The daughter of a White Rock senior who lost her retirement savings through what she was told was “low-risk” investment is speaking out following news that officials with a Surrey-based financial firm are facing a hearing before the B.C. Securities Commission.
“She lost everything,” the daughter – who asked to remain anonymous to protect her mother’s identity – told Peace Arch News Monday (Dec. 21).
“It’s hurt her a lot.”
In a news release issued Dec. 8, BCSC alleges that a former registered investment fund manager and portfolio manager with Chartwell Asset Management, as well as two directors, “failed to exercise sufficient care, diligence and skill in calculating the value of one of its funds, and did not ensure that the fund was a suitable investment for clients.”
At issue is an arrangement in which the majority of the assets of a fund managed by the firm – the Magna High Income Fund – “were loaned to Health Capital Receivables Funding Special Purpose Corporation I, by 2011.
“The loan arrangement bore several indicators of risk,” the release states. “Health Capital missed payments or was late making payments, requested an extension or modification of the payment schedule, and didn’t provide information about its finances.
“The BCSC alleges that Chartwell calculated the net asset value of the Income Fund without having sufficient information about Health Capital. Chartwell also failed to re-evaluate the Income Fund’s valuation despite the risk indicators.”
After Health Capital defaulted on the arrangement in 2017, Chartwell suspended client redemptions from the Income Fund, the release continues.
BCSC alleges Chartwell “violated the B.C. Securities Act’s requirement that investment fund managers exercise ‘the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances.’”
It also attributes the violation to directors Gregory Paul James Cameron of Surrey and Wah Bo Chew of Burnaby “because they authorized, permitted or acquiesced in the alleged misconduct.”
Advising representatives and chief compliance officers Matthew Evans Cameron of Surrey and Eric Mayrhofer of Coquitlam, the release states, are alleged to have “caused 146 clients to be invested in the Income Fund without having sufficient information about the Income Fund’s loan to Health Capital.”
“By doing so, they breached their duty to take reasonable steps to ensure that the investment was suitable for those clients.”
The White Rock woman’s daughter said her mom, a retired nurse nearing 80 years of age and known for her compassion throughout her health-care career, is among the 146 affected clients. Advised to take out a home equity loan to fund investments, she lost $58,000 and the ability to enjoy retirement in the way she had planned, the daughter said.
They have no expectations of recovering the funds, the daughter said, but hope that sharing the experience will help others avoid similar losses.
Noting the allegations have not been proven, the release adds that Chartwell surrendered its registration as an investment fund, portfolio manager and exempt market dealer in January 2020.
A date for the BCSC hearing is to be scheduled in February.
Like us on Facebook and follow us on Twitter