A Halifax investment adviser’s “reckless arrogance” cost clients more than $36 million in investments, says the lawyer who is representing 29 plaintiffs in a lawsuit against the investment company.
“We will have to see what defence the defendants will come up with but I don’t think anyone would deny that our clients lost their shirts here and we say that is the responsibility of the defendants,” said Ian Gray, a partner in the Halifax law firm Walker, Dunlop.
Gray filed a lawsuit Monday in the Nova Scotia Supreme Court seeking more than $40 million in overall damages against investment adviser Fredrick Saturley, the High Tide Wealth Management company that he founded in 2010, and investment dealer National Bank Independent Network, the investment brokerage arm of National Bank of Canada.
Gray said his clients, primarily elderly Nova Scotia couples who were preparing for retirement or had already retired, invested tens of millions of dollars with Saturley and High Tide. The money was predominantly the life savings, retirement funds and planned inheritance of generally middle class and upper middle class individuals, Gray’s summary stated.
He said the greatest single family loss incurred was somewhere in the order of $8 million.
‘Risky investment strategy’
“Mr. Saturley has consistently pursued a very risky investment strategy,” Gray said at a news conference at the Lord Nelson Hotel in downtown Halifax.
In good times, pursuing the “strangle strategy,” can make a reasonable amount of money, Gray said. “but if the market takes a certain downtown, you are going to lose just about everything, as indeed our clients did.”
Gray described it as a strategy that requires a certain sophistication on the part of the investor and a stomach for losses, “a certain ability to bounce back from a catastrophic loss, which is precisely what our clients didn’t have.
“I have clients in their 60s, their 70s and in a couple of cases, their 80s. These are not the sort of people that I think anyone would advise to undertake risky, capital-intensive strategies in an attempt to make a killing. These are people who needed to play things safe and steady for retirement.
“But here is the important thing. That is what they thought they were doing. Mr. Saturley, our clients allege, said he would take care of them with conservative investments.”
All the while, he was independently going out and executing a very risky strategy and one that ultimately catastrophically exploded in his and his clients’ faces, Gray said.
Gray said Saturley and High Tide opened margin accounts in the names of his clients, which allowed it to trade on margin. The investment company purchased uncovered options and leveraged exchange traded funds, depositing them in clients’ accounts while the majority of clients were unaware of the high risks.
When the economy took a significant COVID-driven downturn in March, High Tide clients’ portfolios were quickly decimated. Not only did Gray’s clients lose entire life savings but in many cases they were left owing money, which had been borrowed without their knowledge or consent.
“Our clients were over-extended in a way that it should have been obvious that it was far too risky, the bank in our view acted precipitously and they didn’t have to do that. Mr. Saturley sets our clients up for the fall and the bank knocks them down.”
Ian Gray, lawyer
Eventually, despite some clients trying to satisfy hundreds of thousands of margin debts by deregistering RRSPs and obtaining lines of credit over a March weekend, National Bank Independent Network (NBIN) liquidated their assets.
Gray said no one could have predicted the economic downturn in March.
“But if you put someone in a very risky position where something going wrong will lead to catastrophe, eventually something will go wrong,” he said. “Our clients were over-extended in a way that it should have been obvious that it was far too risky, the bank in our view acted precipitously and they didn’t have to do that.
“Mr. Saturley sets our clients up for the fall and the bank knocks them down.”
NBIN was previously involved in the Knowledge House scandal, Nova Scotia’s last major investment case, and was ordered in 2015 to pay $3 million in punitive damages for its treatment of claimants.
Gray is also seeking punitive damages, court costs and interest, pushing the $36 million in losses to over $40 million in damages sought.
This is not Saturley’s first trouble with investments and unauthorized trading. He was fined $10,000, plus $5,000 in court costs, in 2004 while working for BMO Nesbitt Burns after a disciplinary hearing for unauthorized trading on multiple clients’ accounts. In 2008, Saturley’s clients with CIBC Wood Gundy lost millions of dollars as a result of a margin error. The investigation showed Saturley had engaged in unauthorized discretionary trading a second time. Still, he unsuccessfully contested his termination from Wood Gundy in the Nova Scotia Supreme Court.
“This was Mr. Saturley’s third bite at the cherry and once again, it was a catastrophe,” Gray said. “It is a problem that this person keeps coming back and running the same play and it keeps blowing up in his face.”
Gray said the industry has to take a harder look at people coming in rather than cleaning up after the fact.
“Should you get your licence back for having lost it for doing this and if you do get your licence back, what level of oversight are we going to impose on you,” Gray said.
He said the chief compliance officer of High Tide is Adrian Saturley, Fredrick’s son, which is “manifestly inappropriate.”
How is a son supposed to provide oversight of his father, who employs him, Gray asked.
Gray said he had considered but decided against including the regulating body, Investment Industry Regulatory Organization of Canada, in the lawsuit.
The lawsuit claims civil fraud against Saturley and his company, negligence against both the bank and Saturley and claims regulatory discrepancies.
A complaint against Saturley has been filed with the Nova Scotia Securities Commission and a complaint against the bank has been launched with the IIROC, Gray said.
If the defendants choose to sit down and negotiate a resolution, things could move quickly but “the reality is it takes a very long time to get a complicated case through the civil justice system,” he said.
None of the allegations have been proven in court and if a trial is required, it probably would not be heard until 2023 or 2024.
