July 23, 2024

The Queens County Citizen

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The Financial Markets Authority (AMF) will pay $9.1 million in compensation to 414 claimants who suffered financial loss due to investments made by broker management financier Cape Cove.

The substantial sum comes from the Financial Services Compensation Fund (FISF) and is “the second largest in the authority's history,” the AMF said in a press release on Wednesday.

In total, 414 claimants received a decision stating the admissibility of their request. Payments will be made from September.

“Unexplained” fund movements

Cape Cove, a company registered with the Authority under the Securities Act, has attracted the attention of regulators in 2021 due to concerns over its financial management and its issuers.

“Unexplained movements of funds” were particularly noticed, the AMF said. In July and October 2021, Quebec's Superior Court responded in favor of the Authority's request to appoint Raymond Chabot, the firm's interim administrator, to take charge of the operations of Cape Cove and the five issuing companies.

In April 2022, Raymond Chabot's report revealed that most of the funds were embezzled in a “Ponzi scheme” involving five issuing companies.

This type of fraud is “the taking of an investor's money to pay false returns to other investors or to repay investors who want their money back. Fraudsters may give a false impression that the invested money will yield good returns and that there is no problem in recovering the invested money,” the AMF explains on its website.

The Financial Markets Authority said the investigation into the matter is ongoing and claims for compensation are still being analysed. “A consumer may receive compensation up to a maximum of $200,000 per claim.”

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