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Pace Securities
June 7, 2020
9:05 am
Elaine
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In my opinion this "problem" of only 300 members affected is way bigger than they thought.They did not know about me.It was only because I had the Pace Financial T5 in front of me and I could read it off to a few different people from PACE that they realized that I was affected.And I am guessing I am not the only one.I really would love to know what was going on at 1138 Bathurst last week when someone tried to buy a GIC.
I think the decision now is whether to fold or not.
I am pretty sure the new CEO does not want her name tarnished with more stuff hidden and to pay off everyone who has been deceived(and that is what happened to me-deception)by the Credit 's solely owned companies is not going to be possible.

June 7, 2020
10:08 am
Norman1
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It may well be the case that the number of members affect is larger than thought.

PACE Credit Union may have based their 300-member number on the number of PACE Securities accounts they found with those PACE Financial preferred shares. It is possible PACE Securities avoided opening a PACE Securities account for those, like Elaine, who didn't buy those preferred shares for a TFSA or for an RRSP. PACE Securities sent PACE Financial the money and asked PACE Financial to register the preferred shares in the member's name.

PACE Financial gets the money, PACE Securities gets the commission, and member owns the preferred shares directly. Dividend are then sent by direct deposit to the member's bank account. No PACE Securities account afterwards.

From a financial perspective, the number of members affected is not as important as the total amount of funds involved in those preferred shares. I don't think we have that exact amount yet. The $10 million and $20 million numbers being tossed around at the moment are just calculation examples.

June 7, 2020
12:29 pm
Elaine
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Until they know how many people are affected they are not going to be in any position to even estimate.
I am surprised that PACE Credit Union has not sent out a revised notice to their clients that there may be more people than originally thought caught up in this and that any members that do get dividends ought to contact their branch ASAP.
Unless I am the only one that got scammed this way.
Or they ought to be going through their system looking for anyone with dividends and contacting them directly.
I just wonder ,for myself,if this had not come to light now,whether I would have got my 100 grand back after the 5 years or if anyone would even know where it was.

June 7, 2020
5:23 pm
Norman1
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Elaine said

I just wonder ,for myself,if this had not come to light now,whether I would have got my 100 grand back after the 5 years or if anyone would even know where it was.

The way that share investment works is that you no longer have $100,000. Instead, you have 20,000 PACE Financial preferred shares. Whether or not you'll get $5 for each of those preferred shares later is another question.

Each preferred share that PACE Financial issued should be recorded in its share register along with the information about its registered owner. So, it should be easy to determine how many of those preferred shares are out there.

Shares being held in a PACE Securities account will all have PACE Securities as the registered owner. One will have to look into the account records of PACE Securities to find the people those shares are ultimately for. Those indirect owners are called the beneficial owners.

Shares held directly and not in a PACE Securities account will have the actual owner recorded as the registered owner. I suspect that is the case with your preferred shares.

June 8, 2020
6:10 am
Elaine
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Thanks Norman1
No one had ever explained that to me.

June 8, 2020
6:46 am
Douglas Thomson
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Just catching up on this, my family lost $300,000 in our pace financial preferred shares. I would like to make an effort to work with other investors as a united group to hold Pace Credit responsible for this loss. My contact is Douglasstewartthomson@gmail.com

June 8, 2020
9:36 am
Yaftica
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Douglas Thomson said
Just catching up on this, my family lost $300,000 in our pace financial preferred shares. I would like to make an effort to work with other investors as a united group to hold Pace Credit responsible for this loss. My contact is Douglasstewartthomson@gmail.com  

I'm sure its a whirlwind trying to catch up indeed, that is a rather large amount, may I ask how you came to catch up at this point? (ie: just noticed from a recent statement, logged into your web portal, someone called you to inform you) I'm curious what brought you to see this on the internet which has certainly become a wealth of info at least from my perspective in understanding specifically whats transpired here from a new investor standpoint (my TFSA deposit was largely eliminated because of this and it is yet to be determined where the final tally will be I suppose).

