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Pace Securities
January 3, 2021
5:36 pm
Norman1
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Elaine said
….
Never even thought about it until I got the letter from Ernie and buds saying they were spliting the shares. Concerned me because I am not an Ernie Eves fan.They said to put the bonds with my other bonds(what other bonds? the only other bond I have is my great grandfather's from WW1 -a German bond)

But I would be interested in what other people thought when they got that letter. Did they have bonds?…

I think you mean share certificate instead of bonds.

If I remember correctly, you wondered why there were no statements showing your $100,000 "GIC". But, what looked like interest payments from the "GIC" were being direct deposited to one of your PACE Credit Union bank accounts.

It turned out you didn't have a PACE Securities account holding your shares. You were the direct registered owner of your PACE Financial preferred shares. You likely got a certificate initially for $100,000 / $10 = 10,000 shares.

When the shares split, they sent you another share certificate for 10,000 shares. I think they meant that you should put the second PACE Financial share certificate with the first PACE Financial share certificate you received. That way, you have certificates for 20,000 shares.

January 3, 2021
5:43 pm
Douglas Thomson
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member said
Although PCU “conveniently” wasn’t able to provide copies of documents at the time, they provided statements in the mail and online.

Anytime someone asked for their documents there was always a delay.

This is where PCU violated the trust of existing customers who had already trusted their institution.  

This was our experience too.

January 3, 2021
5:51 pm
Bill
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So statements were provided. And none of the 700 noticed that the statement did not show any GICs, that what was displayed was other financial instruments?

Re. Mr Eaves et al: general, indistinct insinuations along the lines of sleaziness-because-he's-an-ex-conservative-politician is not that compelling reading, of much more interest would be specific details supporting allegations of exactly how he might have broken specific law(s).

January 3, 2021
5:53 pm
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Douglas Thomson said

member said
Although PCU “conveniently” wasn’t able to provide copies of documents at the time, they provided statements in the mail and online.

Anytime someone asked for their documents there was always a delay.

This is where PCU violated the trust of existing customers who had already trusted their institution.  

This was our experience too.  

This is why PRRR interviewed several affected members and according to sources both inside and outside the credit union, this was a “consistent” experience among affected members.

PACE approached existing customers who would not be as suspicious as a new member or non member because they already had dealt with and trusted their credit union.

January 3, 2021
6:07 pm
Norman1
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Elaine said
…It is all very puzzling how over 700 people could be swindled like this. And it is interesting that it is only 700. Why didn't other people buy in? Did they know it was crooked?

Some of the credit union staff may have tried to sell them for what they are (preferred shares) and not a bond or GIC.

Some of the other credit union members probably knew the agent's sale pitch was suspect. "5% GIC plus up to 2% bonus? No way that can be a GIC or an investment grade bond. GIC's are currently around 2% to 4%. That sounds awfully like the yield on some kind of preferred share…"sf-surprised Imagine the look on the agent's face! "Excuse me. Did I say GIC?"

January 3, 2021
6:45 pm
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Douglas Thomson said

member said
Although PCU “conveniently” wasn’t able to provide copies of documents at the time, they provided statements in the mail and online.

Anytime someone asked for their documents there was always a delay.

This is where PCU violated the trust of existing customers who had already trusted their institution.  

This was our experience too.  

PACE specifically targeted members who purchased PCU preferred shares and marketed them the same way without explaining or sharing documentation and the forms they required were just a “formality” like the others you already bought without disclosing the excessive (3 and 30) management fees or exactly what they were really doing (IIROC alleges that PSC even went further from what they actually disclosed hence the disciplinary hearing in February).

The original investment shares, if held to term, yielded 5.71% which is consistent with other preferreds so these “new shares” were pitched the same way without disclosing the risks and disguising them as a new offering that was “just like” the others.

Hence the internal and external investigations that have confirmed this through interviews conducted by PCU and the regulators with employees and customers.

Commissions for referrals from PCU to PSC were also not disclosed or ever mentioned to clients as many sales were carried out in PCU branches which provided the perfect cover.

Miraculously all of the ads and posters for these “new” shares disappeared from all branches and the website, however, FSRA, IIROC and PRRR have copies of them.

