Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

The PACE credit union office in Vaughan, Ont., is photographed on Wednesday, April 24, 2019.

Christopher Katsarov

A regulator’s plan to stabilize troubled PACE Savings and Credit Union is unravelling after almost all of the financial institution’s board members, chief executive officer and chief risk officer resigned.

The Financial Services Regulators Authority of Ontario announced late Friday that is has taken over daily management of PACE for the second time in two years.

The first to resign, last Tuesday, was board chair George Cooke, a former insurance executive who was handpicked by FSRA to help turn PACE around after two years of turmoil. By Friday, six directors had stepped down, along with CEO Barbara Dirks and head of risk Terri O’Brien, both of whom joined PACE in April. Two more board members resigned over the weekend.

Story continues below advertisement

Mr. Cooke and Ms. Dirks declined to comment.

The credit union, which is based in Vaughan, Ont., and has 40,000 members and about $1.2-billion in assets, has been ensnared in legal battles stemming from the alleged conduct of its former top executives. In the fall of 2018, a provincial regulator seized control of PACE and ousted the president and CEO, Larry Smith, and his son, Phillip Smith, over allegations of fraud and self-dealing.

Last January, PACE took a step toward recovery when members elected a new board, endorsed by the regulator after a search by an executive recruitment firm. That allowed FSRA to gradually ease up on its supervision of the credit union and hand over some governance responsibilities.

More recently, however, regulators have been investigating whether a now-defunct investment dealer started by the previous executives, Pace Securities Corp., improperly sold $46-million in risky investment products to retail investors. Those investments plunged in value early this year, and another regulator, the Investment Industry Regulatory Organization of Canada, is seeking to discipline the two former executives who led Pace Securities, Joseph Thomson and Gerald McRae.

In August, law firm Paliare Roland Rosenberg Rothstein LLP was appointed to represent investors who say they were misled in negotiating a settlement. Yet even after the deadline for talks was extended, no deal has been announced.

A FSRA investigation recently concluded that the sales of the investment products had breached the act that governs credit unions, and PACE’s management agreed. But “there was not consensus on how best to address those breaches,” said FSRA CEO Mark White in a statement.

“The board of PACE inherited problems created by the former PACE leaders, and worked hard to identify and resolve them – and I would like to thank the board members for their leadership during this difficult time,” Mr. White said. But he added that “it is with regret that I accept their resignations.”

Story continues below advertisement

He also sought to assure PACE’s members that the credit union has “ample liquidity and capital” and is financially viable, while deposits are protected under FSRA’s insurance reserve fund.

Once again, the regulator will now try to chart a course to return PACE’s governance to its members. A FSRA spokesperson, Judy Pfeifer, said the regulator has no plan to wind down the credit union.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies