Hedge Funds And Life Insurance Policy Investments

Admin | December 05, 2011 | Comments Off

Hedge Funds And Life Insurance Policy Investments

Hedge Funds And Life Insurance Policy Investments

Many bank and insurance company directors were chosen for their connections and prominence in the world of finance. People such as Sir William Mackenzie, Sir Henry Pellatt, Sir Max Aitken, W.D. Matthews, and George Albertus Cox sat on many of the same boards.

Life Insurance Companies Investigated

In 1906, a federal Royal Commission on Life Insurance Companies showed that investment policies were ignored by the controlling group. Frequently, they used policy holders’ money as funding for their own projects. Sir Henry Pellatt, a director of Manufacturers’ Life Insurance and member of its investment committee, was specifically named in that regard. Questionable investment practices that benefitted other directors were cited in the report. Nothing was done about the inquiry results.

The general public’s opinion was that the wealthy financiers were arrogantly making excessive profits at the expense of the public good. Despite warnings, the financiers and brokers continued as though oblivious to expressed concerns.

Whistleblower at Home Bank of Canada

Incorporated in Toronto in 1903, the Home Bank of Canada was one of several chartered during that period. From the beginning, it advanced questionable loans by using the savings of working-class people.

James F. Mason (General Manager) and Henry Pellatt were directors along with E. George Gooderham, A. Claude Macdonnell, and three more in Winnipeg, Manitoba. Mason retired from the bank following his appointment to the senate in 1913. His son, Harry G. Mason became the new General Manager.

William Machaffie was Manager of the Winnipeg Branch. In 1914, he took his concerns about the bank’s fraudulent accounting to the directors. His concerns were ignored, and after a lengthy leave of absence, he tried again, but was fired. In 1918 he sent a letter to the Minister of Finance in which he gave detailed information about the bank’s internal, questionable dealings.

In July 1919, M. J. Haney, a Home Bank of Canada director struck a note of confidence. He indicated that the bank “enjoyed one of the most satisfactory years in its history”. In 1920, Pellatt and Pellatt (Sir Henry’s brokerage firm) owed the bank almost $2 million.