Berkshire investigation completed
Mutual fund body has now sent the file to enforcement counsel


Andrew A. Duffy

Wednesday, May 02, 2007

Notice that the Mutual Fund Dealers Association has completed its investigation into Berkshire Investment Group and is moving along the path to a hearing should have come as welcome news to former clients of Berkshire investment adviser Ian Thow.

But it seemed to hit some of those clients -- who claim Thow fled the country owing them in excess of $37 million -- as cold comfort.
 

"You know, I just don't know what my reaction is," said Daryl Goodwin, whose family claims Thow bilked them out of $1.4 million in an investment scheme. "I just don't trust the MFDA, I'm left with a life of no trust, I honestly am."

Goodwin, like many in the creditor group, has said the fact his family trusted Thow left them vulnerable and they have no intention of letting that happen again.

Thow's former clients and creditors claim the investment adviser convinced them to invest in schemes that ranged from a Jamaican bank to loans for Vancouver developers and seed shares with his former employer.

The former vice-president of Berkshire Investment Group left the company at the end of May 2005. He filed for bankruptcy in Canada and the U.S., left Victoria and has been living in Seattle since August 2005.

His clients say they have nothing to show for their investments.

The B.C. Securities Commission and RCMP have conducted investigations into Thow's activities with the BCSC completing its work and setting a hearing to start at the end of May. The RCMP investigation is ongoing.

The MFDA investigated the company he worked for.

Late last week, the MFDA sent a letter to Thow's former clients advising them their investigation was done and they had "escalated the file to enforcement counsel."

Goodwin said at least there has been some action after months of little or no news on the file.

"It was a like a dead zone, but my feeling is we're coming up on the second anniversary of this and something has to happen," he said.

"It just has to, it can't keep going like this."

According to Shaun Devlin, vice-president of enforcement for the MFDA, the escalation of the file means their counsel will review the case to determine if a proceeding is warranted.

Devlin, who would not comment on this specific case, said the organization generally hopes to have the review process completed within 10 months, at which point it is either dismissed or counsel will send a letter to the respondent, in this case Berkshire.

"That's an opportunity for the respondent to provide more information to the MFDA before the MFDA finalizes its decision to issue a notice of hearing," he said.

If a case gets to that point, the MFDA can issue a notice of hearing or a notice of a settlement hearing depending on the circumstances.

Either public hearing would be heard in the province where the investment activity is deemed to have taken place.

A MFDA hearing panel is made up of two members of the MFDA's regional council and one independent, usually a lawyer or retired judge.

Former Thow client Kirk Wong believes there is a strong possibility Berkshire may settle before it gets to a hearing stage.

"I can't see why they would want to bring any more trouble," he said, adding he expects the MFDA to have looked into the issues of compliance and complaint handling by Berkshire.

The company in question is keeping quiet at this point.

Berkshire's senior counsel Julie Clarke said, "Berkshire agrees with the MFDA's decision not discuss the status of the investigation through the media. It remains that Berkshire will continue to co-operate with the MFDA and its enforcement counsel."

Some Berkshire advisers in Victoria admit they have been looking forward to these investigations finally being completed so the air can be cleared once and for all.

aduffy@tc.canwest.com

see: 

 

Ian Thow takes flight