Deals & People June 18, 2010

BNY Mellon Makes Canadian Wealth Management Buy

BNY Mellon has made its first wealth management acquisition in Canada.
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The firm said that it has entered into an agreement to acquire I(3) Advisors of Toronto, an independent wealth strategy company with more than C$3.5 billion in assets under advisement.

Terms of the deal were not disclosed and it is expected to close in the third quarter, subject to regulatory approvals.

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June Ntazinda, CEO of I(3) Advisors, will remain as chief executive following the closing and will report to BNY Mellon Wealth Management Executive Vice President Don Heberle. “We are pleased to be working with June and I(3), whose expertise, integrity and style impressed us from the very beginning,” Heberle said. “The firm is well-known and highly respected in Canada, making it an excellent choice.”

“Both BNY Mellon and I(3) are distinguished by their commitment to client service and satisfaction and delivering trusted guidance to help clients achieve their financial goals. Together, we will be able to offer a whole new level of service to wealthy investors,” said BNY Mellon Wealth Management CEO Larry Hughes. “Canada’s high net-worth market represents a very attractive opportunity for BNY Mellon as we accelerate our global expansion and seize new opportunities in dynamic markets.”

Formerly Ernst and Young’s wealth management arm in Canada, I(3) Advisors was established in 2005 under the leadership of Ntazinda. The firm has grown its assets under advisement from C$1.8 billion to more than C$3.5 billion and has earned the reputation of Canada’s independent investment counselor of choice known for an integrated and holistic approach to wealth management.

Ntazinda noted that the transaction offers several advantages to I(3) clients, including:

  • Broader global asset management opportunities
  • Increased access to alternative investment opportunities
  • Enhanced technology and reporting capabilities
  • Expanded banking and wealth planning services

According to a press release, BNY Mellon has a robust presence in Canada, including: CIBC Mellon offices in Toronto, London (Ontario), Calgary, Halifax, Montreal and Vancouver, BNY Mellon Asset Management in Toronto, BNY Mellon Asset Servicing in Toronto, and Eagle Investment Systems in Toronto and Montreal.

Deals & People June 18, 2010

Adviser Who Misused Pension Funds Sentenced to Nine Years

John Orecchio, a former investment adviser accused of misusing funds from six union pension plans, was sentenced to nine years and four months in prison and ordered to pay $26.4 million in restitution.
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The DoL filed a lawsuit on April 10, 2008 against AA Capital Partners, its co-owner and president Orecchio, chief financial officer Mary Elizabeth Stevens, and affiliate AA Capital Liquidity Management, LLC for allegedly misusing plan assets and charging the plans excessive fees on investments.   The suit claims that at various times from 2002 to 2006, the defendants improperly used $25.9 million of the plans’ assets to pay for, among other things, the operating expenses of the firm, renovations to a horse farm, and a strip club owned by Orecchio.     

In addition, the DoL said they caused the plans to pay unauthorized fees to AA Capital.  

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In August 2009, the U.S. Department of Labor obtained a consent judgment and order requiring Orecchio to restore $50 million in losses to five Michigan pension funds as restitution for misuse of the plans’ assets (see Former AA Capital Partners President to Pay $50M to Pension Funds).  

In 2006, the Securities and Exchange Commission filed a complaint against AA Capital Partners Inc. and Orecchio, accusing him of misspending $10.7 million of investments by Detroit area pension funds, on things such as political donations and sporting events.

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