeowner for having their house in the way, the homeowner can argue that I'm at least 99% responsible for the damages to my car. After all, I drove the car into their house which was not moving and hasn't moved in decades!

Douglas Thomson said
The Pace Securities advisors defrauded clients by convincing them they were putting their money into a investment with bond-like security. They were enabled by the credit union. It was simple fraud. Whether that’s a matter for civil court, or criminal, remains to be seen.
(Cue “Norman’s” hand-washing)  

Although this current case is a business/civil case I wouldn’t be surprised if there are other potential investigations especially with the Smiths and their “web of deals”. It’s been quiet about them lately but I’m sure we’ll hear something about them.

Norman1 said

Elaine said

…It would be interesting to know just how many ACCREDITED INVESTORS Pace Security had.Wealthy beyond all means.That would be a fun fact.maybe someone can produce that little tid-bit of info.

There are at least three accredited investors judging from the number of investors who put $1+ million into the shares. This is Table 7.2 on page 26 of Motion Record, December 22, 2020:

Value of Preferred Shares at Cost	Number of Investor Claimants	Aggregate Investment
$25,000 or less	320	$2,893,460
$25,001 to $200,000	348	$25,974,490
$200,001 to $750,000	39	$14,082,680
$1,000,000 or more	3	$3,847,570
Total Amount Invested		$46,798,200

Could be more of them as some accredited investors may not have invested $1 million or more. This couple is likely an accredited investor who invested around $500,000. Their story is on page 29:

(b) CK and JK are husband and wife. They retired in March 2020. Together they had invested nearly half a million dollars in the Preferred Shares, representing approximately half of their retirement savings. Their financial plan is dependent on those funds, and they need to know the time frame for resolution so that they can plan accordingly.

  

The accredited investors I am referring to are not the ones that actually have (OR HAD) but the ones who had it signed on the documents that they were accredited.That will be a completely different number.What I would like to know how many people were DESIGNATED as accredited investors

I would never leave without a copy of a document I had just signed, I think that's pretty standard practice for many of us. Seems very odd to me that not one of 700 people were like me and refused to leave until they had been given a copy - ? Must be more to it.

Elaine said

The accredited investors I am referring to are not the ones that actually have (OR HAD) but the ones who had it signed on the documents that they were accredited.That will be a completely different number.What I would like to know how many people were DESIGNATED as accredited investors

I didn't run into any breakdown of the number of investors and their class. One can't really tell with some of the lower investment amounts:

Someone who had $100,001 to $200,000 of shares would have to be designated as an "accredited investor" to buy that in one shot.

But, an "eligible investor" can buy up to $100,000 in a 12 month period. The investor who bought $150,000 of shares could have been designated an "eligible investor" and bought over more than one 12-month period.

Elaine said
I actually called everyone I could think of to cancel once I got the documents from Ernst and Young.The customer has 2 business days to cancel from receipt of the documents-I think that is what the wording was.So I cancelled
Still don't have my money back

If it were only as easy as that!

Who is the contract with? PACE Credit Union, PACE Securities, or PACE Financial?

The money was eventually sent to PACE Financial. If the contract was with PACE Financial, then PACE Financial is responsible for returning the money. Unfortunately, because of that serious "accident" with the junk bonds, PACE Financial no longer has the money to return.

member said
But how many had it written on their documents-when they obviously were not-like me-how many people banking at Pace would be accredited investors?Unless you can look at all 700 documents you won't know how many of us were considered "accredited"

The advisor said they would get back to everyone. This occurred in the PACE Credit Union branch on a Saturday when most office stationary was conveniently unavailable. And then time passed. And here we are.  

Norman1 said

Elaine said

The accredited investors I am referring to are not the ones that actually have (OR HAD) but the ones who had it signed on the documents that they were accredited.That will be a completely different number.What I would like to know how many people were DESIGNATED as accredited investors

I didn't run into any breakdown of the number of investors and their class. One can't really tell with some of the lower investment amounts:

Value of Preferred Shares at Cost	Number of Investor Claimants	Aggregate Investment
$25,001 to $200,000	348	$25,974,490
$200,001 to $750,000	39	$14,082,680

Someone who had $100,001 to $200,000 of shares would have to be designated as an "accredited investor" to buy that in one shot.

But, an "eligible investor" can buy up to $100,000 in a 12 month period. The investor who bought $150,000 of shares could have been designated an "eligible investor" and bought over more than one 12-month period.  

Douglas Thomson said
The Pace Securities advisors defrauded clients by convincing them they were putting their money into a investment with bond-like security. They were enabled by the credit union. It was simple fraud. Whether that’s a matter for civil court, or criminal, remains to be seen.
(Cue “Norman’s” hand-washing)  

That’s why PCU and PRRR are keeping at as a civil matter because that is why the corporate liability insurance not only covers court costs but also settlements which are obviously negotiated with the insurance company.

If it were to be a criminal matter, the liability insurance would not cover this. After speaking with several lawyers, there needs to be a “triggering” event such as mediation or litigation to trigger the corporate liability insurance.

The globe article also stated that the sum that PRRR was seeking would be devastating if not for insurance policies that can offset some of the costs.

This is how Exxon settled their multi billion settlement several years ago, by using their insurance and not their own cash/equity/capital to pay.

But this is where it gets complicated with multiple parties involved but PACE and FSRA both agree that PACE is at fault and hence the mediation in an attempt to solve this before resorting to a trial.

The findings from IIROC’s disciplinary hearing will also help establish responsibility in addition to IIROC’s earlier concerns about PCU and PSC.

We’ll see how it plays out in the coming weeks/months.

Although PCU “conveniently” wasn’t able to provide copies of documents at the time, they provided statements in the mail and online.

Anytime someone asked for their documents there was always a delay.

This is where PCU violated the trust of existing customers who had already trusted their institution.

Norman1 said

Loonie said

My opinion of what is "likely" is quite different.
…
My sense of what was "likely" is that he knew what he was getting into. He's a graduate of Osgoode Law School and has been a practising lawyer. I don't think he's naive. I think he knows how to protect himself.

For those same reasons, I don't think Eves would have knowingly become chairman of the board of a startup investment dealer that was breaking OSC rules.

An implosion, like PACE Securities, won't look good on the resume afterwards. As well, there could be serious consequences when things go wrong. In the YBM Magnex fiasco, the OSC staff asked that, as one of the directors, David Peterson be sanctioned with a five to ten year ban on being a director for any public company.

The corporate director positions are paid positions. So, a former politician is not lending his/her credibility for free.

Keep in mind the directors are not required to shadow the day-to-day employees and can miss things. In the Home Trust problems around 2015, the board didn't know that their mortgage underwriters had been "phantom ticking" mortgage applications when the work to verify applicant's income was not actually done.  

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I think we are drawing very different conclusions from the same information.

In sum, he was a big boy. He knew what he was doing.

However, I have no vested interest in this situation, and those who do don't seem interested in this dialogue, so I will close now.