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Pace Securities
May 17, 2020
3:36 pm
Briguy
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Norman1 said

If anyone is looking for some office furniture and is near a PACE Financial or a PACE Securities office, one should contact the liquidator Ernst & Young!sf-laugh  

I would imagine office furniture would be sold at a public auction, but I'm not sure with Covid if those still exist. What do you think would happen to more expensive items like computers ?

May 17, 2020
9:11 pm
Norman1
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Briguy said

I would imagine office furniture would be sold at a public auction, but I'm not sure with Covid if those still exist. What do you think would happen to more expensive items like computers?

Probably the same with the computers. The liquidator's job is to turn all the assets into cash, if possible, unless some creditors or shareholders will accept some of the assets in lieu of money they would be entitled to.

May 17, 2020
10:17 pm
Loonie
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With everyone who can do so working at home, who would want clunky office furniture? I guess E&Y would have to scrape the computers? - otherwise would make for some interesting reading! Maybe they'll just melt them down somehow as it seems like a lot of bother to make them super clean.

I imagine online sales and auctions are still happening, with timed pick-ups. MaxSold is still operating - or at least they were when I looked recently.

I was under the impression that some legislation was proposed or passed a year or so ago which said that preferred shareholders would have to swallow a loss. I may have misunderstood. It had to do with bailouts, as I recall.

May 18, 2020
7:31 am
Doug
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Loonie said
With everyone who can do so working at home, who would want clunky office furniture? I guess E&Y would have to scrape the computers? - otherwise would make for some interesting reading! Maybe they'll just melt them down somehow as it seems like a lot of bother to make them super clean.

Hopefully the regulator, FSRA, has already done this otherwise, well, they're not much of a regulator! 😉

I do, nonetheless, find it interesting that an IIROC member dealing firm was placed into liquidation by its parent company, Pace Credit Union, and we've not seen one word—no "investor alert," no news release, or "market bulletin"—from either of the two regulators, IIROC and CIPF, that would be involved in this case. 🙁

I imagine online sales and auctions are still happening, with timed pick-ups. MaxSold is still operating - or at least they were when I looked recently.

Never heard of MaxSold. Will have to look into. Thanks!

I was under the impression that some legislation was proposed or passed a year or so ago which said that preferred shareholders would have to swallow a loss. I may have misunderstood. It had to do with bailouts, as I recall.  

I think you're maybe thinking of the bail-in provisions of CDIC deposit insurance framework for federally regulated financial institutions? It's more complicated than that, and I don't even understand it all. Nonetheless, in this case, it doesn't apply as Pace Securities Corp. is just a subsidiary, regulated by IIROC, assets protected by CIPF, and registered with provincial securities regulators.

Norman1 said

Briguy said
I would imagine office furniture would be sold at a public auction, but I'm not sure with Covid if those still exist. What do you think would happen to more expensive items like computers?

Probably the same with the computers. The liquidator's job is to turn all the assets into cash, if possible, unless some creditors or shareholders will accept some of the assets in lieu of money they would be entitled to.  

It's also possible Pace Credit Union held the lease or, at minimum, was required to provide a guarantee to the landlord that they would pay the rent if their subsidiary did not. Such provisions are commonplace and, unless you're a federal or provincial government Crown corporation or a major bank like CIBC or Scotiabank, it's quite likely that at least the latter applied. The furnishings may have been owned by Pace Securities or they may have been owned by Pace Credit Union. I suspect Pace Securities doesn't have many creditors outside of Laurentian Bank Securities and Pace Credit Union and I suspect the latter is going to waive whatever it is owed out of moral goodness to their members who had investment accounts with Pace Securities. After all, they placed Pace Securities into liquidation for an orderly wind up, so I suspect they want to see the margin loan repaid and their members made as close to whole as possible.

Speaking of which, did you happen to get the February 2019 offering memorandum for First Hamilton Holdings, Inc., to load? I kept trying and somehow managed to get it download yesterday. While it's not necessarily the Offering Memorandum for Pace Financial Ltd., since both companies distributed the preference shares, it's PFL's was similar. See the archive copy (will be available for download for several days), downloaded from the original. Essentially, they were investing in high yield bonds (junk bonds) to pay those yields.

