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Pace Securities
June 21, 2020
7:32 am
AltaRed
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I would be more kind to Norman1. He is simply stating facts on what is understandably an emotional and heartbreaking experience.

Whether anything can be done to recover anything is highly questionable but public exposure of the guilty and the actions and tactics of PCU should be the main goals and it needs a strategic approach. Things like keeping CBC Go Public or Marketplace engaged plus the G&M could be key tactics.

June 21, 2020
7:49 am
savemoresaveoften
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For those wondering if Pace keeps their GIC rates artificially low, that will be impossible to prove, or one can also say the big 6 banks do that too for the purpose of...

For a reference point, I got some 30months GIC from PCU back in the summer of 2018 at a rate of 3.4%. That was actually the highest rate among all the CUs at the time. Think its almost as high as their 5y rate if my memory served me right.

June 21, 2020
8:01 am
sevenup
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AltaRed said
I would be more kind to Norman1. He is simply stating facts on what is understandably an emotional and heartbreaking experience.

Whether anything can be done to recover anything is highly questionable but public exposure of the guilty and the actions and tactics of PCU should be the main goals and it needs a strategic approach. Things like keeping CBC Go Public or Marketplace engaged plus the G&M could be key tactics.  

I didn't realize I (or we) are being unkind to Norman1. I apologize if it is perceived that way. Sorry if I offended anyone.

The facts that are stated here by the "unaffected" members are different than the reality of the sale of a faulty investment product. People that are unaffected, as knowledgeable as they are, are mere commentators and spectators, they don't have anything to gain or lose from this. However, we do. The ramifications of the loss is distressing and devastating. All Pace "affected" members have slightly different circumstances. But one thing is clear, PCU and PSC conduct is not according to the rule books and the law.

June 21, 2020
8:32 am
sevenup
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Something to read through with your morning coffee:

IIROC The Notice of Hearing and Statement of Allegations (against Joe Thomson and Gerald McRae)

https://www.iiroc.ca/documents/2020/4fd5ec1e-35d4-4a08-a004-2782000ab296_en.pdf

June 22, 2020
9:32 am
Investor1
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I’m new here, but the bottom line is that Pace Credit Union (PCU) owned Pace Securities (PSC) and they decided to pull the plug which caused this mess and should accept responsibility for fixing it.

The PSC fund managers wanted to rebuild the portfolio as most preferred shares were still locked in for a few more years so after the dust settles and we see what the residual value of the shares is, PCU should be liable to make the members who owned them whole because they (PCU) decided to shut down PSC.

Once the residual value is determined, PCU could easily take out a low cost bridge loan from the Central 1 credit union to refund the difference and amortize that loan over 30 years.

This would be far cheaper that facing a class action lawsuit that they can’t afford to fight and certainly wouldn’t win.

If they are smart, PCU will find a way to make this work because it was more than 300 accounts that held these shares. It was closer to 1,000 accounts, many of which were held by PCU employees.

Any class action lawyer would love to take this case because they would win or take down the credit union as a result.

The new PCU CEO is a lawyer and is probably looking at the cost benefits of settling or not and it is far cheaper to make the invested members whole than to risk a class action and all of the negative publicity that would ruin them especially since they are just coming out of administration.

Since this CEO is new, it would be in their interest to make investors (and a large number of PCU employees) whole in order to look like a hero instead of the one who was responsible for the demise of the credit union.

It’s a make or break moment and hopefully the new CEO will do the right and smart thing.

June 22, 2020
10:58 am
Yaftica
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Investor1 said
I’m new here, but the bottom line is that Pace Credit Union (PCU) owned Pace Securities (PSC) and they decided to pull the plug which caused this mess and should accept responsibility for fixing it.

Well... it certainly is being revealed that there was much advanced warning on that aspect, back in the fall in fact the writing was on the wall and those discussions began after Laurentian Bank allegedly made a move which devalued the product we were rooked into right across the board. They may have elected to approach investors then but someone made decisions obviously and no doubt those were to protect their liabilities

The PSC fund managers wanted to rebuild the portfolio as most preferred shares were still locked in for a few more years so after the dust settles and we see what the residual value of the shares is, PCU should be liable to make the members who owned them whole because they (PCU) decided to shut down PSC.

Well, I'm sure that will be one argument which is being assessed at this moment by the new board.