I'm sure you've read these pages over again and understand as we do that we're waiting for the CU to provide additional support here following their Inquiry before the matter reaches a major boiling point although I 'm certain that is where most peoples blood pressure is already at. We know they are fully aware of the implications to members caused by the decision to scuttle Pace Securities.

Perhaps you're willing to relate where your investment with these preferred shares was specifically placed in your portfolio? (TFSA, GIC or straight cash purchase of what sounds like 60k worth of shares...). People seem to have different scenarios of course but of course your matters are private and understand if you wish to not speak on.

There will be plenty of time to consider Action but it seems the only thing we can do at the moment is await the Inquiry process and provide assistance with the investigative measures taking place and try to have some faith with that. Thanks for sharing your info ... it lends to more head shaking of course, I presumed there was some kind of limit to the amount they could sell to an investor or as I previously had thought there were qualifications which may have been overlooked in my case and my deposit was put into these shares almost full bore but its just another layer added to the overall disentangle process...

June 8, 2020
9:59 am
Douglas Thomson
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Thank you for your follow up. Our shares were held “directly” 60,000 shares as you noted.
For the record I have no confidence in the credit union’s intent to offer any remedy. After all, this is the same company who constructed the scam to begin with.
Hindsight being what it is, this is a classic confidence scam.
Investors were identified by PCU and directed to Pace Securities where they were met with an “advisor” working for a company owned by a credit union the investor knew and trusted.
Investors were then sold the shares as “Bond-backed” investments. But this is true in name only. Much like the “mortgage-backed” securities fraud of a decade ago.
The fact is these shares were highly leveraged and highly risky and sold to a particular set of “qualified” investors and misrepresented as a highly secure bond-backed investment (which these investors understood to be a transitional bond investment).
I believe the only remedy is a collective legal action taken directly against PCU by investors who were ultimately scammed by theIr credit union.

June 8, 2020
11:02 pm
Norman1
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Elaine said
Thanks Norman1
No one had ever explained that to me.

You're welcome! That advisor should have taken the time to explain.

What that means, in practice, is that should you decide to contact the E&Y people liquidating PACE Financial to look for your investment, you would not ask them to find your $100,000. The money was likely deposited into a Laurentian Bank Securities margin account, along with the money from Yaftica and other fellow investors, and used to buy junk bonds, buy options, pay trading commissions, pay management fees, and pay interest on the margin loan.

Instead, you would ask the liquidator to confirm that there are 20,000 PACE Financial preferred shares registered in your name.

June 9, 2020
7:19 am
Carly
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Douglas Thomson said
Just catching up on this, my family lost $300,000 in our pace financial preferred shares. I would like to make an effort to work with other investors as a united group to hold Pace Credit responsible for this loss. My contact is Douglasstewartthomson@gmail.com  

My husband and I have invested approx. 500,000.00 with Pace and First Hamilton. We're retired and live on our income from investments, so this
was a Huge shock.
I agree ,when Ernst and Young has completed the Liquidation we should all seek legal counsel and/or contact W5 or Marketplace.
Just wondering have you talked to Barbara Dirks or Terri Obrien?

June 9, 2020
9:51 am
sevenup
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Has anyone talked to Laurentian Bank about their account since the wind-up? I called on June 1, left a detailed message asking about my account and never heard back. This was mentioned in the EY letter that was sent out May 22 to us.

Why give us this information to speak to a representative at LBS when no one is there to help out?

June 9, 2020
10:01 am
Elaine
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I tried today,again,and got nothing
Just the recorded message in French.
It almost feels like the wrong extension.

Today's math question is getting into the double digits.
Gonna have to get a calculator out soon.

June 9, 2020
10:08 am
Norman1
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Carly said


I agree ,when Ernst and Young has completed the Liquidation we should all seek legal counsel and/or contact W5 or Marketplace.
Just wondering have you talked to Barbara Dirks or Terri Obrien?

You may wish to start seeking some legal counsel now.

Should it turn out that PACE Credit Union is legally only 10% responsible and that PACE Securities is 90% responsible, that 90% could turn out to be very hard to collect should PACE Securities be wound up and dissolved by then.