The Globe and Mail has made repeated attempts to speak with Ernie Eves who has never replied to requests for comment while other board members have provided public comment so it’s a fair question to wonder why he has not replied to such an issue that has and will continue to gain media coverage.

https://www.theglobeandmail.com/business/article-agencies-battle-over-who-dropped-the-ball-as-pace-credit-union-back/

January 3, 2021
7:00 pm
Loonie
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Bill said
I would never leave without a copy of a document I had just signed, I think that's pretty standard practice for many of us. Seems very odd to me that not one of 700 people were like me and refused to leave until they had been given a copy - ? Must be more to it.  

Obviously this is what everyone should do, but it's surprisingly easy to get off track and it's not necessarily the customer/member's fault.

Case in point. A few years ago spouse bought a GIC at Luminus Cu. I think it was an RSP. Made an appointment, which was supposed to allow plenty of time for the transaction. However, it took longer than expected. For some technical reason which I can't remember, they said they couldn't provide a copy of the transaction before spouse left the branch. It was almost closing time, the transaction had already taken place, and they were closing up shop. They said they would send the paper work in the mail in a few days. The paper work never arrived in the mail. When spouse inquired further, the answer was that they couldn't send it because those records had been sent out for microfilming and would not be accessible until that process was completed. This went on for months and they were not apologetic about it. I can no longer remember whether we eventually received a copy or not, but we did close the membership at the first opportunity. It was very disconcerting to have no record of the transaction and we would not risk that again by continuing to do business with them.

Some problems are hard to anticipate. I think that's what happened with these investors who thought they could reasonably trust what was being said to them.
Have you ever tried to sit or stand in a financial institution and read the documents presented including all the fine print on the reverse side, usually in microscopic font? Since I have a vision problem and couldn't read it regardless, I have tried different approaches.
Sometimes I ask someone to accompany me and to read it out loud. Sometimes I ask the person representing the FI to read it out but have found I can't trust them to read out the entire thing. Any attempt to insist on a thorough reading and intelligible explanation of unfamiliar terms is not welcomed as they are all sales people in the end.

January 3, 2021
7:07 pm
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Loonie said

Obviously this is what everyone should do, but it's surprisingly easy to get off track and it's not necessarily the customer/member's fault.

Case in point. A few years ago spouse bought a GIC at Luminus Cu. I think it was an RSP. Made an appointment, which was supposed to allow plenty of time for the transaction. However, it took longer than expected. For some technical reason which I can't remember, they said they couldn't provide a copy of the transaction before spouse left the branch. It was almost closing time, the transaction had already taken place, and they were closing up shop. They said they would send the paper work in the mail in a few days. The paper work never arrived in the mail. When spouse inquired further, the answer was that they couldn't send it because those records had been sent out for microfilming and would not be accessible until that process was completed. This went on for months and they were not apologetic about it. I can no longer remember whether we eventually received a copy or not, but we did close the membership at the first opportunity. It was very disconcerting to have no record of the transaction and we would not risk that again by continuing to do business with them.

Some problems are hard to anticipate. I think that's what happened with these investors who thought they could reasonably trust what was being said to them.
Have you ever tried to sit or stand in a financial institution and read the documents presented including all the fine print on the reverse side, usually in microscopic font? Since I have a vision problem and couldn't read it regardless, I have tried different approaches.
Sometimes I ask someone to accompany me and to read it out loud. Sometimes I ask the person representing the FI to read it out but have found I can't trust them to read out the entire thing. Any attempt to insist on a thorough reading and intelligible explanation of unfamiliar terms is not welcomed as they are all sales people in the end.  

Exactly!

It can be hard enough to review everything when the institution isn’t trying to hide or misrepresent the facts (Confirmed by PCU and FRSA investigation) so it’s no wonder this well orchestrated activity succeeded, especially with existing members inside the PCU branches.

January 3, 2021
9:32 pm
Norman1
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Bill said
So statements were provided. And none of the 700 noticed that the statement did not show any GICs, that what was displayed was other financial instruments?

