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DICO placed Pace Credit Union under Administration due to governance issues
October 5, 2018
6:02 am
Top It Up
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From Pace Securities homepage -

Although PSC is a wholly owned subsidiary of PACE Savings and Credit Union Limited, our operations are entirely separate. We maintain separate officers and board of directors, we are subject to an annual, independent audit and client securities and monies are lodged with Laurentian Bank Securities Limited, our carrying broker.

http://www.pacesecurities.com

October 5, 2018
8:08 am
Londonguy
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Loonie said
Does anyone else think this is peculiar?

"The trading strategy used by PCM has been developed by the principals over the past three years. PACE Capital Partners LP (PCP) uses leverage to purchase a portfolio of North American Corporate bonds rated between CCC+ and BBB-. PCP aims to provide clients with diversification across multiple industry sectors targeting an absolute return of in the range of 12% net of fees."
http://www.pacesecurities.com/.....ode/20  

What, you think it's "peculiar" for a local family banking operation to be taking depositor funds and playing the junk bond market with them? And in a rising rate environment to boot?

I think the word is a lot stronger than "peculiar" but I'm not going to use it. Let's just go with "risky"

October 5, 2018
8:14 am
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Londonguy said

What, you think it's "peculiar" for a local family banking operation to be taking depositor funds and playing the junk bond market with them? And in a rising rate environment to boot?

I think the word is a lot stronger than "peculiar" but I'm not going to use it. Let's just go with "risky"  

Their investment activities are clearly stated on their website - nothing peculiar about it - either you're in or you're out.

From the G&M story, Pace is being investigated by DICO, nothing about OSC involvement ... yet, if at all.

October 5, 2018
9:13 am
NorthernRaven
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Londonguy said

What, you think it's "peculiar" for a local family banking operation to be taking depositor funds and playing the junk bond market with them? And in a rising rate environment to boot?

I think the word is a lot stronger than "peculiar" but I'm not going to use it. Let's just go with "risky"  

Pace Securities is investing funds from its own customers - it has nothing to do with the deposits of customers of the Pace credit union parent. Also, the DICO CEO specifically stated that the issues under investigation do not involve the securities subsidiary.

October 5, 2018
9:23 am
Londonguy
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Top It Up said

Their investment activities are clearly stated on their website - nothing peculiar about it - either you're in or you're out.

From the G&M story, Pace is being investigated by DICO, nothing about OSC involvement ... yet, if at all.  

Fair comment, disclaimer acknowledged -- although I am willing to bet that the vast majority of the investors were/are seized by the 12% return target and know diddlysquat about the junk bond market and what can go wrong when rates start to rise. However, that's their problem.

October 5, 2018
9:27 am
Londonguy
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NorthernRaven said

Pace Securities is investing funds from its own customers - it has nothing to do with the deposits of customers of the Pace credit union parent. Also, the DICO CEO specifically stated that the issues under investigation do not involve the securities subsidiary.  

I wasn't suggesting that the insured deposits aren't safe.

October 5, 2018
5:10 pm
savemoresaveoften
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Londonguy said

Fair comment, disclaimer acknowledged -- although I am willing to bet that the vast majority of the investors were/are seized by the 12% return target and know diddlysquat about the junk bond market and what can go wrong when rates start to rise. However, that's their problem.  

Rates rising affect all bonds, junk or investment grade. Credit spread widening under crisis scenario etc is when junk bonds go down the drain. During crisis rates actually go lower as flight to quality occurs.

October 6, 2018
9:30 am
PhDJohn
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Londonguy said

What, you think it's "peculiar" for a local family banking operation to be taking depositor funds and playing the junk bond market with them? And in a rising rate environment to boot?

I think the word is a lot stronger than "peculiar" but I'm not going to use it. Let's just go with "risky"  

As with a lot of things on the internet, it is very easy to spread misleading information as seen above. First, PACE Securities + PACE Capital Management are COMPLETELY different entities from PACE Credit Union with different products, CEOs + management team, staff, etc. The same difference like: TD Waterhouse to TD Canada Trust, Scotia McLeod Wealth Management to ScotiaBank, BMO Nesbitt Burns to Bank of Montreal, CIBC Wood Gundy to Canadian Imperial Bank of Commerce (CIBC). When you buy a GIC and give the Credit Union money they go out and give people mortgages, car loans, etc. When you buy an investment security at an Investment Dealer (like PACE Securities) they go out and buy bonds, stocks, mutual funds, etc.

Somebody buying a GIC with PACE Credit Union is not investing in "junk bonds". They're investing in mortgages, home equity lines of credits, car loans, etc. So when you use "peculiar" in your very minimal understanding of how a Credit Union and Investment Dealer works in forums like these, it misleads average, everyday GIC investors.

While caution is good, throwing logic out the window is not. Have a great long weekend, everybody.

October 6, 2018
1:55 pm
Loonie
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As far as we know, PACE is not taking depositors' GIC and savings funds and putting them into the junk bond fund operated by PACE Securities.

However, the intertwining of PACE Credit Union and PACE Securities cannot be denied. The CU owns the Securities firm.

The G&M article stated (#18 above):
"The credit union also has oversight from two prominent former politicians. Frank Klees, who was an MPP for the Ontario Progressive Conservative Party from 1995 to 2014, joined the credit union’s board last April. And, in 2014, when PACE created an investment dealer subsidiary, PACE Securities Corp., former Ontario premier Ernie Eves was named its chairman.
Last year, executives at other credit unions raised concerns with DICO about an investment product created and marketed by PACE Securities, according to a source with knowledge of the discussions and correspondence reviewed by The Globe. "

The only specific product listed at PACE Securities website is this leveraged junk bond fund.

The question then arises as to why PACE Securities was really set up and why its only specific advertised investment is a very risky hedge fund. Who else are they likely to sell it to other than PACE CU members?
It seems most likely to me that this is the product which raised eyebrows with other CU managers.

What were they thinking?!

October 6, 2018
2:39 pm
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Since the OSC hasn't been called in as part of the investigation into governance issues, it's probably a little early to start posting unfounded conspiracy theories.

October 6, 2018
7:23 pm
hotmony
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It appears past merger deals Pace has done with other CUs have fallin thru e.g. Alterna, City Savings any comments? one deal falls thru ok but it appears at least two maybe three. City Savings website i recall was forwarded to pace no longer..

October 9, 2018
9:02 pm
Saver
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Pace Credit Union partnered with a Consulting company to resolve, "Why members are leaving?"

“In talking with xxx Consulting Inc. we found out that members begin to leave
4 months before they actually close their last account”, said Dan Coldwell,
Chief Marketing and Community Relations Officer. “

Customer Satisfaction is lagging indicator. Email surveys were used to generate good reviews for posting on PACE's website.

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