Court of Appeal revokes BCSC preservation order on registered retirement accounts
Vancouver – A preservation order imposed by the British Columbia Securities Commission (BCSC) against Earle Douglas Pasquill has been revoked by the British Columbia Court of Appeal.
The preservation order prevented Pasquill, who owes the BCSC $36.7 million, from withdrawing or transferring funds from two life income fund (LIF) accounts, totaling $644,951 as of April 2020. LIFs are a type of tax-deferred registered account, regulated by the federal government, that hold locked-in pension funds and other assets that can be withdrawn gradually during retirement.
The BCSC issued the preservation order under amendments to the Securities Act in 2020 that allow the Commission to preserve property in registered accounts after a sanctions decision has been issued by a panel.
In 2020, Pasquill applied to a panel of the Commission to revoke the preservation order. The panel dismissed the application in November 2020, and Pasquill appealed the panel’s decision to the Court of Appeal.
Pasquill contended that the preservation order is a form of “execution, seizure or attachment,” and the Pension Benefits Standards Act (PBSA) exempts LIFs from the preservation order. Pasquill further argued that amendments to the Court Order Enforcement Act (COEA) enacted in 2020 to correspond with the enhanced collection powers in the Securities Act do not apply to LIFs.
The Court of Appeal agreed with Pasquill that the PBSA exempts his LIF accounts from the preservation order. Although the COEA was amended in 2020 to reflect the Securities Act amendments, the court noted, the PBSA was not.
“The legislation must in my opinion be taken as meaning that the Commission does not have the authority to enforce judgments against plans that are derived from pension funds,” Justice Mary V. Newbury wrote for the three-member court panel.
A panel of BCSC commissioners found in 2014 that Pasquill and Michael Patrick Lathigee, who jointly directed and controlled the Freedom Investment Club, fraudulently raised a total of $21.7 million in 2008 through the sale of securities to nearly 700 investors without telling the investors about severe cash flow problems.
In addition to an administrative penalty of $15 million, Pasquill is also liable for another $21.7 million, representing the ill-gotten gains that he and Lathigee obtained directly or indirectly as a result of the fraud. Pasquill has not paid any portion of those sanctions, and has not presented a plan for paying them.
“We are determined to return money to investors that has been obtained through misconduct, and we will continue to use every tool at our disposal in our efforts to collect sanctions imposed by our panels,” said Peter Brady, the BCSC’s Executive Director.
About the British Columbia Securities Commission (www.bcsc.bc.ca)
The British Columbia Securities Commission is the independent provincial government agency responsible for regulating capital markets in British Columbia through the administration of the Securities Act. Our mission is to protect and promote the public interest by fostering:
- A securities market that is fair and warrants public confidence
- A dynamic and competitive securities industry that provides investment opportunities and access to capital
604-899-6854 or 1-800-373-6393 (toll free)
Learn how to protect yourself and become a more informed investor at www.investright.org