Andrew A. Duffy
July 13, 2007
The B.C. Securities Commission will
release this fall its decision on disgraced Berkshire investment adviser
A three-member panel adjourned a
three-week hearing into Thow's exploits July 6 after a final submission
from commission counsel Doug MacKay, who called Thow a "predator" who
stole millions from unsuspecting clients. The panel's decision is set to
be released Oct. 9.
The Securities Commission wants to levy
Thow with an administrative penalty of $250,000 -- the maximum allowed
in 2005 when the investigation started --and a lifetime ban from selling
securities in B.C.
The panel heard how Thow, a senior
vice-president with Berkshire, took his clients' money and used it to
fuel a lavish lifestyle featuring private jets, helicopters, mansions
Thow left the country in the summer of
2005 and set up home in Seattle after filing for bankruptcy. He left
behind clients and creditors who claimed he owed them in excess of $32
Those former clients claim he cost them
millions by convincing them to invest in a series of schemes that
included buying shares in the National Commercial Bank of Jamaica, an
initial public offering for Berkshire, and providing short-term loans to
But none of those investments were
made, and according to testimony from a forensic accountant, the money
was used to pay off Thow's personal debts, furnish his lifestyle and, in
some cases, pay off clients who were demanding money.
In his final oral submission to the
commission panel last week, MacKay painted a picture of Thow as a
predator who changed his story to suit his prey and lied to cover his
"It appears Mr. Thow was, or at least
became, a predator. And over the period of at least three years, 2003,
2004 and much of 2005, the evidence of these witnesses shows that he
intentionally and systematically stole millions of dollars from his
clients, many of whom were elderly and were particularly vulnerable to
Thow's apparent charm," he said.
"It appears as though Thow's approach
was calculated to tell the clients what he expected they wanted to hear,
and in this at least, he was apparently successful."
MacKay also alleged Thow breached the
Securities Act and related rules by failing to deal fairly, honestly and
in good faith with his clients; trading in non-mutual-fund securities
for which he was not registered; and making misrepresentations in the
selling of securities.
The RCMP Integrated Market Enforcement
Team is continuing its investigation into Thow's activities, though
there is no indication of when or if he would be charged.
The Mutual Fund Dealers Association is
also investigating the role Berkshire may have played in this saga. The
self-regulating body has passed the file to its enforcement counsel for
Thow is also being dragged back to a
Seattle court by the trustee overseeing his bankruptcy because he did
not satisfactorily answer questions about where he was living and
working or what he was earning.
Thow has invoked his Fifth Amendment
right under the U.S. Bill of Rights, meaning he refuses to testify under
oath on the grounds that the answers could be used to convict him of a
Michael Cheevers, the trustee, now
intends to ask the court to find Thow in contempt, which could mean a
financial penalty or jail time.
The questions are part of Cheevers'
search for the money former clients and creditors claim they are owed as
a result of Thow's activities.
Manulife Financial Corporation
announced late last month that it plans to acquire Berkshire's
mutual-fund and securities dealerships in Canada. The deal is expected
to close by Aug.31.