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Berkshire accused of legal piling on
Off the Record

Barry Critchley

Friday, October 5, 2007

In most sports, there are various rules regarding piling on. Those who disregard them are penalized.

A group of disaffected clients of the Berkshire Group — specifically, those who put their faith in Ian Thow, the firm’s former senior executive based in Vancouver — feel similar rules should apply to the way large and well-funded financial institutions deal with complaints.

Those clients — who are part of a larger group who claim they lost $32million over a period ending in the early summer of 2005 — feel Berkshire, now owned by Manulife Financial Corp., is piling on by making them go through interminable delays, be it through the courts or through dealings with various regulatory bodies, to get satisfaction.

For instance, next Friday Berkshire was scheduled to bring a series of motions against Brad Goodwin, one of Thow’s former clients, for allegedly disclosing information to a journalist. (The matter has been adjourned.) Goodwin, who along with his family has filed a lawsuit against Thow and Berkshire, has so far spent more than $200,000 on legal bills and his case has yet to reach discovery. “It’s just corporate bullying,” said Goodwin. “They want to get our lawyers tied up in there for three days and just bleed the life out of us. It’s so expensive to fight these motions. They are absolutely doing everything they can to bury us. … They’re beating us down.”

A number of Thow’s former clients say they’re upset, claiming Berkshire hasn’t been reined in by Manulife, one of the country’s most respected financial institutions. Many felt Manulife, usually lightning fast at stamping out fires, would have taken a more hands-on approach and sought to put the matter behind it after it bought Berkshire in August. As Doug MacKay, the prosecutor for the British Columbia Securities Commission said at its hearing into Thow: “He [Thow] intentionally and systematically stole millions of dollars from his clients, many of whom were elderly and apparently vulnerable to Thow’s apparent charms.”

Other examples of piling on:

According to people who have filed complaints, Berkshire has refused to co-operate with the Ombudsman for Banking Services and Investments, an independent agency whose mission is to fix conflicts between participating banking and investment firms and their customers. For the OBSI to complete its work, it needs some input from Berkshire.

Last January, Mr. Justice R. Goepel criticized the way Berkshire was behaving in a court case brought by George Thomson, a Nanaimo businessman and also a former client of Thow. “Berkshire’s failure to comply with the rules of court and various court orders made during the course of this application is not acceptable,” Judge Goepel said.

At least one body seems breaking free of the pile.

The Mutual Fund Dealers Association announced yesterday it has issued a notice of settlement hearing against Berkshire. The proposed settlement agreement concerns allegations that Berkshire “failed to conduct reasonable supervisory investigations of Thow, and to take such reasonable supervisory and disciplinary measures as would be warranted by the results of its investigations,” contrary to two specific MFDA rules.

The MFDA has the real power over Berkshire’s fate and future operations.

The hearing is scheduled for Oct. 22 in Vancouver.



Ian Thow takes flight