VANCOUVER, Dec. 13 /CNW/ - A Settlement Hearing in the matter of
Berkshire Investment Group Inc. was held today before a Hearing Panel of the
Pacific Regional Council of the Mutual Fund Dealers Association of Canada
The Hearing Panel approved a Settlement Agreement entered into between
the MFDA and Berkshire. Under the terms of the settlement, the Hearing Panel
imposed a fine in the amount of $500,000 on Berkshire and required Berkshire
to pay $50,000 in respect of the MFDA's costs of its investigation and the
The Settlement Agreement concerned Berkshire's failure to conduct
reasonable supervisory investigations between September 16, 2004 and June 1,
2005 in response to reports it received from two individuals concerning the
activities of one of its mutual fund salespersons, Ian Gregory Thow. Thow was
a Senior Vice-President of Berkshire located in Victoria, B.C. Over a period
of several years, Thow persuaded numerous individuals, including clients of
Berkshire, to provide him with money that he promised to invest on their
behalf but instead used for his personal benefit.
The British Columbia Securities Commission conducted enforcement
proceedings against Thow, and recently found that he had failed to deal
fairly, honestly and in good faith with clients, made misrepresentations and
perpetrated a fraud. The Commission described Thow's activities as "one of the
most callous and audacious frauds this province has seen". The Commission's
decision is available on its website, www.bcsc.bc.ca.
Thow is also the subject of a criminal investigation by the Vancouver
Integrated Market Enforcement Team of the Royal Canadian Mounted Police.
Although Berkshire was not aware of Thow's fraudulent activities,
Berkshire acknowledged in the Settlement Agreement that it did not take
reasonable supervisory and disciplinary measures after it received the reports
from the two individuals. Berkshire further acknowledged that, had it taken
those measures, it is more likely that Thow's activities would have been
discovered and brought to an end. Instead, Thow was able to continue to
persuade individuals to provide him with an additional $6.3 million, almost
$4.5 million of which was received from clients of Berkshire.
The Hearing Panel accepted that Berkshire's failure to conduct reasonable
supervisory investigations in response to the two reports was not the result
of a systemic failure on its part or intentional misconduct. Berkshire has
paid substantial amounts to compensate some of the individuals who provided
money to Thow.
At a previous settlement hearing held on October 22, 2007, the Hearing
Panel declined to approve an earlier settlement agreement entered into between
staff of the MFDA and Berkshire concerning the same subject matter.
MFDA disciplinary panels have the power to terminate or suspend
membership, levy fines and impose terms and conditions on membership. MFDA
disciplinary panels, like many securities regulatory organizations, do not
have the power to award compensation. Clients who are not satisfied with
Berkshire's response to their complaint have two options. They can:
- Bring their complaint to the Ombudsman for Banking Services and
Investments for review. OBSI is a free, independent service for
resolving investment disputes. OBSI can recommend compensation of up
- Commence a civil action before the courts to pursue financial
recovery in any amount.
A copy of the Settlement Agreement is available on the MFDA's website,
www.mfda.ca. The Hearing Panel will issue the Order approving the settlement
and its Decision and Reasons in due course.
The Mutual Fund Dealers Association of Canada is the self-regulatory
organization for Canadian mutual fund dealers. The MFDA regulates the
operations, standards of practice and business conduct of its 161 Members and
their approximately 75,000 Approved Persons with a mandate to protect
investors and the public interest.
For further information:
For further information: Shaun Devlin, Vice-President, Enforcement,
(416) 943-4672 or firstname.lastname@example.org