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Pace Securities
September 18, 2021
7:04 pm
Norman1
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Investor1 said
The IIROC hearing finally happened after multiple delays.

This is probably why PACE finally decided to settle before this hearing.

Here is a link to one of the stories covering the matter: https://www.investmentexecutive.com/news/from-the-regulators/pace-securities-ceo-faces-temporary-ban-after-iiroc-settlement/

The IIROC notice:

IN THE MATTER OF Joseph Anthony Thomson – Settlement Accepted

September 19, 2021
8:45 am
i_got_smucked_too
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Very cool. Thomson gets 2 minutes in the penalty box. Gotta love it. He'll be eligible to be back on the street pushing some new product in August 2022.

I read the 15 page settlement agreement @ IIROC and note the following omissions:

  • no mention of Gerald McRae. Does McRae walk away ? or is he on the hot seat next ?
  • no mention of Harry Mahesh, Tajie Varicat, or other scam advisors.
  • no mention of all the falsified Account & Know Your Client documents.
  • no mention of IIROC & FSRA becoming aware of this scam in July 2018, yet these regulators watched while millions continued to be invested in 2018 & 2019. Thanks for the delay. Not!
  • no mention of the $1 million Thomson siphoned off to invest in FHH Capital 2. No accounting for this money. No nothing. Here's a C&P of the original IIROC allegation on this issue:

Investing FHHI funds in his own company

    60. On November 27, 2018, Thomson caused FHHI to purchase 100,000 shares of First Hamilton Capital 2 LP (“FH Cap 2LP”) at $10 each for a total investment of $1 million. Thomson was the sole director and officer of the corporation he established to be the general partner for FH Cap 2LP and was therefore its directing mind. PSC was the Manager of FH Cap 2LP and was entitled to a monthly management fee.

    61. When Thomson caused FHHI to invest $1 million in FH Cap 2LP he was in a conflict of interest that he failed to identify or address.

So white collar crime pays. A $100,000 fine for Thomson. My fine was more. Far more than $100,000. I'm in the wrong line of work.

Thomson should start a "how to" school on screwing over IIROC, OSC, and John/Jane Doe public. Where do I sign up Joe ?

September 19, 2021
10:11 am
COIN
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i_got_smucked_too said
Thomson should start a "how to" school on screwing over IIROC, OSC, and   

The OSC is actually dangerous in one respect. Their reckless action over some less than perfect paperwork at Home Trust caused "a run on the bank" and almost sank Home Trust. Sorry to digress a bit. Back to Pace.

September 25, 2021
7:13 am
i_got_smucked_too
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Didn't take long for the answer on Gerald McRae to come in. Click here.

Thomson gets 2 minutes in the penalty box & the Chief (non) Compliance Officer at PACE Securities, Gerald McRae, walks. No fines. No falling on your sword. No nothing. Just update your resume Mr McRae and you can move on. Gotta love it.

IIROC's decision was based upon a reassessment of the case.

That is some "back room deal" IIROC cut him.

October 28, 2021
7:12 am
canadian.100
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There was an article in the Globe and Mail on October 26:

"PACE credit union finds more fraud in its lending books"

You can read the details if interested.

Something appears to be very wrong with this Credit Union.

October 28, 2021
9:51 am
AltaRed
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Clearly business controls were not their strong suit, but that could probably be said for a lot of institutions which may not have well documented processes and/or checks and balances, and/or separation of duties, and/or effective management oversight. These take resources to put into place, both time and money, and the expertise to maintain/monitor them.

I would not be surprised if forensic accountants would find problems in a lot of FIs, not necessarily of a catastrophic nature, but errors none the less. The latest issues were only found because of a deep dive.

October 28, 2021
10:22 am
Norman1
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It doesn't look that serious. According to the Globe & Mail article, "a mid-level manager misappropriated funds in connection with $7-million in loans."

$7 million didn't go missing. Sounds like the employee skimmed some of money on $7 million worth of loans, from 2010 to 2021. That kind of fraud is hard to detect "especially when it involves numerous transactions in small amounts."

October 28, 2021
11:26 am
canadian.100
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Norman1 said
It doesn't look that serious. According to the Globe & Mail article, "a mid-level manager misappropriated funds in connection with $7-million in loans."

$7 million didn't go missing. Sounds like the employee skimmed some of money on $7 million worth of loans, from 2010 to 2021. That kind of fraud is hard to detect "especially when it involves numerous transactions in small amounts."  

Perhaps there was collusion - how could an employee collect payments and then make a payment to him/herself? Oh well if only a few million $ was "skimmed off"by the employee(s) over 10 years - perhaps as you say "not that serious"...........

October 28, 2021
12:20 pm
Norman1
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I suspect it wasn't a few million that was skimmed off. Someone would notice a few million skimmed off of $7 million of loans. That would be around 10% to 30%.

If a member was approved for a $25,000 car loan and 10% to 30% got skimmed ($2,500 to $7,500), the member or the car dealer would notice the shortfall.

More likely something like $50 to $100 got skimmed and an extra $50 - $100 was advanced and approved on the loan. Member probably thought the extra $50 - $100 advanced and added to the car loan was for license or dealer prep fees.

February 18, 2022
2:51 pm
bpcpa
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It's been very quiet over here! Just wondering if members here have heard anymore about being paid the agreed upon settlement. A client of mine who invested with Pace has received no word about next steps. thanks in advance

February 18, 2022
3:37 pm
sevenup
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bpcpa said
It's been very quiet over here! Just wondering if members here have heard anymore about being paid the agreed upon settlement. A client of mine who invested with Pace has received no word about next steps. thanks in advance  

This is surprising. Most people have access to their settlement funds now, some are in the transfer phase. Has your client provided their correct contact to the law firm? You should tell them to email: info.pacesecuritieslitigation@paliareroland.com. They should also contact Industrial Alliance.

February 18, 2022
4:53 pm
Norman1
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According to the Paliare Roland page, the concluding court order was issued October 19.

Investors are to received a letter like the sample on page 9 of the court order.

Those who held their shares in registered accounts with PACE Securities and Laurentian Bank Securities need to make arrangements within 6 months of the court order. Otherwise, the settlement funds would be considered a registered account withdrawal.

April 21, 2022
4:20 pm
Yaftica
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Cool:: https://www.investmentexecutive.com/news/from-the-regulators/fsra-signals-deal-for-pace-credit-union/

PCU really is going down the toilet. Guess enough people have headed for the exits and well, everything can be permanently swept under the carpet now.

What say the experts here... who's going to step in? Still wondering if I'll ever get my membership fee back...

April 21, 2022
5:25 pm
AltaRed
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The momentum on this subject has mostly moved to this thread https://www.highinterestsavings.ca/forum/general-financial-discussion/pace-cu-to-be-folded-into-another-cu/

It is interesting though that PACE assets (not necessarily liabilities = deposits) seem to be holding up reasonably well. In the 4Q2021 stats https://ccua.com/app/uploads/private-files/top100-4Q21_29-Mar-22.pdf PACE has only moved down to 48th place from 43rd in 4Q2019, or from $1.11B in 4Q2019 to $0.95B in 4Q2021. Clearly they have had to shed some of their loan book as loans have matured.

We don't know how customer deposits are faring though. It could be that FSRA has had to inject some liquidity into PACE if members are pulling their deposits disproportionately to shrinking of the loan book.

It doesn't matter much I think which Ontario CU picks up the deposits and most/all of the loan book. PACE members who still have deposits in PACE should be happy with whoever picks them up.

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