Statements from PACE Securities seemed to be provided to those who held the preferred shares in an RRSP or TFSA. Some had online access to their PACE Securities registered account and could see their shares there. Those investors knew they had shares and not a GIC.

It looks like something different was done for those who didn't hold their shares in a registered account. Elaine, for example, reported she never got any statements. It turned out no brokerage account was opened for her to hold her preferred shares.

Instead, her shares were issued and registered directly in her name in the PACE Financial corporate share registry. She would then be sent a certificate for her preferred shares. There would be no monthly statements.

It may not have been obvious that the nice looking certificate for 10,000 PACE Financial preferred shares was what her $100,000 "GIC" was. Hopefully, she didn't think it was some kind of fancy PACE advertising, like those faux certificates Publisher's Clearing House sends out, and tossed the certificate into the recycle bin. sf-surprised

January 4, 2021
5:12 am
savemoresaveoften
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I don’t think even when go to trial, the judge will agree with the plaintiff that All 700 investors were misinformed that they were buying a GIC with guaranteed principal. The signed document as a accredited investor, together with a much higher than market ‘guaranteed’ return meant an investor can not simply claim ‘I am dumb, I believed what I was told’ as the reason. There are numerous court cases as references.
Elaine’s case is quite unique and not the norm of the majority of investors in my mind.
Regarding the allegation of The entire Pace organization knowingly scamming investors from the get go, don’t forget the ‘preferred shares’ were performing and mostly likely would have been performing if not because of covid and forced liquidation. Obviously not a single investor were complaining about the misinformation nor missing document while an outsized return was being paid out before. It’s only reasonable for the investor to at least share part of the loss. No one likes to lose but that’s life. Can’t cry foul just because...

Last but not least, chances are the shares are pitched to be ‘GIC like’ as in it pays a fixed return, but are actually preferred shares cuz the extra return potential. Will be interesting if investors were promised ‘guaranteed principal’ during the pitch. Investors now have the incentive in court to claim so, it’s whether the judge believes the claim or not. Its one’ words against another.

Not surprised if some of the salespersons selling it were not even aware of the money being used to buy leveraged junk bonds, or what that really means. Not defending those, just saying one can’t just assume the one behind the branch counter knows more than you !

January 4, 2021
6:26 am
Bill
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I have never been swindled by a financial institution, not even for a penny. I have always insisted on getting copies of everything before I leave, if they ever would have tried the it's-closing-time-we'll-send-them-to-you-later thingy I would have said that's fine, we'll just rip up what we just did and we'll do it again when you've got sufficient time. Also, if I can't review the documents in sufficient detail to my satisfaction at the meeting I have obtained blank copies to take with me to review before coming back to consummate the transaction another time. And I was always especially diligent if the deal looks like it's a pretty sweet one. Just some tips for the youngsters.

The only times I've relaxed my approach a bit is when dealing with the big banks and their discount brokerages, I trust them more. Seems to have been borne out, the tales of woe I hear are invariably concerning credit unions and various other small/independent financial institutions, investment dealers, brokers, etc.

Mr Eaves may well have reason to avoid the media, but on the other hand I would never say a word to the media (they are very dishonest sh*t disturbers) and I'm an honest guy, so maybe that's his deal too, who knows?

January 4, 2021
6:30 am
Elaine
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I will have to give Norman credit.
i went through all the wording on the papers I had received.
The wording was certificate.So ,initially after my purchase I was mailed a single sheet of white paper says share certificate-it looked the same as the single pieces of paper that I have had for my GIC'sand stuck it in the same place.
Then a few months later I received the letter of the split,to keep this certifiate with the other one and what was included was something that looked like my great grandfather's German bond so I tore my house apart trying to see whether I had anther 'bond' that looked the same.But it says share certificate on it.I guess they wanted me to put it with that piece of white paper.
Mea Culpa
This thing was designed to mislead.In my opinion.

January 4, 2021
7:34 am
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savemoresaveoften said
I don’t think even when go to trial, the judge will agree with the plaintiff that All 700 investors were misinformed that they were buying a GIC with guaranteed principal.  

At this point there will be a “mediation” and if that does not produce a settlement, it will move to an expedited trial.

Apparently, PACE is covering the cost for the mediation. (Although paying for the mediation is not an admission of guilt).

