Barret Capital Management, a commodities dealer that specializes in purchasing physical gold and silver for clients, is on the verge of being shut down by regulators.
Following an investigation that started in March 2011, the Investment Industry Regulatory Organization of Canada alleges that Barret has been using client funds for its own purposes “in complete disregard of securities regulation.” An expedited hearing is scheduled for Tuesday morning.
IIROC alleges the small investment firm, located in north Toronto, juggled winning and losing trades across multiple client accounts for years. The gains or losses attributed to each account were based on how much capital was available in each, and the scheme was conducted “without regard to particular client objectives or investment instructions.”
To ensure that clients didn’t know what went on, IIROC alleges that Barret manipulated account values and created false statements. The scheme was so elaborate, IIROC said, that it can’t even trace individual investors’ money or track the history of unauthorized trading.
IIROC is now seeking to immediately suspend Barret’s membership and then expel the firm. It is also hoping to recover what’s left of client funds with the help of Laurentian Bank of Canada, who performed all of Barret’s back office duties.
Barret is run by Jamie Cohen. The amount of funds under his management isn’t specified on the firm's website.