Why Canada Continues to Attract Real Estate Investors
Real estate experts, foreign investors, and Canada’s citizens unanimously agree that Canada has everything it takes to create better living opportunities and, therefore, become one of the most sought-after destinations globally. Besides, real estate in Canada is competitively priced, vast, and has a reasonable appreciation rate. The hassle-free legal system in Canada is another reason why foreign investors flock to Canada. A comparative study of real estate in the UK, US, Spain, or France will help you realize that Canadian real estate is not very expensive. You will find cheaper land in Canada and a myriad of real estate options to invest in.
As the Canadian economy strengthens, more people are expected to migrate to this country, leading to a rise in demand for properties. According to real estate experts, this growing demand will boost the property values radically in years to come. In contrast to the high standard of living, Canada’s cost is lower than in many other countries. In Canada, foreign investors can buy cold properties that they probably couldn’t have afforded in their own countries. The most significant advantage is that you don’t have to be a resident of Canada to purchase property in the country. This puts foreign investors in an enviable position to invest in a higher quality purchase in Canada than their homelands. Owing to the abundant land available, overcrowding will never be an issue in this incredibly beautiful country. Besides, Canada has a diverse property portfolio that can please even the most fastidious buyer.
The best part of being a foreign investor is that you virtually get to enjoy almost all the privileges and benefits as any other citizen and yet, not go through the painful ordeal of applying for immigration acceptance. Thus, as a foreign investor, you can open a bank account in the country and have your land and car. Alternatively, you can make Canada your new home by permanently settling in this country like millions of Europeans who have already decided here. This explains why Canada is the third most popular emigration destination. The ever-increasing popularity of Canada will continue to attract more people in the future. This popularity of Canada among expatriates ensures a steady supply of money in the property market.
A quick look at the figures mentioned below will throw light on the Canadian property market’s past performance. Listed below are the rising prices of a single-family home in Vancouver:
- 1961 – CAD $13,500
- 1974 – CAD $48,000
- 1982 – CAD $120,000
- 2007 – CAD $475,000
Canada provides excellent rental opportunities for real estate investors. Thus, if you purchase apartments and townhouses in some of the hottest areas in Canada, you can enjoy a steady income and cash flow in the form of rent. This allows you to enjoy capital appreciation and build equity in the long run. No matter what the reason may be for your investment, Canada has an effortless buying procedure, and you can close a property deal in a short time.
Rogers sweetens offer for Cogeco with $3B Quebec investment pledge – BNN
Rogers Communications Inc. said Friday it will invest up to $3 billion in Quebec if the telecom giant is successful in acquiring rival Cogeco’s Canadian assets.
The Toronto-based company unveiled a series of measures aimed at sweetening a deal to buy Cogeco’s internet and cable television business after getting rebuffed by the company’s largest shareholder earlier this month.
Rogers and Altice USA Inc. delivered an unsolicited proposal to buy Cogeco, with the U.S. company offering $10.3 billion for the company and would then sell the Canadian assets to Rogers for a cash consideration of $3.4 billion.
“Rogers is deeply committed to the future of innovation and the knowledge economy in Quebec. We would be honoured to help enhance the customer experience and bring new investments including 5G that will fundamentally reshape the economic landscape of Quebec,” said Joe Natale, Rogers’ president and chief executive officer, in a statement.
Rogers said it would spend $3 billion in Quebec, where Cogeco is based, over the next five years. Half of that investment would be earmarked for various network investments including a broad rollout of 5G wireless technology infrastructure as well as expanding connectivity to rural communities. Rogers added it would ensure that the combined company would employ 5,000 people while keeping Cogeco’s headquarters and management in the province, and would support several community partnerships.
A Cogeco spokesperson told BNN Bloomberg in an email that Rogers is free to make its investment in Quebec, but it doesn’t need to buy Cogeco to do so.
“If Rogers fails to invest, their competitors will take away its mobile customers, regardless of 5G,” the spokesperson said. “As far as Cogeco is concerned, the company remains focused on executing its profitable growth strategy, investing in its state of the art broadband networks and offering leading edge services to its customers.”
Earlier this month, Cogeco’s independent directors rejected Rogers and Altice’s takeover offer, with Gestion Audem, Cogeco’s controlling shareholder and the Audet family’s investment vehicle, stating that it is not interested in selling its shares.
Analysts have also cast doubt on whether a deal could ever materialize given the Audet family’s control of the business.
Want to invest like Warren Buffett? Now you can with the Buffettology Smaller Companies Investment Trust
Is Warren Buffett headed to the UK? Well, more in spirit than in body.
For the 90-year-old Sage of Omaha’s investment philosophy that turned him into one of the world’s most successful stock-pickers will be at the heart of a trust that also takes his name.
The Buffettology Smaller Companies Investment Trust is aiming to raise at least £100mln, which it will plough into some of the market’s hidden gems.
It is the brainchild of Sanford DeLand, the boutique asset manager behind the top-performing SDL UK Buffettology fund inspired by billionaire head of Berkshire Hathaway.
The listed vehicle will be run by Keith Ashworth-Lord, the driving force behind the highly-rated, £1.4bn SDL UK Buffettology fund. Over the last three years, it has delivered a 30% return and is ranked second out of more than 200 similar funds for its five-year performance.
Its top holding is Games Workshop, which accounts for just under 10% of the portfolio.
In a statement on the launch of the listing of the new trust, chief investment officer Ashworth-Lord said: “We believe that the UK small-cap market offers excellent investment opportunities to experienced managers who know what to look for and have the freedom to take a long-term view.
“Our business perspective investing approach is ripe for application to smaller companies and presents an opportunity to deliver superior returns for our shareholders, over the long-term.”
Buffettology will be quoted on the premium segment of the official list. The prospectus is expected to be published on or around September 29.
Source:- Proactive Investors USA & Canada
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