The Financial Services Regulatory Authority of Ontario (FSRA) announced that court-ordered mediation has produced a proposed $40-million settlement on behalf of investors that bought preferred shares of Pace Financial Ltd. and First Hamilton Holdings Inc.
FSRA, which took control of PACE Credit Union amid alleged misconduct involving the sale of preferred shares to its members, said that a settlement of claims has been reached with court-appointed representative counsel for investors, Paliare Roland Rosenberg Rothstein LLP.
The settlement — which also involves PACE Securities Corp., Pace Financial, First Hamilton, certain investment advisors, and AIG Insurance Company of Canada (AIG) — would resolve all of the investor claims.
“If approved, and its conditions fulfilled, the settlement contemplates that the settling parties will pay a total of $40 million to the trust account of representative counsel, for future distribution to the investor claimants,” FSRA said in a release.
According to court filings, the settlement would result in investors recovering approximately 70% of their losses.
The Ontario Superior Court of Justice must approve the settlement at a hearing scheduled for July 30.
The motion for approval argued that the proposed settlement “is fair and reasonable and in the best interests of [investors],” and that it “provides certainty […] and avoids years of litigation and its attendant risk and expense.”
It also noted that the settlement will provide stability to the credit union, and will facilitate its exit from administration by FSRA.
Investors have until July 23 to register objections to the settlement, which has been endorsed by both the court-appointed counsel for investors and an investor committee.