PrefBlog

Incidents like this give preferred shares a bad name:

Last summer, 27 individuals from 12 families filed two separate multi-plaintiff court cases against Yujie (Jared) Liu, a financial adviser and portfolio manager with BMO Nesbitt Burns Inc. The group is asking for $50-million in damages for losses they allege they suffered as a result of Mr. Liu’s negligence in managing their investment accounts.
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Last year, the group of clients filed two lawsuits alleging that during 2017 and half of 2018, Mr. Liu recommended a new investment strategy that would provide “reasonable” investment returns that was “risk-free” to their principle. The groups’ statements of claim say many of them had low-risk investment objectives and chose Mr. Liu because he could speak Mandarin and they were not proficient in English.

The claims say that instead, investors were placed in a high-risk strategy that involved short-selling bonds – particularly Canadian government bonds – to purchase long positions in preferred shares, many of which had rates that were variable or that reset based on interest rate movement. Some clients were advised to begin trading on margin – investing with borrowed money – in order to purchase more preferred shares.

The value of some clients’ investments declined between 50 per cent and 80 per cent, with losses ranging from $600,000 to $16-million, the claims say.

This entry was posted on Monday, January 4th, 2021 at 6:51 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.