To say Pace Credit Union had a lack of governance, internal controls, and oversight is an understatement! This crap should've never been permitted to get off the ground. 🙁

Cheers,
Doug

May 18, 2020
8:08 am
savemoresaveoften
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I guess they are unwinding the $hit that the father and son started / accumulated over the years ? If so the current management are doing the right thing ?

May 18, 2020
8:29 am
Doug
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Norman, see also this spreadsheet from the Ontario Securities Commission that shows Pace Financial Ltd raised $2.8 million from 28 Ontario residents. I couldn't find anything from the B.C. Securities Commission showing any registration exempt selling to B.C. residents. The First Hamilton Holdings Inc. filing showed $203,200, in 2019, was raised from 12 Ontario and 1 B.C. residents (offering memorandum).

Note, too, that Pace Securities Corp. and First Hamilton Holdings Inc. shared the same Mississauga, Ontario, office space on the 4th floor of the Sussex Centre (not sure if it's the East or West Tower)—the same office space they, together with Pace Credit Union, put out a press release announcing the unveiling of the office.

Cheers,
Doug

May 19, 2020
8:29 am
Yaftica
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Thats an interesting spreadsheet I guess I'm on there someplace as one of the Ontario investors. I'm still awaiting a call / info from the liquidator (E&Y) I suppose they will call me to give me the state of the union. I'm most concerned obviously with what will be the status of these preferred shares that my broker put my TFSA into last year when the bank (Pace) convinced me that it would be a good idea to transfer over. It was $5 per share at that time and when the court order for insolvency was filed it was at $1.62. So not sure if that means it gets frozen there at that value or if it will basically be junk, zero, total loss, converted to something else doubtful.

My portal to Pace Securities is still running so I can see that there is still $ there albeit reduced in appropriate value, I suspect they will tell me during the liquidation that the rest of it will fall to zero value. I don't understand how they could have put me into this position, first time investor, & put my savings into such a high risk category it was never expressed to me or did I imply that was what suited me of course. But I suspect that will be everyones claim in whatever class action I'll be involved with over the next decade to obtain whatever few peanuts may be left. I hope the 300+ people affected here will chose to litigate Pace (bank).

This is the latest info received from E&Y:

Ernst & Young ("EY") was appointed by Order of the Ontario Superior Court of Justice under the Business Corporations Act (Ontario) and the Canada Business Corporations Act to wind-up Pace Securities Corp. ("PSC") and related entities. You can find a copy of the Court Order at http://www.ey.com/ca/pacesecurities. As part of our appointment, EY is authorized to deal with PSC's assets and facilitate the transfer of customer accounts to another IIROC Dealer Member. EY's top priority is moving customer assets and accounts to solvent dealers as quickly as possible so that PSC's customers can regain control over their accounts. In the meantime, although no withdrawals can be made from a PSC account until it has been transferred, your assets and accounts remain secure at Laurentian Bank Securities, which continues to be the carrying broker for PSC. You will be notified when your customer accounts are transferred to a new dealer via a letter that will be mailed to you. You may also keep checking the above website for any updates.

Ernst & Young Inc.
Liquidator of Pace Securities Corp.,
Pace Financial Limited, Pace Insurance Brokers Limited and
Pace General Partner Limited
100 Adelaide Street West, P.O. Box 1, Toronto, Ontario M5H 0B3, Canada
Office: +1-855-943-7141| Fax: 1 416 943 3300 |
Website: http://www.ey.com/pacesecurities

Proudly serving Canada for over 150 years.

May 19, 2020
11:21 am
Yaftica
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Letter Received >IMG_8789.png

May 19, 2020
11:53 am
Norman1
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When PACE Financial Limited is eventually wound up, you will be receiving cash for those preferred shares, Yaftica.

According to the letter, had the company been wound up on April 28, there would have been around $1.62 per preferred shared to be paid out. That is approximate because that likely does not account for any liquidator fees.

That $1.62 per share value is just a snapshot on April 28 and is not fixed. Exact amount will depend on what those junk bonds and whatever else is in the portfolio can be sold for.

