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Commission failed to act on complaint: investor


Andrew A. Duffy

Saturday, August 13, 2005

In the late 1990s, Tim Ball was having trouble with his investment adviser.

According to Ball, his directions weren't being followed, the investments his adviser was proposing were too risky for someone who was retired, and the relationship had become more dictatorial than advisory.

So Ball, a professor of climatology who retired with his wife Marty to Victoria from Winnipeg, complained to the B.C. Securities Commission about his advisor, Ian Thow.

He was told the complaint had been investigated but did not warrant enforcement.

Ball wonders whether the BCSC would be investigating Thow's activities now if it had followed up on that initial complaint.

"I bet they wish they'd done something about [my complaint] now," said Ball. "But they said at the time they had too many cases ahead of me, and I was passed off."

Thow, who at the time worked for Investor's Group, is being investigated by the securities commission and the RCMP's Integrated Market Enforcement Team in light of a series of lawsuits revolving around an investment scheme in the National Commercial Bank of Jamaica.

According to writs filed in B.C. Supreme Court and the Court of Queen's Bench of Alberta, the suits stem from a scheme where clients wrote cheques to Thow's numbered company to purchase shares in the bank, to be held in trust.

Those court documents allege Thow told his clients their investments were soaring, but when the clients demanded their money, they received either a small fraction of the investment or nothing at all.

This week, the chief operating officer for Berkshire Investment Group, where Thow was employed as a senior investment adviser until the end of May, said Thow was not authorized to sell shares in the National Commercial Bank of Jamaica, and the company was not aware of Thow ever owning any shares in the bank.

In an affidavit, Thow has denied advising the Goodwin family of Richmond -- one of four parties suing over the investment -- to purchase shares in the bank. Repeated attempts to contact Thow through his lawyer Rod Anderson in Vancouver have been unsuccessful.

In a letter dated Feb. 26, 2001, securities commission investigator Romolo Di Fonzo told Ball the BCSC typically receives more than 900 formal written complaints a year.

"Consequently the practical reality is that it is impossible for us to pursue enforcement action in every case in which a violation of the Securities Act has occurred."

Di Fonzo went on to lay out factors the securities commission takes into account before deciding whether to pursue a complaint, including the number of people affected, sophistication of the victims, dollar amount involved and whether the conduct is ongoing.

"As you can see, the focus of our efforts must be on those issues that have significant consequences for the investing public as a whole," Di Fonzo wrote.

Andrew Poon, spokesman for the securities commission, said he cannot discuss the details of Ball's complaint and how it was resolved, since Thow remains the subject of an investigation.

Poon says the securities commission can apply sanctions for contraventions of the Securities Act, ranging from fines of up to $250,000 for an individual and $500,000 for a company to barring brokers from working in the industry.

"[Barring] is one of the most severe tools we have -- in essence it's taking away their livelihood," he said.

The number of complaints to the securities commission has dropped significantly over the last few years, with 232 filed in 2004-05, down from 336 in 2003-04 and 410 in 2002-03.

Poon said while the securities commission has a team of 13 investigators, 10 litigators and eight intelligence and assessment staff, regulating the industry is a "heavy workload."

"And yes, there is always a demand for resources," he said. "It comes in cycles -- as market activity picks up, then so do our complaints."

Fifty or so creditors who claim Thow owes them nearly $30 million are currently waiting for the former investment advisor to file his proposal to creditors under the Bankruptcy Act.


Ian Thow takes flight