Anne Bucher  |  October 21, 2020

Category: Legal News

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Asset Management sign regarding the stableview class action lawsuit

A $20 million class action lawsuit was filed over allegations Stableview Asset Management Inc. and others were negligent in the operation and management of certain funds.

The defendants named in the Stableview class action lawsuit include Colin Fisher, who is reportedly the sole officer and director of Stableview Asset Management Inc., Grant Thornton Limited, Stableview Yield and Growth Fund, Stableview Progressive Growth Fund, Stableview Insight Fund LP and Stableview Insight Fund GP Inc.

Plaintiff Shannon Davidson filed the Stableview Asset Management class action lawsuit on behalf of all investors in the above-mentioned funds who invested between Jan. 1, 2016 and March 24, 2020, and who remained invested as of March 24, 2020. Approximately 109 investors may qualify as Class Members of the Stableview class action lawsuit.

According to the Stableview class action lawsuit, the Class Members suffered losses ranging from $7 million to $20 million.

Stableview Accused of “Speculative and Overvalued” Investments

In January 2016, defendant Fisher allegedly caused the Stableview Yield and Growth Fund, the Stableview Progressive Growth Fund and the Stableview Insight Fund to start investing in debentures issued by Clarocity Corporation. According to the Stableview class action lawsuit, Clarocity was a penny stock technology company that provided technology for real estate valuations.

Clarocity was reportedly losing money at the time of these transactions, and eventually the Stableview funds became significantly over-concentrated in Clarocity securities, which are allegedly classified as “alternative investments” under Davidson’s policy. She says that, as of Dec. 31, 2017, the funds’ investment in Clarocity debentures was more than 40% of each of the funds’ net asset value.

By December 31, 2018, more than 70% of each of the funds’ net asset value was allegedly invested in Clarocity.

“By June of 2019, the Funds held Clarocity debentures which totaled over $18,000,000; but Clarocity was worth less than $5,000,000,” the Stableview class action lawsuit states. “Accordingly, the Clarocity debentures were illiquid and of negligible value.

The Stableview class action lawsuit claims that these investments were in breach of Stableview’s management agreement with the Insight fund, in breach of the funds’ investment parameters, in breach of investors’ portfolio management agreements, and in breach of the fiduciary duties Fisher and Stableview owed to Class Members.

“Fisher’s decision to have the Funds invest in Clarocity began in January 2016 and continued unabated to August 2018, when he caused Stableview to move to have a receiver appointed over Clarocity,” the Stableview class action lawsuit says. “However, Clarocity securities were never appropriate investments for any of the Funds, as they were excessively speculative and overvalued.”Woman analyzing graph regarding the stableview class action lawsuit

Even after it was clear that the investment was losing money, Fisher allegedly continued to increase the funds’ investments in Clarocity.

Class Action Lawsuit: Stableview Funds Overinvested in ‘Alternative Investments’

Davidson says she moved her investments to Stableview in 2014 and entered into a managed account with Stableview. Fisher allegedly made all of the decisions regarding Davidson’s investments in the funds.

According to the Stableview class action lawsuit, Davidson entrusted more than $190,000 to Stableview for investments in her registered trust accounts between Jan. 1, 2014 and March 24, 2020.

Davidson says she received an Investment Performance Report covering the 2019 calendar year which showed more than a $230,000 reduction in value of her investment accounts.

Under the terms of her policy, the upper limit for “alternative investments” was 20%. “However, over a period of months, starting in or about January 2016, the Defendants made repeated investments in Clarocity debentures, which resulted in concentrations of more than 70% of the Funds’ capital in this security,” the Stableview class action lawsuit states.

2019 Audit by Ontario Securities Commission

Stableview was reportedly audited in 2019 by the Ontario Securities Commission. During this audit, the OSC reportedly discovered the overconcentration in Clarocity securities and many of the other irregularities in Fisher’s operations of Stableview and the funds he managed.

The OSC also determined that the values of the securities in investors’ accounts were improperly valued. On June 9, 2020, the OSC caused a receiver manager to be appointed over Stableview and the funds.

TD Asset Management is also facing a class action lawsuit from investors who accuse the company of causing them to lose tens of millions of dollars.

What do you think about the Stableview class action lawsuit? Tell us your thoughts in the comment section below! 

Davidson is represented by Margaret Waddell and Tina Q. Yang of Waddell Phillips Professional Corporation and by Sean Brown, Jean-Claude Rioux, Candace Mak and Christopher Lupis of Flaherty McCarthy LLP.

The Stableview Asset Management Class Action Lawsuit is Shannon Davidson v. Grant Thornton Limited in its capacity as Receiver and Manager of Stableview Asset Management Inc., et al., Case No. CV-20-00648572-00CP, in the Ontario Superior Court of Justice, Canada.

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