Jory Capital exits brokerage business

Jory Capital, easily the most controversial firm in Manitoba’s financial services sector, has had its registration revoked and its CEO is moving on.

After being suspended yet again in late November by securities commissions from Manitoba to British Columbia for capital deficiencies and having its membership in IIROC suspended late last week, the Winnipeg-based firm is getting out of the brokerage business.

Patrick Cooney, Jory’s CEO, says he is going to transform the 13-year-old company into a research house, specializing in macro-economic issues and setting screens to evaluate assets.

“Now that I’m no longer an IIROC member, I’ve been intellectually emancipated. I don’t have to worry about people editing my comments or what I say about the markets. I’ve been fairly bland up to now,” he says.

Over the past decade, IIROC has fined both Jory and Cooney numerous times because of compliance failures and capital deficiencies.

Warren Funt, Vancouver-based vice-president of IIROC’s Western Canadian operations, says the reason for its latest action against Jory was simple.

“They ran out of money,” he says. “Their capital became such that they couldn’t continue on and they didn’t have an alternative.”

Funt says IIROC’s position with Jory has been clear all along – the firm needed to meet its regulatory capital requirements in a “very transparent” way. An order was created in May stating the firm couldn’t be capital deficient for more than five days.

“[Jory] is suspended now and I would expect it’s indefinite. They’re making provisions to wind up the business,” he says.

Indeed, Jory broker Harry Ong and the firm’s book of business moved over to the Winnipeg offices of MGI Securities late last week.

Ed Balcewich, MGI’s branch manager, says the process was a quick one.

“Harry and I had been in conversation. We met and chatted with Patrick briefly for five minutes, he endorsed Harry moving to our firm and the client assets coming over and we made it all happen [last] Friday,” he says.

While he’s happy to add another book, Balcewich also laments the winding up of a firm.

“When you take an independent investment firm off the Street, you give the investing public one less choice. I’m kind of sad to see that happen,” he says.

Jory will not provide its research to particular firms because Cooney perceives that as a conflict.

“We’ll deal with pension plans and institutions and then anybody who is an individual investor who wants access to what we do. [Generally,] the more money you have, the quicker you get access to research. I’m egalitarian; that offends me. You should get the information at the same time whether you have an account with $2 billion or $2,000,” he says.

In the end, Jory’s demise as a brokerage firm was anticlimactic, Funt says.

“It was kind of a non-event. The firm ran out of money and the MSC (Manitoba Securities Commission) finally agreed that there was no choice at this stage. They couldn’t continue,” he says.