Thursday, April 03, 2008
VANCOUVER - The lawyer attempting to sort
out the Canadian commercial paper debacle strengthened his suggestion
Wednesday that the furious retail investors who bought the now-frozen
financial instruments will get their money back soon.
"That's what I've been trying to tell you all day. That that's what's
going to happen," Purdy Crawford said during a testy exchange with an
investor in Vancouver, where those tasked with restructuring the notes
came to present their plan to unfreeze the assets.
"We're going to do the best we can to help you people and I think
there's sunshine over the hill for you," Crawford said. "I assure you we
will try to make sure the sun shines."
Several hundred people packed a Vancouver hotel conference room to hear
Crawford and a team of lawyers and executives describe the enormously
complex plan in terms most in the room could not understand.
Confused and angry investors poured forth stories of much-needed money
frozen in commercial paper investments that, under the restructuring
plan, would not be available for many years to come.
Much of the anger was directed at Canaccord Capital, which unlike some
other institutions has so far refused to refund money to retail
investors, some of whom said they were not notified that their money was
invested in commercial paper. An estimated 1,400 of the 1,800 retail
investors with commercial paper investments are with Canaccord.
Together, they make up about $269 million of the estimated $300 million
in commercial paper held by small, non-corporate investors. Given
Canaccord's strength in British Columbia, many of those investors live
on the West Coast, and dozens came to rail against what they see as a
restructuring plan crafted more toward the interest of large
institutions, which hold 99 per cent of the value of the $32 billion in
The smaller investors want back 100 per cent of their investment, plus
interest, and have substantial clout behind their demands, since the
vote on the restructuring plan distributes power equally among holders
of commercial paper -- no matter if they have $1,000 or $1 billion --
and there are far more small investors.
"It comes down to, if you want our votes, buy our notes," said one
investor, Chris Haaf.
But speaking to reporters, Crawford called that "a big ask. You have to
measure that (demand) against this (money) going down the drain, and
what flows from that in terms of potential years of litigation."
Still, he said that whether the investors get that big demand may simply
boil down to the voting power they now wield. If they vote down the plan
-- as most speakers in Vancouver pledged to do -- some of Canada's large
financial institutions could be forced into a fire sale of their
commercial paper and face huge losses, giving them some incentive to
give in to the retail investors.
"I don't know whether anything is involved in fairness here," Crawford
said. "I think it's more a question of the relative bargaining power of
© The Edmonton Journal 2008