Unlicensed Kelowna trader awaits sanction after $20M in investor losses

A Kelowna man’s illegal financial trades lost investors $20 million and now he awaits a decision from Alberta regulators.

Kyle Watters may face a steep fine after an investigation attempted to trace how much of that money went toward his own expenses and how much was truly lost.

He and his business partner Glenn Hunter started a Caribbean-based company, trading in foreign currencies. An Alberta Securities Commission panel found they had done so illegally, according to a recent decision.

They started their company in 2021, soliciting investments with the slogan, “We work so you don’t have to.”

Hunter and Watters found success in trading on their own, they told a BC securities investigator in 2022.

It was that success that prompted friends and family to ask for their help, leading them to start their company HW and Associates Inc.

By late-2022, they pulled in $20 million in investments from more than 200 investors from BC, Alberta and Saskatchewan. Most of them lost most of their money if not all of it, according to the decision.

Around $14 million of that was invested by Hutterite colonies, which were primarily solicited by Watters.

It also found Watters, who also owned a Kelowna painting business, had not only solicited the bulk of the investments, was found to have “commingled” the funds with his own expenses. He used some of the money for personal and business expenses.

Without any licensing in Alberta or BC, Hunter and Watters promised to trade on their clients’ behalf, taking a 35 per cent commission on any profits. Their model meant they stood to make “substantial” profits if the investments paid off, but they would also make “substantial” losses if not.

They started seeing major losses in the fall of 2022, then continued soliciting more investors without informing them of the losses, according to the decision. By February 2023, almost all the money was gone and the investigation were underway in Alberta.

Watters and Hunter themselves told the commission they didn’t have “proper accounting systems, governance practices or policies in place to safeguard investors.” They also failed to accurately keep track of their clients or their money.

Noting the difficulty in accurately tracking the funds, the commission found Watters took around $1 million in commission, while Hunter got around $600,000.

Hunter, however, told the commission he kept none of it. He said his own investments were lost and he used the $600,000 to repay 48 investors.

Following the Oct. 8 decision, the Alberta Securities Commission panel will consider submissions from Watters, Hunter and securities staff before deciding on how it will sanction them.

Whether investors will see any of their money returned is yet to be seen, but it may be difficult as Watters has filed for bankruptcy in BC Supreme Court.

The securities commission had earlier attempted to intervene in Watters’ bankruptcy, which could block creditors from taking action against him for their losses.