Peter Brown, CEO of Canaccord Capital, wrote a letter to the Vancouver Sun yesterday, and for the life of me I can’t figure out what the hell he’s trying to say. It all has to due with the ABCP nightmare that Canaccord got caught in, they sold over $269 million of the crap to both retail and corporate clients. The dog shit is worthless, but in face of a massive class action lawsuit that could have seen the firm taken out, Canaccord decided to pay 100 cents on the dollar to each retail buyer who had $1 million or less in ABCP (which accoutned for about 97% of the disgruntled.)
Who Canaccord didn’t bail out were companies like Goldcorp and Redcorp, exploration/mining companies who Canaccord only did underwritings with if they would turn around and buy the ABCP from the firm. These clients, some of whom have upwards of $20 million still frozen, could REALLY use that money right now given the nuclear winter that has hit mining stocks. There is a lawsuit in the works right now by these corporate clients, and if it sticks the firm could be on the hook for well over $100 million.
I guess Peter’s problem is that while in the US the government stepped in to bail out firms and banks who had too much of this toxic crap on their balance sheets, the Canadian government won’t do the same for Canaccord. But why the hell would Peter Brown write to the Sun bitching like this? To me, something stinks here. Canaccord may not be out of the woods yet as they AAA rated this dog crap to these companies and Peter Brown is ultimately responsible for the firm’s actions. Now Mr. Brown is as heavy as they come in terms of Vancouver finance, but this isn’t the same a stairwell deals made with Murray Pezim back in the heyday of the old VSE. The Canaccord Crapout may still come back to haunt him.
If anyone else has a different take on the strange letter, here’s the link.
