British Columbia Securities Commission Welcomes Resolution of Vantage Securities Affair
Released: November 20, 1998 Contact: Michael Bernard 899-6500 or (BC only) 1-800-373-6393
Vancouver -- The British Columbia Securities Commission welcomes a court decision that lets 3,400 Vantage Securities clients regain complete control over their investments at the failed firm, Commission Chair Douglas Hyndman said today.
"We’re very happy to see that these investors can now resume full decision-making power over their investments," said Hyndman. "We understand how this has been a difficult time for them. This ruling allows them to get on with their lives."
Hyndman was commenting after a B.C. Supreme Court judge lifted a freeze order Friday on 5,500 accounts belonging to Vantage clients in B.C. and Alberta. Mr. Justice Donald Brenner also granted clients leave to seek judgment against Vantage for a shortfall in their accounts, now estimated at about $1.8 million.
His judgment paves the way for the clients to make claims against a $2.7 million B.C. contingency fund and a $200,000 surety bond maintained by Vantage under Alberta securities law.
The commission asked the court to put Vantage Securities Inc. into receivership last April after the Vancouver-based dealer, among other things, failed to comply with repeated demands to meet "risk-adjusted capital requirements." Under the Securities Act, dealers must maintain prescribed minimum capital to protect the firm against market risks.
The commission was concerned that a firm responsible for managing more than $1 billion in clients’ investments couldn’t come up with $139,000 in capital, Hyndman said. All remaining Vantage officers and directors abruptly resigned in the weeks leading up to the court action, leaving the firm rudderless, another factor which added to the commission’s worries about the security of the clients’ accounts.
When no suitable purchaser for Vantage’s assets was found, the receiver asked the court in May to assign the firm into bankruptcy. As part of the bankruptcy, the clients’ accounts were frozen while the receiver undertook to reconcile the firm’s accounts.
That reconciliation was a long and complex process that involved matching claims made by clients with records held by Vantage and those of mutual fund companies and other investment vehicles. The receiver and the trustee also had to maintain contact with Vantage clients and continue limited functions within Vantage’s head office.
"The interests of Vantage’s clients have always been our first concern," Hyndman said. "We supported the appointment of legal counsel to represent the clients and the transfer of clients’ accounts to Yorkton Securities so that they could manage their investments during volatile markets."
There is a total of about $290 million in the frozen accounts: $240 million in mutual fund securities, $30 million in securities in Vantage’s vaults, $10 million in securities held by Canadian Western Trust, $6 million in cash and $3 million in deposits at the Bank of Montreal.
Vantage clients who have questions about their accounts are urged to contact their legal counsel or Yorkton Securities for more information.
The British Columbia Securities Commission is the independent provincial government agency responsible for regulating trading in securities and exchange contracts within the province.