Once the residual value is determined, PCU could easily take out a low cost bridge loan from the Central 1 credit union to refund the difference and amortize that loan over 30 years.

This would be far cheaper that facing a class action lawsuit that they can’t afford to fight and certainly wouldn’t win.

Well, they likely have many sources of revenue and other avenues of which they are likely using at the moment to restore the losses from the executives that they call a mismanagement of sorts currently, which didn't exactly take out the life savings of members either, or those who are living on same to sustain retirement, and a multitude of other reasons not desirable to be discussed in the courts of public opinion when promoting and restoring your brand identity.

If they are smart, PCU will find a way to make this work because it was more than 300 accounts that held these shares. It was closer to 1,000 accounts, many of which were held by PCU employees.

Unsure that is confirmed to be the case yet but that doesn't remotely help if its truth.

Any class action lawyer would love to take this case because they would win or take down the credit union as a result.

Well, that wouldn't be desirable - there are a vast amount of people who wouldn't want that I'm sure, existing customers not affected by this, and even some of the people affected I'm sure would remain customers and do what it takes to restore confidence in the brand. But you're right, much is at stake here which hopefully someone is smart enough to realize.

The new PCU CEO is a lawyer and is probably looking at the cost benefits of settling or not and it is far cheaper to make the invested members whole than to risk a class action and all of the negative publicity that would ruin them especially since they are just coming out of administration.

Since this CEO is new, it would be in their interest to make investors (and a large number of PCU employees) whole in order to look like a hero instead of the one who was responsible for the demise of the credit union.

As mentioned above, there is no better way to restore confidence in your brand and prevent a complete storm of controversy and mistrust in your organization by taking swift action, restorative measures and ensuring the people who are affected by such devastation are taken care of, essentially what attracts people underneath the brand umbrella of the CU. You break that confidence and promote something else with your actions then its time to change the brochures and marketing approach or be dogged by it forever and then some.

It’s a make or break moment and hopefully the new CEO will do the right and smart thing.  

Potentially there is blatant evidence of criminality here in some cases, some way shape or form. Highly questionable actions unchecked, a scheme of confidence masqueraded under the nose of the CU promoting the business to clients, as a risk manager or lawyer or public affairs exec it isn't something that I would recommend we try to choose an explanation for buried amongst the fine printed legalities of paperwork some may have signed, clearly some have not, advisors who no doubt put people's $ into harms way through these products without consultation (time for the police in that respect), as the liquidator is lifting the carpet on this and providing a clear view of the modus operandi here I've no doubt that there is just as much shock and awe about it as the investors felt when they received a letter in the mail from the CU advising of what had transpired and what the CU just did to address it.

June 22, 2020
11:45 am
Nehpets
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Former PACE executives face IIROC enforcement action link for complete article
An appearance to set a hearing date will be held by teleconference on Aug. 17
Advisor's Edge
By: James Langton June 22, 2020 11:54

Related Article:
EY to proceed with PACE transfer plan
The process was delayed because the new dealers refused to accept certain securities held in client accounts
Advisor's Edge
June 22, 2020 11:55

June 22, 2020
12:23 pm
Elaine
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Okay
I am asking any of the oldtimers here or anyone who knows how this works-
IIROC has just confirmed that my Pace Financial shares were not sold to me by an IIROC registrant.
So they can not be involved in my issue.
I bought what I thought was a Pace type GIC (with dividends) from someone at Pace Credit Union which turns out to be $100,000.00 worth of something from Pace Financial.
My question(although it may be somewhere in this long thread-forgive me)
who is allowed to sell Pace Financial shares?

June 22, 2020
12:48 pm
PhDJohn
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Elaine, anyone was able to sell the shares in the branches. As long as you had a pulse, you could sell it. With my first purchase of Pace Financial, it was from a branch staff. Based off the reports, Pace Financial was a wholly-owned subsidiary of Pace Securities. And Pace Securities is a wholly-owned subsidiary of Pace Credit Union. Therefore, any earnings should flow upwards to its parent company. Which makes sense why they'd be marketing it in the parent credit union branches, and why credit union branch staff would promote it.

