Trapeze Asset Management Inc.
May 2 , 2012 – The law firm Rochon Gevova LLP has been actively involved in investigating and litigating on behalf of investors against the portfolio investment firm Trapeze Asset Management Inc. (“Trapeze”) and related parties. Trapeze has operated as an investment advisor and Portfolio Manager to many hundreds of Canadian investors offering investment services that were represented to be safe, professionally managed, and invested using careful value investment strategies designed to maximize returns and minimize losses. Rochon Genova counsel have advised clients who have suffered investment losses in Trapeze accounts, in which those clients have alleged that they were inadequately advised regarding the risk of significant loss which was sustained in their accounts.
It was announced by the OSC that on April 19, 2012 Trapeze Asset Management Inc. and its principals – Randall Abramson, President and Chief Executive Officer and Director and Herbert Abramson, Chairman – entered into a Settlement Agreement with the Ontario Securities Commission in which it admitted that the firm had invested many of its clients in higher risk investments, many in securities of small capitalized companies, which carried higher risk of investment loss than was appropriate for those clients. In that Settlement Agreement, Trapeze and Randall and Herbert Abramson admitted the following:
“…the majority of the securities the Respondents purchased for clients were in small cap issuers, many of which were in the junior energy(oil and gas) sector and in basic material, such as gold. During the Relevant Time, the Respondents’ client accounts were concentrated in small cap issuers in these sectors, at times holding over fifty per cent in oil and gas issuers and as much as twenty per cent in gold issuers”
“…the Respondents did not give sufficient weight to sector and individual security concentration risk, price volatility risk and liquidity risk when assessing risks associated with securities invested in on behalf of their clients.”
“…statements made in marketing materials distributed by the Respondents to their clients during the Relevant Time understated the risks associated with Trapeze’s investment strategy and a number of recommended investments”.
As part of the Settlement Agreement, Trapeze agreed to an administrative order that provided for a $1 million administrative penalty “for the allocation to or for the benefit of third parties”, agreed to a third party review of its practises and procedures and agreed to conduct account reviews for all of its accounts with a disclosure to clients that the reviews are required “because of concerns regarding understatement of risk arising from the Respondents’ failure during the Relevant Time to adequately consider factors such as price volatility risk”.
ROCHON | GENOVA LLP will continue to investigate these matters and act for investors who are seeking financial compensation for their investment losses from Trapeze and related parties. Its team includes experienced lawyers who have acted for many years on behalf of investors in recovering investment losses from financial institutions, including broker dealers and Portfolio Managers.
For more information contact Peter Jervis or Joel Rochon at 416-548-9874.
Additional information regarding this Settlement can be found here:
TAMI Letter to all Clients – April 27, 2012
Statement of Allegations
Order of the Commission