Not sure why you chose that way to get exposure to the junk bond market. I do have junk bonds in my portfolio through a mutual fund (PH&N High Yield Bond Fund) and by occasionally buying them directly. No margin/borrowed money is involved. Consequently, the fund manager, as well as myself, is free to hold the bonds indefinitely with no outside pressure to sell.

May 19, 2020
1:42 pm
AltaRed
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Yaftica's post #27 and #28 provide a telling story of the junk bond market and the buying of bonds using margin. That clearly was a 'speculative' investment as defined by the financial industry and should have never been sold to any client without an 'aggressive' designation on the KYC documentation. No idea what Yaftica means by "the bank (Pace)" but if the selling broker was employed by Pace CU rather than Pace Securities, Yaftica may have recourse about being sold an inappropriate investment and can seek restitution. If the selling broker was acting on behalf of Pace Securities, there probably is nothing that can be done about it. Cannot get blood from a stone.

Hard to know at this point what the value of those preference shares really are. Investment grade bonds have recovered somewhat due to signals from the central banks that they plan to support the investment grade bond market through the purchase of bonds. I don't know if the same thing applies to sub-BBB- junk bonds but I suspect some have recovered in sympathy with investment grade uplift.

The OP just got him/herself into some really bad luck: 1) likely being sold a product not consistent with KYC documentation, and 2) the product itself being a swing for the fences rather than prudent base run hits.

Lesson learned: Buyer beware. Brokers are mostly sales people looking to make commissions. They don't have a fiduciary responsibility to the client... only to their firm.

May 19, 2020
4:07 pm
Norman1
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Doug said
Norman, see also this spreadsheet from the Ontario Securities Commission that shows Pace Financial Ltd raised $2.8 million from 28 Ontario residents. I couldn't find anything from the B.C. Securities Commission showing any registration exempt selling to B.C. residents. The First Hamilton Holdings Inc. filing showed $203,200, in 2019, was raised from 12 Ontario and 1 B.C. residents (offering memorandum).

Unfortunately, it won't make a difference to the outcome.

The amount of money people put in isn't going to help how much they will recover. With Nortel, whether one bought at $1,000 a share or $5 a share, everyone ended up with the same $0 a share. sf-frown

May 19, 2020
5:09 pm
Elaine
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New person here and I am still in shock.I lost 100000 dollars to Pace Security-which was purchased at Pace Credit Union.History-I was with Altrans Credit Union(TTC) and it go amalgamated into PACE credit union.The first time I went to renew my GIC a young man went to the desk of the credit union and said that he could offer me 5% for 5 years and 2% bonus for the first 3.I at no time had any idea that this was not a PACE credit union package.And the person doing the selling was well aware that I did not want to lose money.So-on a Friday of a long weekend I get a notice in my e-mail.Apparently only 300 PACE credit union members are affected but there are thousands that are not with Pace credit union that are affected.Seeing Pace Security was operating in the same unit as PACE Credit union I would have thought there would be more members affected.Did some bail?Just curious.This is new to me.I am good at saving money so this is a shock to me and my family..I am still using a Nokia candybar cell phone.This is why I have money and it was retirement funds.I have money from a disabled son in the Credit Union portion which I am anxious to get out at this time.There is something that does not feel right about what has happened.And the fact that I never once received a quarterly statement but received my interest dividends on my PACE CREDIT UNION statement -with zero mention of security on there made it seem like it was a Pace Credit Union product.
I stick to GIC's or to items that I know I won't lose any money on.
Again a shock-Unfortunately I was so happy to see something on this that I have not read through the whole thing yet.i was just so happy to see something.Thank you for whoever started this and if anyone has any ideas I am all ears.Thank You

May 19, 2020
6:30 pm
Elaine
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https://finance.yahoo.com/news/enforcement-notice-hearing-iiroc-hold-183500061.html
If anyone would like to attend a meeting on this

Sign up soon
I think tomorrow or next day

May 19, 2020
6:32 pm
Norman1
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Elaine said

…Seeing Pace Security was operating in the same unit as PACE Credit union I would have thought there would be more members affected.Did some bail?Just curious.…

Those PACE Financial preferred shares were sold without a prospectus under an National Instrument 45-106 exemption. As such, the shares cannot be sold to just anyone.

