Kenneth Rijock

Kenneth Rijock

Tuesday, December 6, 2016


Though the two customer lawsuits, pending in the Superior Court of Ontario, against Leon Frazer & Associates, Inc., and Northland Wealth Management, Inc., presently seek only documents and records, given the evidence, and statements, obtained to date, it is reasonable to assume that eventually, suits for ordinary damages, and possibly even aggravated or punitive damages, will be entered, and that those cases will go to trial, and result in judgments against the defendants.

Such judgments could exceed the financial ability of the brokers to satisfy them, especially since the conduct complained of involved intentional torts, and there may not be insurance coverage available, resulting in insolvency, and eventually, bankruptcy of the judgment debtor company. Alternatively, securities licenses may be revoked by the OSC, or through court action, or settlement of a civil or criminal matter, which will also cause eventual insolvency.

Here's how other Leon Frazer, or Northland, clients could be adversely affected: for the purposes of convenience, and to reduce costs, we will probably find that most client securities are being held under "street" name, meaning in the name of the brokerage house. This means that they are not transferred into the customers' names, and that no share certificate in those clients' names is ever issued.

If and when insolvency, resulting in bankruptcy, occurs, at Leon Frazer and/or Northland Wealth Management, clients whose securities are held in the name of the firm, are treated as only general creditors, and when street name assets are assembled, they will be used pro rata, to pay proven and filed claims of creditors. Yes, I know most brokers tell their clients that there are a long list of valid reasons why their securities must remain in street name, but when there is even a remote possibility that the broker may fail, in the future, prudence demands that all clients order that their securities be titled in customer names. Otherwise, the customers, as unsecured creditors, will probably sustain a total loss, when their brokerage house goes into bankruptcy. This can only be avoided by action early on.

Consider this article to be general information, furnished for informational purposes only. Readers who are clients of the two defendant brokers should consult a competent, licensed attorney, knowledgeable in securities matters, to ascertain whether they should take steps now, to protect their interests.


No comments:

Post a Comment

Note: Only a member of this blog may post a comment.