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Investment broker accused of 'reckless, arrogant' activity in $40-million lawsuit – TheChronicleHerald.ca

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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.

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,” and a trial probably would not be heard until 2023 or 2024.

None of the allegations have been proven in court.
 

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Green Power to Draw $11 Trillion Investment by 2050, BNEF Says – BNN

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(Bloomberg) —

Green power is set to draw around $11 trillion of investment in the coming decades as the cost of renewables plummets and more of the world’s energy comes from electricity.

That’s the latest analysis from BloombergNEF in its annual New Energy Outlook report. It’s further evidence of how cheap renewable power sources will continue to push aside fossil fuels in the energy mix.

Despite the massive sum, BNEF said the pace of building out new renewables will need to increase further to limit global warming to less than 2 degrees Celsius by the end of the century.

The projected increases in renewable energy and battery technology — wind and solar will grow to 56% of global electricity in 2050 — are set to cause emissions to peak in 2027 and then fall 0.7% annually until 2050, BNEF said.

That would lead to a warming of 3.3 degrees Celsius by 2100, well short of the 6% annual emissions reduction needed to keep warming below 2 degrees and the 10% reduction required to achieve 1.5 degrees of warming.

Below are four key takeaways from this year’s report:

Gas Growth

The only fossil fuel to increase its share of demand over the coming years will be gas. That’s largely driven by its use in heavy industry and to heat buildings. A key reason for the growth of gas to warm buildings is the weak economic argument for using heat pumps. BNEF doesn’t see cost parity with gas boilers until 2040. In the U.S., an abundance of cheap gas will delay the energy transition, but renewable power will still overtake the fuel by 2041.

Driving Oil

The future of oil demand will be shaped by the uptake of electric vehicles. BNEF sees primary oil consumption peaking in 2035 and then gradually declining.

Meanwhile, the thirst for oil in road transport tops out in 2031, according to BNEF. The fall will be sped up by EVs reaching price parity with traditional engines before 2025, at which point people will start buying plug-in cars at a faster rate, offsetting oil’s growth from aviation, shipping and petrochemicals

. By 2050, some 65% of all passenger-vehicle kilometers will be made in electric vehicles. The current fleet of EVs is displacing 1 million barrels of oil a day.

Hydrogen Scale

Governments, energy companies and lobbyists have been touting hydrogen as a way to decarbonize vast swathes of the world’s economy.

If that is realized with hydrogen made by machines powered by renewable energy, the world will need a lot more of it. For so-called green hydrogen to provide just under a quarter of energy in 2050, it would require 38% more power than is currently produced globally. Making all that hydrogen with wind and solar farms would require a land area the size of India.

Turbulence Ahead

Air travel will continue to be one of the most difficult sectors to decarbonize. Aviation emissions are up 80% since 1990 and they’ll double again by 2050. It’s one of the few sectors, along with shipping, that struggles to electrify. Heavy planes and ships that need to travel long distances would require batteries to significantly improve in order to make them commercially viable for the sector. Sustainable fuel alternatives and ammonia would need more government support than currently expected to make them cost competitive with fossil fuels in the coming decades.

©2020 Bloomberg L.P.

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Global foreign direct investment halved amid pandemic, but China remained resilient – UN News

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FDI includes cross-border mergers and acquisitions, international project finance, and corporate investments in new “greenfield” projects abroad, and it can be an indicator of the growth of the corporate supply chains that play an important role in world trade.  

Worse than expected 

James Zhan, the director of UNCTAD’s Division on Investment and Enterprise, said the slump in FDI flows in the first half of the year was more drastic than expected.  

“This was due to the lockdowns around the world, which slowed existing investment projects, and the prospects for deeper recession which led the multinationals to reassess new projects. And that’s the current mood of the investors – they try to be very conservative at this stage”, he said at a press conference in Geneva.  

All major forms of FDI and all regions suffered from the slowdown, although developed economies were worst hit, with FDI flows of $98 billion in the six months – a 75 per cent reduction from a year previously.  

China holds course 

However, China was bucking the trend, with FDI flows relatively stable at $76 billion in the first half of the year, while Hong Kong bounced back as an FDI destination after a weak 2019.  

“Overall investment flows into China remain at a high level and this is partly because China was one of the very few countries, among the first, to control the pandemic and to resume its production system in the country.  

“In the meantime the Chinese government put in place effective measures to retain investment, to service operations of the multinationals operating in the country, and also put in place new measures to attract investment”, Mr. Zhan said.  

Most of the FDI heading to China went into high-tech industries. The value of Mergers and Acquisitions transactions into China, grew by 84 per cent, mostly in information services and e-commerce industries, while several multinational companies also expanded their investments into China, he added.  

Global outlook highly uncertain

The global outlook remains highly uncertain, with question marks over the duration of the pandemic and the effectiveness of the policy response, but prospects for the full year remain in line with UNCTAD’s earlier projection of a 30-40 per cent decline, Mr. Zhan said. 

The rate of decline in developing economies is expected to flatten because of the signs of impending recovery in East Asia, but the global decline is expected to continue, with a further reduction of 5-10 per cent foreseen in 2021, the UNCTAD official added.  

FDI is the most important source of external funding for developing economies – outstripping remittances, bank loans and overseas development assistance.  

The current value of FDI invested in projects around the world is equivalent to 42 per cent of annual global GDP, said Mr. Zhan.

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Microsoft announces biggest investment in Taiwan – Anadolu Agency

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ANKARA

The US-based Microsoft Corporation has announced its biggest investment in Taiwan amid faltering US-China trade ties.

In a news conference on Monday, Microsoft Taiwan CEO Ken Sun said the company will build a data center in Taiwan, creating over 30,000 jobs with an investment of over $10 billion until 2024, daily Taipei Times reported on Tuesday.

The investment in four digital projects also include research and development of artificial intelligence hardware. It has been the first time in last 31 years that Microsoft announced such a big investment in the island nation.

Taiwan President Tsai Ing-wen said in a tweet: “I am proud to be part of reimagining Taiwan with @Microsoft & welcome their investment. Our collaboration is yet another step forward for the Taiwan-US partnership, as we reimagine supply chains & create business opportunities for a better tomorrow.”

The huge investments come amid weakening US-China relations which have hit the bottom rock. Washington has increased its relations with Taiwan which China claims a “breakaway province”.

Beijing has warned against hobnobbing with Taipei arguing it violates “One China Policy”.

Microsoft said it will also train more than 200,000 “digital talents” to serve its ventures.

“We have been increasing our investment in Taiwan every year for the last five years,” Microsoft Taiwan Corporation General Manager Ken Sun said. “And now we are making the biggest investment in Microsoft’s 30-plus-year history in Taiwan.”

Tsai said Microsoft’s investments came at a “critical time”.

“As the world’s supply chains are rapidly reforming in the wake of COVID-19, this is the most powerful moment for us to take our trade relations with the US to a new level,” Tsai said.



Anadolu Agency website contains only a portion of the news stories offered to subscribers in the AA News Broadcasting System (HAS), and in summarized form. Please contact us for subscription options.

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