A failed investment of more than $1.2 million that drained a North Vancouver couple’s life savings has prompted a disciplinary hearing against their financial adviser.
Brian Anthony Peters, a Vancouver-based adviser for Canaccord Genuity, will face a hearing to address allegations he failed in some of the most basic duties expected in the industry.
The Investment Industry Regulatory Organization of Canada alleges Peters emptied the retirement savings of the couple into shares of Vancouver-headquartered junior exploration company Colonial Coal in an ‘all your eggs in one basket’ play.
The IIROC citation paints a picture showing Peters particularly eager to put his clients’ money into Colonial.
In 2010 Peters told the couple, then in their early 50s, via email that he was “basically pounding the table that we buy a couple hundred grand” of Colonial Coal. And after initially investing about $25,000 of their money without their consent, he persuaded them to buy over $950,000 worth of shares – equivalent to nearly their entire life savings.
Colonial stock subsequently plummeted from around $1.80 a share at its peak in January, 2011, to, at one point, $0.10 a share. It now trades around $0.50.
It’s unclear from the IIROC notice how much money the couple lost in the end.
Certified advisers, such as Peters, are supposed to shelter clients from financial risks, or at least clearly explain such risks. Peters is said have failed in this respect.
Aside from facilitating the money-losing investment, Peters is accused by IIROC of failing to perform due diligence, conduct know-your-client protocol and execute transactions with proper direction from his clients.
The wife and husband, referred to by IIROC as JG and LG, respectively, had a combined gross annual income of $180,000 (JG was a Loblaws pharmacist and LG was a Pharmasave manager) and net worth of $950,000 when they came to Canaccord.
Peters initially made the couple $300,000 on Western Coal in a short period of time. He then turned to Colonial.
Before putting his clients’ money into the companies, Peters is said to have spoken only to husband LG, who did not have trading authority over any of JG’s accounts. When JG lost her job of 23 years, Peters allegedly did not update her risk profile and forged ahead with more investments, including from a new $60,000 loan that was said to be rushed through the banks to take advantage of JG’s last paycheques as a source of income.
By May 2012 the couple, who rented their home, had invested about $950,000 in Colonial.
“By the end of June 2012, the value of these shares had been reduced to approximately $550,000,” IIROC noted. “Across all of the Gs’ accounts at Canaccord, Colonial Coal was 96% of their holdings by market value and even more concentrated when calculated by book value.”
But the push to invest didn’t stop. Peters had LG open a locked-in $265,000 RSP, representing her pension.
By June 2015, the stock was trading at $0.10 a share and the Gs had yet to sell. It’s unclear if they’ve ridden the stock back to about $0.50.
“JG and her husband have incurred significant financial losses,” noted the citation.
IIROC said in a news release it started investigating Peters in July 2016.
Peters and Canaccord president Stuart Raftus did not respond to Glacier Media requests for comment.
To set a disciplinary hearing, a meeting between Peters and IIROC is set for Jan. 30 at Reportex at 925 West Georgia Street, Vancouver.
IIROC is the national self-regulatory organization that oversees all investment dealers and their trading activity in Canada’s debt and equity markets. IIROC also sets and enforces market integrity rules regarding trading activity on Canadian debt and equity marketplaces. It is tasked to investigate misconduct by members.