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Investment broker accused of 'reckless, arrogant' activity in $40-million lawsuit – SaltWire Network

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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.

‘A catastrophe’

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.

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Oracle TikTok Investment Wins Trump’s Blessing: Deal at a Glance – Yahoo Canada Finance

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Oracle TikTok Investment Wins Trump’s Blessing: Deal at a Glance

(Bloomberg) — Oracle Corp.’s agreement to take a stake in TikTok has won the long-awaited blessing of U.S. President Donald Trump.

The proposal, which would give Oracle and other investors minority ownership of a new company called TikTok Global, still needs approval from regulators in China, where TikTok’s parent ByteDance Ltd. is based.

Trump’s praise for the agreement suggests that weeks-long deliberations over the fate of a popular music and video-sharing app are nearing completion. ByteDance began holding discussions with investors in its U.S. operations after the Trump administration threatened to shutter the business, saying that it poses a threat to national security.

While some of the terms remain undetermined, here’s what’s known about the deal, based on public statements and people with knowledge of the matter:

What We Know

Who’s in and who’s outOracle plans to take a 12.5% stake in a round of financing that would precede an IPOTikTok also said that together, Oracle and Walmart Inc. could end up with as much as 20%The new company, called TikTok Global, will seek a U.S. IPO and raise a pre-IPO round of financingExisting Bytedance investors that could participate in the pre-IPO round include Sequoia Capital, General Altantic and Coatue CapitalA host of other companies made proposals or considered bidding. Microsoft Corp. was rebuffed because it wanted to control all of TikTok in the U.S., a condition that didn’t sit well with BeijingWhat the deal looks likeOracle will be TikTok’s “trusted technology provider,” meaning Oracle will house the entity’s data in its U.S. servers — a boon to a cloud computing business that has lagged behind those of Amazon.com Inc., Alphabet Inc. and Microsoft. It will also get access to monitor TikTok’s source code and algorithmsWalmart Chief Executive Officer Doug McMillon will sit on Tiktok Global’s board and is discussing a commercial partnership with TikTokTikTok Global will likely be headquartered in Texas and will hire at least 25,000 people, Trump said, without mentioning a timeline for those hiresByteDance would retain a majority stake in TikTok’s assets and control the closely guarded algorithm that determines what clips users seeThe new company will hold an initial public offering in about a yearHow the parties are addressing security concernsOracle will review TikTok’s full source code and updates to make sure there are no back doors that could be used by ByteDance to gather data or spy on the app’s 100 million or so American usersOracle will be able to continue to review the technology as updates come in to make sure there are no new points of access to the dataTikTok was able to convince the U.S. government that TikTok Global would be controlled by American investors by counting the passive stakes of existing shareholders in TikTok’s Chinese parent, people familiar with the matter said. Although Bytedance will retain an 80% stake in the new company, because existing U.S. investors hold a 40% stake in ByteDance, the math works out to 53% ownership by U.S. companies and investorsWhether Trump will get a payoutTikTok Global will use proceeds of the IPO to create a $5 billion education fund“They’re going to be setting up a very large fund,” Trump said Saturday. “That’s their contribution that I’ve been asking for”

What We Don’t Know

What China thinksThe Chinese government will also have to approve ByteDance’s plans under new restrictions Beijing imposed on the export of artificial intelligence technologies, Bloomberg News reported earlierAs of earlier this week, ByteDance was growing increasingly confident that the proposal would pass muster with Chinese regulators, people familiar with the matter told BloombergEarly reaction from Chinese state media appeared positive. “This scheme is still unfair, but it avoids the worst result that TikTok is shut down or sold to a US company completely,” wrote Hu Xijin, the influential editor in chief of China’s state-owned Global Times

Fate of the Commerce Department’s ban

The Commerce Department said Saturday it will push a ban back by one week that would bar TikTok from the Apple Inc. and Android app stores, extending the Sept. 20 deadline set by President Trump

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Oracle TikTok Investment Wins Trump's Blessing: Deal at a Glance – BNN

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(Bloomberg) — Oracle Corp.’s agreement to take a stake in TikTok has won the long-awaited blessing of U.S. President Donald Trump.

The proposal, which would give Oracle and other investors minority ownership of a new company called TikTok Global, still needs approval from regulators in China, where TikTok’s parent ByteDance Ltd. is based.

Trump’s praise for the agreement suggests that weeks-long deliberations over the fate of a popular music and video-sharing app are nearing completion. ByteDance began holding discussions with investors in its U.S. operations after the Trump administration threatened to shutter the business, saying that it poses a threat to national security.

While some of the terms remain undetermined, here’s what’s known about the deal, based on public statements and people with knowledge of the matter:

What We Know

  • Who’s in and who’s out
    • Oracle plans to take a 12.5% stake in a round of financing that would precede an IPO
    • TikTok also said that together, Oracle and Walmart Inc. could end up with as much as 20%
    • The new company, called TikTok Global, will seek a U.S. IPO and raise a pre-IPO round of financing
    • Existing Bytedance investors that could participate in the pre-IPO round include Sequoia Capital, General Altantic and Coatue Capital
    • A host of other companies made proposals or considered bidding. Microsoft Corp. was rebuffed because it wanted to control all of TikTok in the U.S., a condition that didn’t sit well with Beijing
  • What the deal looks like
    • Oracle will be TikTok’s “trusted technology provider,” meaning Oracle will house the entity’s data in its U.S. servers — a boon to a cloud computing business that has lagged behind those of Amazon.com Inc., Alphabet Inc. and Microsoft. It will also get access to monitor TikTok’s source code and algorithms
    • Walmart Chief Executive Officer Doug McMillon will sit on Tiktok Global’s board and is discussing a commercial partnership with TikTok
    • TikTok Global will likely be headquartered in Texas and will hire at least 25,000 people, Trump said, without mentioning a timeline for those hires
    • ByteDance would retain a majority stake in TikTok’s assets and control the closely guarded algorithm that determines what clips users see
    • The new company will hold an initial public offering in about a year
  • How the parties are addressing security concerns
    • Oracle will review TikTok’s full source code and updates to make sure there are no back doors that could be used by ByteDance to gather data or spy on the app’s 100 million or so American users
    • Oracle will be able to continue to review the technology as updates come in to make sure there are no new points of access to the data
    • TikTok was able to convince the U.S. government that TikTok Global would be controlled by American investors by counting the passive stakes of existing shareholders in TikTok’s Chinese parent, people familiar with the matter said. Although Bytedance will retain an 80% stake in the new company, because existing U.S. investors hold a 40% stake in ByteDance, the math works out to 53% ownership by U.S. companies and investors
  • Whether Trump will get a payout
    • TikTok Global will use proceeds of the IPO to create a $5 billion education fund
    • “They’re going to be setting up a very large fund,” Trump said Saturday. “That’s their contribution that I’ve been asking for”

What We Don’t Know

©2020 Bloomberg L.P.

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UAE Makes Appointments to Investment Body, UN Aviation Group – BNN

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(Bloomberg) — The United Arab Emirates appointed new heads to several federal committees, as well as a permanent representative to the International Civil Aviation Organization.

The UAE’s prime minister, Mohammed Bin Rashid Al Maktoum, named Thani Ahmed Al Zeyoudi as head of the federal committee for direct investment, according to the official news agency WAM. Saeed Mohammed Al Suwaidi was named as permanent representative for the UAE at the United Nations’ civil aviation body known as ICAO, WAM reported.

©2020 Bloomberg L.P.

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