June 10, 2020
1:55 pm
Yaftica
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June 10, 2020
2:10 pm
Yaftica
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June 10, 2020
3:14 pm
Elaine
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Lots of info but it does not bring my money back.You are young enough to make the money up in your working years.The rest of us including the 80 some year old will just die in poverty and be grateful for MAID.
They still won't release my disabled son's GIC's
I guess they don't discriminate between the aged ,the diasabled and the mentally incompetent.All fair game at Pace Credit Union.
(I am always tempted to give them the wrong math answer but don't know what will happen-lifetime ban?)

June 10, 2020
3:22 pm
Shelley Mackie
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Yes, I searched and found these documents last week.

I'm not sure how the advisors sleep at night.

I spoke with pace credit union last week and she said we should have more information in about 2weeks.

June 11, 2020
8:04 am
Norman1
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Yaftica said
Some Interesting Info I wish I knew about a long time ago::

https://www.theglobeandmail.com/investing/article-preferred-shares-are-priced-attractively-but-proceed-with-caution/

https://www.raymondjames.ca/branches/premium/pdfs/preferredsharesreport.pdf

The preferred shares info there doesn't really apply to the PACE Financial preferred shares.

Those preferred shares are ones issued by large established companies, like BCE and Royal Bank, that report financial results every quarter. Those preferred shares also trade publicly on the stock exchanges.

In contrast, the PACE Financial preferred shares are private shares that don't trade anywhere. As a private company, PACE Financial is not required to report its financial results publicly. It is not know publicly how big PACE Financial was.

June 11, 2020
8:10 am
PhDJohn
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I still have not seen any updates yet. I've been contacted by a PR consulting representative that PACE has hired. My concern now, is that there will be a lot of "campaigns", which will be a lot of spin and talk. PACE should understand the gravity of this entire situation and just make things right.

June 11, 2020
9:40 am
Douglas Thomson
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Based on what I’ve recently come to understand (and I’m not any kind of expert) I believe it’s important to note the “uniqueness” of the Pace Financial Preferred Shares... they were held out by the advisors (and sometimes by Pace Credit staff directly) who were selling them as a “special to you” version of what sounded to them like a conventional security, with all the requirements attached, in order to provide reassurance to their customers. In fact, none of these expected checks and balances were in place.
Despite the “advisors” reassurance that the shares could be sold at their original purchase price, there was really no market for them. That’s because nobody other than trusting (mostly unsophisticated investors) Pace customers would buy them. And this customer base was already exhausted, likely within months of the “initial offering” because the sales team had already taken all the money they could from their clients (aka customers who were fed to them by Pace Credit). Investors were going to own those shares forever. And if the bond market experienced a downturn (which it obviously did), the company had no ability to ride it out as a more solid company would.
This raises another important point. These shares differed from other “similar sounding” investments sold by large institutions because of the credit standing of Pace and their associated companies. The larger companies typically have better credit ratings which makes them more solid to ride out downturns. In this case, and according to the Pace Securities president Joe Thomson‘s own statement, Laurentien Bank, who financed the leverage, cut Pace off when they asked for more money (because Laurentien Bank knew Pace was a bad credit risk).
Unfortunately their customers (investors) didn’t have the same level of access to what was going on behind the scenes. (Essentially a company with a poor credit rating, buying junk bonds at high leverage).
In fact, Pace Financial’s own parent company, Pace Credit, had so little confidence in the company’s ability to keep themselves from going bankrupt that they fired everyone and put the company into “liquidation“.
This was a company built on a shaky foundation from the start. But one that had both the real and perceived “backing” of Pace Credit.
In a letter, dated January, 20, 2014 from then Pace Credit CEO, Larry Smith, talking about the launch of Pace Securities, “We’re excited about this new opportunity. Owning an investment dealer means PSCU can monitor and control every aspect of the services we deliver to our members and the public. It will also ensure both companies are consistent with our core Credit Union values.”
I should also note, I may have misunderstood some terminologies above, but I stand by my basic understanding of how this “business” operated.
Unfortunately I have only come to better understand these details after my 87-year old mother was sold $300,000 these shares to help pay for her care.

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