There will be several parties in the mediation including the investors law firm, PRRR, PCU and their lawyers, FSRA, the Ontario Securities Commission (OSC) and other potential stakeholders or regulatory groups (IIROC?). The various parties insurers will also be present as that is critical to a class action or class action like settlement.

The reason for mediation is to hopefully obtain a settlement without the need for a costly trial.

Mediation will allow for open and (hopefully) honest communications between the groups without the discussion becoming public as they would in court. I’m sure there is a lot that PCU and PSC does not want to be aired in public.

The article mentioned that advisors were apparently given risk opinion reports by “experts” hired by PSC that stated that the investments were of low to medium risk so either these reports were inaccurate or PSC executives misled these experts or didn’t offer a true disclosure of what they did and that is why IIROC complained to FSRA several times and why the hearing is set for February. It will be interesting to see what comes out of this hearing.

Since the new PCU regime is paying for mediation to try to resolve this, it makes me wonder what the previous regime was really doing with their expensive lawyers.

We’ll be getting facts soon.

January 4, 2021
7:41 am
savemoresaveoften
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member said

savemoresaveoften said
I don’t think even when go to trial, the judge will agree with the plaintiff that All 700 investors were misinformed that they were buying a GIC with guaranteed principal.  

At this point there will be a “mediation” and if that does not produce a settlement, it will move to an expedited trial.

Apparently, PACE is covering the cost for the mediation. (Although paying for the mediation is not an admission of guilt).

There will be several parties in the mediation including the investors law firm, PRRR, PCU and their lawyers, FSRA, the Ontario Securities Commission (OSC) and other potential stakeholders or regulatory groups (IIROC?). The various parties insurers will also be present as that is critical to a class action or class action like settlement.

The reason for mediation is to hopefully obtain a settlement without the need for a costly trial.

Mediation will allow for open and (hopefully) honest communications between the groups without the discussion becoming public as they would in court. I’m sure there is a lot that PCU and PSC does not want to be aired in public.

The article mentioned that advisors were apparently given risk opinion reports by “experts” hired by PSC that stated that the investments were of low to medium risk so either these reports were inaccurate or PSC executives misled these experts or didn’t offer a true disclosure of what they did and that is why IIROC complained to FSRA several times and why the hearing is set for February. It will be interesting to see what comes out of this hearing.

Since the new PCU regime is paying for mediation to try to resolve this, it makes me wonder what the previous regime was really doing with their expensive lawyers.

We’ll be getting facts soon.  

Yes think its obvious PACE admits some guilt (some advisors may have use crafty words to get a sale done) but unwilling to absorb 100% of the investment loss. If I am PACE lawyers, I would not spend my time trying to get the regulator to share the blame and cost. I would work on a number that is amicable to the affected investors and move on.

January 4, 2021
5:14 pm
Elaine
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Norman1 said

Bill said
So statements were provided. And none of the 700 noticed that the statement did not show any GICs, that what was displayed was other financial instruments?

Statements from PACE Securities seemed to be provided to those who held the preferred shares in an RRSP or TFSA. Some had online access to their PACE Securities registered account and could see their shares there. Those investors knew they had shares and not a GIC.

It looks like something different was done for those who didn't hold their shares in a registered account. Elaine, for example, reported she never got any statements. It turned out no brokerage account was opened for her to hold her preferred shares.

Instead, her shares were issued and registered directly in her name in the PACE Financial corporate share registry. She would then be sent a certificate for her preferred shares. There would be no monthly statements.

It may not have been obvious that the nice looking certificate for 10,000 PACE Financial preferred shares was what her $100,000 "GIC" was. Hopefully, she didn't think it was some kind of fancy PACE advertising, like those faux certificates Publisher's Clearing House sends out, and tossed the certificate into the recycle bin. sf-surprised  

And just to dig myself deeper into the hole-the only nice looking certificate I got was the one that was the splitting of the shares.If that had not happened I would just have the single piece of white paper that explained nothing.Just what I had bought.The interest showed up on my Pace statements-and as I thought that it was a Pace GIC I did not even notice that the interest payments stopped.Actually glad to be rid of it.Tax time was a disaster from day 1.
And to who ever it was who said they may check my banking history-hope they do-they will learn how to pay off a house in 5 years.