Outside of being a friend, family, or business associate of a director of the company, one had to be an "accredited investor". To be such an investor, one has to be quite well off. One way is to have over $1 million of net financial assets. Another way is to have over $200,000 pre-tax income in the last two calendar years.

There aren't large numbers of people who could legally be sold those preferred shares.

May 19, 2020
6:47 pm
sevenup
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I emailed them and got this:

The dial in particulars for the Protective Order Hearing for Pace Securities are:

Local: 416 -933-9440
Toll free: 1-855-453-6959
Conference ID: 1034330

We are in major anxiety and panic mode, especially when there's no other information given as yet. This forum is very useful, thank you again for sharing your insights.

May 19, 2020
6:51 pm
Briguy
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Elaine said
https://finance.yahoo.com/news/enforcement-notice-hearing-iiroc-hold-183500061.html
If anyone would like to attend a meeting on this

Sign up soon
I think tomorrow or next day  

The link info says it's a teleconference, so I imagine it's phone in or Zoom.

May 19, 2020
7:16 pm
Doug
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Norman1 said

Elaine said

…Seeing Pace Security was operating in the same unit as PACE Credit union I would have thought there would be more members affected.Did some bail?Just curious.…

Those PACE Financial preferred shares were sold without a prospectus under an National Instrument 45-106 exemption. As such, the shares cannot be sold to just anyone.

Outside of being a friend, family, or business associate of a director of the company, one had to be an "accredited investor". To be such an investor, one has to be quite well off. One way is to have over $1 million of net financial assets. Another way is to have over $200,000 pre-tax income in the last two calendar years.

I'm not certain about either those Pace Financial Ltd or the First Hamilton Holdings Inc preferred shares, but I've been doing a fair bit of research the past few days into changes in recent years to exempt market securities offerings and to a new category of registration, that of exempt market dealers and dealing representatives. Regulations vary by province, but there are also permitted sales by "offering memorandum exemption" and "eligible investor exemption." This has, without question, added significant costs to issuers' stock issuances, but, from the various exempt market issues I've looked through (mainly crowdfunded equity platforms like FrontFundR and mortgage investment corporations), the level of disclosure and transparency in terms of audited financial statements being made publicly available before receiving an offering memorandum has greatly improved than in years past. This has generally been a positive development. Nevertheless, the issue here isn't with an exempt market dealer—it's actually a more fully regulated IIROC member, wholly owned by an FSRA regulated Ontario credit union.

Generally, these include the completion of suitability and risk profile questionnaires and, depending on the province, may require annual household income and/or net worth minimums. I'd have to re-read the First Hamilton Holdings offering memorandum, which may be different than the Pace Securities one. Elaine, do you happen to have either (a) PDF copy or (b) a printed version of the Pace Securities offering memorandum that you could scan? In either case, make a copy of it, and ensure you've blacked out, on the copy (not your original), any personally identifying information. You could use wetransfer.com to share it.

Nevertheless, the fact that Elaine was immediately cross-sold by a Pace Savings & Credit Union branch employee and referred to a Pace Securities Corporation financial advisor, who, quite likely, was dually employed by both employers, is highly problematic. Even if not specifically employed by Pace Savings & Credit Union, the apparent cross-selling and in-branch referrals, by credit union staff, to Pace Securities advisors when the member came in to renew one or more GICs suggests, to me anyway, that Pace Savings & Credit Union shares some culpability here. For one thing, the Pace credit union employee was likely a non-registered branch employee, a receptionist or teller, most likely. If the employee (or, most likely, employees) included potential returns in their referral, that's not a permitted activity by unlicensed staff, and I would encourage Elaine and others to reach out to both FSRA and IIROC, in writing, explaining exactly how they were referred to the Pace Securities staff member. For another, the branch employee proceeded to refer to an investment product without ascertaining any sort of pre-suitability assessment in terms of whether it was even suitable for the client's situation. They also apparently consolidated the members' credit union and investment states, implying the preferred shares were issued by the credit union. Moreover, Pace Securities Corporation, and the related affiliates, had boards of directors that were, presumably, appointed by either Pace Savings & Credit Union executives or the board. Who paid for the directors' liability insurance policy, or did the Pace Savings & Credit Union directors' liability insurance policy extend to all wholly-owned subsidiaries of Pace? It's very early days, but I wouldn't be at all surprised to see one or more lawsuits against not only the advisors, but Pace Savings & Credit Union, as the surviving entity, emerge.