June 22, 2020
6:00 pm
Elaine
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PhDJohn said
Elaine, anyone was able to sell the shares in the branches. As long as you had a pulse, you could sell it. With my first purchase of Pace Financial, it was from a branch staff. Based off the reports, Pace Financial was a wholly-owned subsidiary of Pace Securities. And Pace Securities is a wholly-owned subsidiary of Pace Credit Union. Therefore, any earnings should flow upwards to its parent company. Which makes sense why they'd be marketing it in the parent credit union branches, and why credit union branch staff would promote it.  

Thank You
This is sick and this was actually put on employees to do the dirty work.And employees are just like us.Did any of them object?Did any of them disappear somewhere else when an investment case was coming up? I want to hear from them.This is an anonymous site.Go ahead.Spill the beans.Or are you living under fear?

June 22, 2020
6:37 pm
Norman1
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Elaine said


This is sick and this was actually put on employees to do the dirty work.And employees are just like us.Did any of them object?Did any of them disappear somewhere else when an investment case was coming up?…

How would the PACE Credit Union employees know those preference shares were crap?

Being able to read the offering memorandum and evaluate the risk of the underlying portfolio of high-yield bonds is a specialized skill. Those skills are not part of the requirements of a teller or loan officer.

It's not quite true that anyone can sell the preference shares. It depends on the investor class of the buyer.

Anyone can sell up to $10,000 to any buyer in a 12-month period for that buyer.

If the buyer is a "qualified investor," then anyone can sell up to $30,000 to the buyer in a 12-month period for that buyer. A "qualified investor" can be sold up to $100,000 in a 12-month period with suitability advice from a registered rep.

If the buyer is a "accredited investor" or is "family, friend, or business associate" of the issuer of the shares, then anyone can sell to the buyer with no limits.

If you were sold private shares above of those limits, by a non-registered person, then that would be an enforcement matter for the Ontario Securities Commission. The contact details are here.

June 22, 2020
6:51 pm
Norman1
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Investor1 said
I’m new here, but the bottom line is that Pace Credit Union (PCU) owned Pace Securities (PSC) and they decided to pull the plug which caused this mess and should accept responsibility for fixing it.

The PSC fund managers wanted to rebuild the portfolio as most preferred shares were still locked in for a few more years so after the dust settles and we see what the residual value of the shares is, PCU should be liable to make the members who owned them whole because they (PCU) decided to shut down PSC.

Once the residual value is determined, PCU could easily take out a low cost bridge loan from the Central 1 credit union to refund the difference and amortize that loan over 30 years.

Why would they do that when they have no established legal liability? You definitely need to see a lawyer to find out what your actual rights are instead of what you imagine them to be.

Unless those PACE Financial or First Hamilton Holdings shares come with veto rights to stop a windup, there will be no liability for winding down either company, regardless of the consequences.

Also don't believe that BS from the PCF "portfolio manager". Last valuation for the PCF preference shares was around $1.62 was it not? From $1.62 back to the original $5 is a 208% gain!

What kind of investment would even remotely triple an investment in a few years?

June 22, 2020
7:24 pm
Norman1
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sevenup said

The facts that are stated here by the "unaffected" members are different than the reality of the sale of a faulty investment product. People that are unaffected, as knowledgeable as they are, are mere commentators and spectators, they don't have anything to gain or lose from this. However, we do. The ramifications of the loss is distressing and devastating.…

Unfortunately, the judge in the lawsuit will also be "a mere commentator and spectator."

Facts are facts and don't change as the result of different storytellers. Your victim impact will entitle you to sympathy but not to compensation. That's why I think you should meet with a lawyer who can explain how to any liability would need to be established.

Investors also have responsibility in their results. Negligence by an investor can severely limit losses against other parties. That's because not only does fault of others have to be established but also the amount of fault.

If other parties are found to be only 10% responsible, then the investor will eat 90% of his or her loss. Your lawyer will explain that to you and figure out how much impact those false "accredited investor" declarations, of having $1 million or more of in cash and securities, will have on your responsibility for your losses.

Had you refused to initial those false declarations, the unregistered branch staff would not have been able to sell you more than $30,000 of those shares in a 12-month period. In some cases, the limit would have been as low as $10,000. The purchase agreement could have been flagged and refused by Compliance at either the credit union or the issuer of those private shares.

Those false declarations open the door for the credit union to credibly argue that any losses above $10,000 or $30,000 are because of the investor's own failure to be reasonably diligent. After all, the statement

Either alone or with your spouse, you own more than $1 million in cash and securities, after subtracting any debt related to the cash and securities.

is not a difficult one for someone to read, understand, and determine the truth of.

