Andrew A. Duffy

Saturday, June 16, 2007

Forget the titillating testimony about private jets and helicopters and mansions: The Ian Thow saga is ultimately a cautionary tale.

Testimony at the B.C. Securities Commission hearing into the actions of the disgraced Saanich investment adviser was painful, as people talked about the impact of losing their life savings.

The allegations of dishonesty and manipulation were shocking.

The panel heard from spouses who followed Thow's advice that neither tell the other that they were handing over money he promised to invest.

Others testified that Thow promised big returns and little risk on short-term mortgage and bank investments.

All handed money to Thow and have nothing but cancelled cheques as proof -- he never supplied a prospectus or any documentation. Combined, investors claim to have lost over $30 million.

The testimony, which concluded this week, should be a warning to all investors.

It's easy to blame the victims for not being more vigilant. But Thow built a good name through community involvement, pretending to be a benefactor to area charities. As president of Greater Victoria Crime Stoppers, he claimed a reputation for honesty and integrity.

Testimony indicated investors relied on Thow's apparent wealth and success -- and his standing as vice-president of Berkshire Investment Group and good relations with bankers.

In many investors' minds, Thow's handshake meant enough that proper due diligence and transaction records weren't required. This trust has proven to be tragically misplaced.

Security laws, processes and procedures are supposed to be in place to prevent scams such as the one Thow is alleged to have committed.

And the fact that he presented himself as a knowledgeable, honest investment adviser, yet proffered schemes that required investors to write him personal cheques should have set off alarms.

However, the rules and processes didn't work. The promise of regulation was no replacement for common sense and skepticism.

There are lessons to be learned from the pain of those who trusted and invested in Thow's reputation and charisma. Be critical, analyze and demand documentation.

And remember: If it sounds too good to be true, it probably is.

aduffy@tc.canwest.com