N.B. pension fund managers accused of costing tech investors millions
CBC
The company that manages billions of dollars in pension funds for thousands of New Brunswick public sector employees and retirees is being accused of causing financial losses for hundreds of investors across Canada.
Fredericton-based Vestcor Inc. and one of its senior executives are the targets of a petition filed in British Columbia that is seeking court approval for a class-action lawsuit.
The company is accused of falsely inflating the value of a corporate merger between two technology companies.
Vestcor invests the pension contributions of New Brunswick civil servants and other public sector employees in various investment vehicles, including stocks.
According to the petition application, Vestcor was the majority shareholder in Exro Technologies, and “orchestrated and significantly influenced” Exro’s 2024 merger with SEA Electric Inc., in which Vestcor also owned shares.
Exro paid $300 million to acquire SEA Electric after telling its shareholders that SEA would make $200 million in profits in 2024 — a figure that proved “delusional,” the court filing says.
“These facts and circumstances reflected within those representations were the basis of the grossly inflated valuation assigned to SEA Electric,” it says.
“Those purported facts and circumstances did not exist, or the manner of their representation in the material change report was false or misleading.”
It alleges Vestcor and its vice-president of equities Mark Holleran “did so in order to manage, or salvage, their significant investment in SEA Electric.”
The assertions in the petition have not been proven in court and Vestcor has yet to file a response.
“Our legal team is currently evaluating the merits of this lawsuit,” CEO Sean Hewitt said in an emailed statement.
“The claims have not been tested in court,” he added. “We have no reason to believe in their veracity.”
Sage Nematollahi, the lawyer who filed the petition on behalf of two shareholders, told CBC News that Vestcor “has lost a lot of money” as Exro’s majority shareholder, tying up “significant funds from pensioners in New Brunswick [with] this investment that has not done great.”
But in Hewitt's statement, he said the impact was “negligible” to the overall performance of Vestcor’s investment portfolios, estimating it at a fraction of one per cent of the total.
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