January 4, 2021
6:19 pm
Norman1
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Elaine said

And just to dig myself deeper into the hole-the only nice looking certificate I got was the one that was the splitting of the shares. If that had not happened I would just have the single piece of white paper that explained nothing.Just what I had bought.The interest showed up on my Pace statements-and as I thought that it was a Pace GIC I did not even notice that the interest payments stopped.Actually glad to be rid of it. Tax time was a disaster from day 1.

It sounds like PACE Financial went cheap for their initial share certificates! sf-laugh

Some investor, who had other shares before and knew what a stock certificate normally looks like (like this), could have complained.

I guess we now solved that mystery in June about where your 20,000 preferred shares were!

That tax time hassle, with grossing up the dividends, was another clue that you actually had shares instead of a GIC.

January 4, 2021
7:44 pm
Dave_1
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Dave_1 said (in Post # 481)
holy cow Batman ! Hold the phone. Have you read this ?

James Bradshaw's twitter feed from overnight.

--- web address removed ---

For those of you that are unable to penetrate the paywall @ The Globe & Mail, the article from Dec 28th is now publicly posted at PACE CU's web site - minus the mug shots of the Smith father & son duo

https://www.pacecu.ca/SharedContent/documents/2020/Dec2820Article.pdf

Worth a read !

January 4, 2021
8:33 pm
Investor1
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Dave_1 said

Dave_1 said (in Post # 481)
holy cow Batman ! Hold the phone. Have you read this ?

James Bradshaw's twitter feed from overnight.

--- web address removed ---

For those of you that are unable to penetrate the paywall @ The Globe & Mail, the article from Dec 28th is now publicly posted at PACE CU's web site - minus the mug shots of the Smith father & son duo

https://www.pacecu.ca/SharedContent/documents/2020/Dec2820Article.pdf

Worth a read !  

Thank you for posting this for the group to see.

I am very surprised that PCU posted this on their public website.

I’m fairly certain that the previous management (regime) would not have posted it or even acknowledged its existence.

January 6, 2021
10:23 am
Dave_1
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I missed this first time around. FSRA wields it's axe once more ?? Lawyers caught up in resignation/firing of the old PACE board too ??

If I'm interpreting this correctly, during another read of the Dec 22 MOTION RECORD, I'd say the lawyers for PACE CU have changed. What was:

    GARDINER ROBERTS LLP
    Bay Adelaide Centre - East Tower
    22 Adelaide St W, Ste. 3600
    Toronto, ON M5H 4E3
    John A Campion
    Tel: 416.865.xxxx
    Email: jcampion@xxxxx.com
    Lawyers for Pace Savings & Credit Union Ltd.

is now:

    LAX O’SULLIVAN LISUS GOTTLIEB LLP
    Counsel
    Suite 2750, 145 King Street West
    Toronto, ON M5H 1J8
    Crawford G. Smith LSO#42131S
    csmith@xxxx.ca
    Tel: 416.598.xxxx
    Andrew Winton LSO#: 54473
    awinton@xxxx.ca
    Tel: 416.644.xxxx
    Jasmine K. Landau LSO#: 74316K
    jlandau@xxxx.ca
    Tel: 416.956.xxxx
    Fax:416.598.xxxx
    Lawyers for Pace Savings & Credit Union Ltd.

Somebody pi$$ed somebody off. I'll save you from my speculation. But maybe James Bradshaw's next report will give us the insider's view ??

January 11, 2021
8:12 pm
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Nothing all that interesting, but there is a Jan 11, 2021 message from the new CEO. Read it here.

Of note:

  • a spring Annual General Meeting (AGM), and
  • Part of our past includes the closure of PACE Securities (PSC). (No kidding ! Only 710 claimants got screwed over ! and most are PACE CU members) The Financial Services Regulatory Authority of Ontario (FSRA) is leading this effort along with Paliare Roland (PR), the Representative Counsel for Claimants. Please direct all inquiries to Paliare Roland going forward; they are happy to assist you.

Please write your comments in the forum.