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An Ontario judge has ordered a receiver to oversee Toronto’s StableView Asset Management Inc. after a regulatory probe found investors’ money had been overconcentrated in a penny stock that paid cash consulting fees of more than $100,000 to the wealth manager.

StableView, which was founded and is solely owned by Colin Fisher, manages about $30-million on behalf of 135 clients and states on its website that its “primary concern is capital preservation.” A review by the Ontario Securities Commission found that StableView poured money into a Clarocity Corp., a thinly traded real estate valuation technology company, putting StableView in breach of diversification and liquidity requirements for its funds, court records allege.

The OSC alleges that, from late 2017 to late 2018, one of the company’s funds, StableView Yield and Growth Fund, increased the concentration of its investment in Clarocity from 45 per cent of the fund’s assets to 83 per cent. Over the same period, Clarocity went from 43 per cent of the holdings in StableView’s Progressive Growth Fund to 72 per cent, court records show.

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The OSC also found that StableView received fees from Clarocity in the form of cash, common shares and debentures as part of a consulting agreement. StableView received cash payments totalling $105,000 from Clarocity, which Mr. Fisher withdrew from StableView “for his own personal use,” Sherry Brown, an OSC senior forensic accountant, said in an affidavit. The OSC has alleged the fees created a conflict of interest that was not sufficiently disclosed to StableView investors.

Clarocity, which had been traded on the TSX Venture Exchange, was acquired by another real estate technology company, iLookabout Corp., in July, 2019.

In a statement, a lawyer for StableView said that because the company consented to the receivership, it did not have the opportunity to respond to the OSC’s allegations in court filings. The lawyer, Janice Wright, said StableView requested and received a condition in the judge’s order that the receiver must “meet with StableView management to discuss their various proposed solutions.”

StableView had initially opposed the receivership application, arguing that if a receiver forced the sale of its holdings in iLookabout, it would decrease their value and harm fund investors, rather than help them.

“StableView consented to the appointment of the receiver in order to expedite a resolution for the investors,” Ms. Wright said.

Mr. Fisher has been a vocal booster of the Canadian technology sector. For five years, up until 2018, StableView hosted a technology conference in downtown Toronto for investors and entrepreneurs. He has often appeared on BNN Bloomberg’s Market Call, where fund managers and analysts offer stock tips.

In an interview with the OSC in 2019, Mr. Fisher acknowledged StableView’s funds had significantly deviated from the investment parameters laid out in their founding documents – namely that they would “invest in a diversified group of securities in both public and private companies.” He also said StableView’s problems were exacerbated by a 2018 margin call made by Laurentian Bank Securities, the custodian of StableView’s holdings.

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“But you can ask me a million times and I will tell you, everything that you say is deficient, I will say yes,” Mr. Fisher said in his OSC interview. “If you want me to state it a million times, I agree with every deficiency you’re about to state, and it all stemmed from one bad problem and then a secondary problem that came in because of the Laurentian Bank, but I am the cause of all of the problems.”

In its application for the receivership, the OSC also raised doubts about how StableView valued its stake in Clarocity, much of which was in debentures. In 2018, StableView recorded the debentures at cost, despite disclosures from Clarocity that its financial position was “substantially deteriorating” – something Mr. Fisher was aware of, the OSC alleges.

The receiver for StableView is Grant Thornton Ltd.

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