June 22, 2020
7:27 pm
MarkOneil
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Agreed. Especially if the product was promoted by Management, the branch employees themselves probably figured it must be a good product. I mean, if the boss(s) are saying it's good, and there's posters everywhere, it must be good (one would assume).

Norman1 said

How would the PACE Credit Union employees know those preference shares were crap?

June 22, 2020
9:11 pm
PhDJohn
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Norman1 said

Investor1 said
I’m new here, but the bottom line is that Pace Credit Union (PCU) owned Pace Securities (PSC) and they decided to pull the plug which caused this mess and should accept responsibility for fixing it.

The PSC fund managers wanted to rebuild the portfolio as most preferred shares were still locked in for a few more years so after the dust settles and we see what the residual value of the shares is, PCU should be liable to make the members who owned them whole because they (PCU) decided to shut down PSC.

Once the residual value is determined, PCU could easily take out a low cost bridge loan from the Central 1 credit union to refund the difference and amortize that loan over 30 years.

Why would they do that when they have no established legal liability?

Perhaps the legality of things will have to explore via corporate law re PACE. But with the illogical moves made, I'm sure there's a case. You can't simply shut down an organization that has more than 1,200 clients, when you've only been the CEO for less than 14 days. Barbara just started. How can you decide the account futures of over 1,200 people in less than 2 weeks? I think this move, even she regrets. There were so many other options, at her disposal. To someone's point earlier re the shares being liquidated, I figured it impacted much more than 300 people too. The liquidators report showed more than 800 accounts. Which if that's the case, clearly there was negligence in not understanding the entire picture, before making such a drastic move, that directly impacts so many people.

June 22, 2020
9:35 pm
Investor1
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The bigger issue is that PSC wanted to continue to build the portfolio after covering the margin calls from Laurentian Bank Securities (LBS) as the shares were still locked in for a few more years until 2022 or 2023 or so.

However, PCU went ahead and shut PSC down before the lock in period ended which leaves everyone including many of their own employees out in the cold.

This is where the liability begins for PCU as they are breaking the deal as investors were prepared to lock their money in for the long term, but the contract didn’t say anything about the parent company PCU having the right to shut PSC down while at the same time trying to pretend they have no relationship with them.

This impacts all PCU members whether or not if they invested because this will raise more red flags with the regulators in addition to the bad press and legal liabilities they face if they don’t fix this.

Many employees are very angry and will resent management if this isn’t handled properly.

June 22, 2020
9:46 pm
WHTT
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In case you did not know: E&Y is not the ones responsible for the valuation of FHHs and likely PFL. It’s a firm called MNP Limited. They handle bankruptcies amongst other things. I guess the writing is in the wall in terms of what little will be left for us to collect. In case you need to find out more, go to https://mnpdebt.ca/en/corporate/engagements/first-hamilton-holdings-inc.

You can also send an email to jerry.henechowicz@mnp.ca.

My question is, will funds from the liquidation be returned to those that deceived us, mismanaged our investments, didn’t care enough to take care of their clients, and possibly if you read the IIROC investigation charges, took money for themselves on the backs of the unsuspecting investor? I don’t think they should be allowed to recoup any of their shares. Thoughts?

June 22, 2020
9:58 pm
Investor1
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If the IIROC investigation fonds that there was fraud or mismanagement, then a liability would also rise there as well. I believe that a hearing is coming up soon, so we’ll see what comes of it.

June 23, 2020
7:00 am
sevenup
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If you are a new member joining or an existing one that's been affected by the PACE Securities Wind-up (you own PACE Financial Limited and/or First Hamilton Holding shares), please send me an email at: svnpdmn@gmail.com

We have a group of people that are victims of this scam and would love to hear from you. Share your story and exchange information.

June 23, 2020
8:34 am
Yaftica
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And file a brief of your situation here so they can keep everyone on the radar with their investigation process. Something of this nature in the underhanded means it was marketed & sold to clients or they otherwise found themselves into them, should preclude these 'Advisors' from employment anywhere else while an investigation of this nature is proceeding but I get that isn't the way it works. They should still be on notice however that their conduct is being examined.

This has certainly become a wonderful experience as a first time investor and long term customer with Pace Credit Union I must say.

https://www.fsrao.ca/ask-question-file-complaint-or-report-fraud

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