Cheers,
Doug

May 19, 2020
7:28 pm
Yaftica
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I am not an experienced investor obviously. I deal with Pace Credit union in Mississauga. The bank convinced me it would be a good idea to transfer my TFSA from another financial institution. I was aware that the broker wasn't a Pace Credit Union employee but they had an office there, also at the Sussex Centre in downtown Mississauga. Regardless, I never made the distinction that this was a problem, Pace Securities I believed was fully owned and supported by the Credit Union of which I have been a member for many years.

I was never told my deposit would be high risk, was not insured, etc. I was only told about the dividends and how the stock was being paid. It was not explained to me adequately on the distinction of these preferred shares. I do not qualify in the terms that Norm stated so I'm unsure if that was a factor, they took hold of my TFSA and put it into these shares last year. I certainly hope there is grounds for class action but I don't know how that would begin, after the liquidation I presume by someone but I'm not holding out hope I'll ever see my 10 years worth of saving.

I'm somewhat fortunate I guess I can begin again on that path (age considering) but this is a hard lesson and explanation to my family. I've spoken to someone at E&Y already (liquidators) but it seemed only like a PR person. I was told to watch the website for additional changes and info to be added and await a letter from them as to the status of my account (who will be assuming it). I asked about the current value, no answers could be provided of course. Its a very sickening situation that I would think an institution like Pace Credit Union with the billions they possess in valuation would do everything they can to protect their brand identity and assist us as investors and members. I hope this goes very public at some point.

I've sent an email to nhc1@iiroc.ca to see if I can listen in on this hearing Thursday although not sure what I will gain from that.

May 19, 2020
8:44 pm
Yaftica
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Norman1 said

Elaine said

…Seeing Pace Security was operating in the same unit as PACE Credit union I would have thought there would be more members affected.Did some bail?Just curious.…

Those PACE Financial preferred shares were sold without a prospectus under an National Instrument 45-106 exemption. As such, the shares cannot be sold to just anyone.

Outside of being a friend, family, or business associate of a director of the company, one had to be an "accredited investor". To be such an investor, one has to be quite well off. One way is to have over $1 million of net financial assets. Another way is to have over $200,000 pre-tax income in the last two calendar years.

There aren't large numbers of people who could legally be sold those preferred shares.  

Here is the receipt they sent me after transferring my TFSA from another bank so hopefully you're right about the legalities... appropriate info deleted of course::
IMG_8793-copy-1.png

May 20, 2020
4:23 am
Elaine
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Hi
As far as Elaine being rich-Elaine owns a house in Toronto(and it is a "war house"-made after World War II) and that was my chief thing that the "advisor" considered as being 1 million -plus another GIC that was still not due.
Elaine is not wealthy.Elaine has a bizarre medical condition that doctors in Toronto are unable to help with.I think-maybe I could have tossed that money away to doctors outside of country trying to find a fix.
And-yes-stress-makes it worse.
I wonder if there is a way to find out who all was affected?
I think Pace Credit Union needs to be held accountable for a a product that they supported.
And-I am new to this stuff-I am not an investor-I stick with GIC's and stuff with safe rates of return.I got out of banks because of being burned on RRSP investments through one -and said never again.And here I am again.
Pace Credit Union sold me up sh*t's creek,is how I am feeling now.I know I am an adult,I signed the papers,I now remember being asked about the million and I faltered and the guy asked if I owned a house and I said yes and it was a done deal.As a new member at Pace -and first time renewing a GIC with them-I thought wow-much better than All Trans.Brenda from All Trans -I hope you are reading this thread and thinking of me.What was done was so wrong.When my house was my only collateral-I am thinking-wow how much more could I lose?

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