The rise and fall and rise of Michael Wekerle

A second act for Bay Street’s wild child

Difference Capital founder Mike Wekerle wearing a purple velvet suit jacket with a purple bowtie, smoking a cigarette

(Portrait by Matt Barnes)

The day of Wekfest 2014, the annual charity rock concert hosted by Michael Wekerle at his home in Caledon, Ont., a team of police officers is stationed at the bottom of his driveway to direct traffic to a nearby field for parking. There, a crew of black-shirted valet attendants hops to action in the mid-August sun, while a shuttle bus whisks visitors to the main event at Wekerle’s sprawling 80-hectare property. Everyone wears a wristband: pink for regular admittance and green for VIP access, which costs $500. There is very little pink to be seen. At the centre of the yard is a massive stage, where some of Wekerle’s favourite bands will play, including Our Lady Peace, 54-40 and Sloan.

Many of his Bay Street friends and colleagues are in attendance, though the crowd appears predominantly young and attractive, suggesting that at least some Wekfest supporters have opted to give their green wristbands to their kids. A team of waitresses in short skirts and bikini tops ensures no one is without a drink, while a row of food trucks serves up ice cream and grilled cheese sandwiches alongside Wahlburgers, the fast-food chain Mark Wahlberg owns with his brothers. (Wekerle is an investor.) As for Wekerle, his booming voice, already hoarse, can sometimes be heard before he’s even seen, as he whips around the property in an electric golf cart, shouting incomprehensible greetings to his friends. He’s wearing black high-top sneakers, a pair of faded skin-tight jeans and, of course, an official red Wekfest 2014 tank top. At 50 years old, Wek (everyone calls him Wek) looks more like an aging rocker than a guy who works in finance.

It’s still early in the afternoon when Wekerle peels off the tank top and climbs into a boxing ring set up for a charity match, exposing a torso adorned with tattoos. There’s a heart inked on his chest, a peace sign on his neck and the iconic Rolling Stones lips-and-tongue logo on his left bicep. He’s not slated to box, but as his bemused executive assistant explains from the sidelines, “He just had to get in the ring.” Wekerle hurls himself against the ropes like a professional wrestler before launching into the air, his gloved fists raised in triumph.

Let’s pause here and savour this image. Because, in many ways, Wekerle is on the verge of something big. Some would say we’re witnessing the second coming of Wek. He already has a well-earned reputation as perhaps the greatest trader Bay Street has ever seen, and his freakish talent for playing the markets has made him (and a host of other people) very rich. But he also spent two years lost in a dark place, grappling with a devastating personal loss and being spurned by the capital markets firm he helped make great. It was not that long ago that he found his way out. He has a new venture, Difference Capital Financial, a merchant bank he co-founded in 2012 to invest in privately held, late-stage tech, health-care and media companies. And starting Oct. 15, he will embark on his highest-profile gig yet: the newest dragon on CBC’s hit show Dragons’ Den. He’s already a legend on Bay Street, and soon every small business owner and mompreneur from Victoria to St. John’s will know (and probably love) Wek.

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The show’s producers sought him out to replace their biggest star, Kevin O’Leary, who announced in March that he would not return for season 9. Wek accepted the offer because he wants a larger platform for his company, for the charities he supports and for himself. “This takes me from Bay Street to Main Street,” he told me. The CBC is betting that Wekerle will be a hit. He already figures heavily in the promos, looking like the very definition of a business rock star in his flamboyant blue floral jacket and flowing hair. He’s a natural on camera, too; the producers were impressed by his ability to think long-term about the investment pitches, despite having the appearance of a guy who lives entirely in the moment. The only thing he had to work on was slowing the torrential pace of his speech.

And so, if it’s possible to encapsulate this moment of Wekerle’s life in a single image, the one of him shirtless, joyous and hanging in mid-air at his own party is a pretty good one. Still, it’s not entirely accurate. That new firm, Difference Capital, isn’t yet ascending along with him. The stock has dropped 70% since it debuted in 2012, and two of the company’s highest-profile investments are also its most troubled. In August, Difference started pruning its portfolio. Wekerle, for whom success as a capital markets rainmaker came naturally, has some of his hardest work ahead of him.

A week before Wekfest, we meet at his office in Toronto. Wekerle is impeccably dressed in a pinstriped suit and dapper tie, his aviator sunglasses still in hand. His sandy hair is slicked back, but unfurls into a wavy mane over the course of the day. This is actually our second meeting. At the first, an irrepressible Wekerle held forth on a mixture of management strategy (“Empowerment and accountability go hand in hand, but if you don’t lead by example, you can’t win”) and general life philosophy (“Empathy is the best word in life”), until a friend called and Wekerle put him on speakerphone. Somehow that conversation led to a debate over whether Wekerle was once kicked off the stage at a private rock concert for trying to make out with the drummer. “I did not make out with the drummer!” Wekerle shouted. “I might have given him a kiss, but it was friendly, man.” This is what it’s like to sit across from Wekerle: He talks faster than you can listen, careens into random topics, cracks jokes and imparts wisdom, all in a single breath. It can be a challenge to keep up.

Today, though, he seems more subdued. He had been out the night before with staff drinking “shitty, sweet beer” at an Irish pub. When an assistant comes into the room, he orders us two large iced lattes and sips liberally from his when it arrives. We don’t get to talk for long before he’s interrupted to sign a cheque related to his Florida real estate venture (he’s got that on the go, too, partnering with Bill Holland from CI Financial to invest around $60 million), and then he has to take a phone call in another room. Shortly afterward, a friend arrives to give him a gift—a bottle of Dom Pérignon—and a freshly laundered shirt. The friend ended up wearing a wine stain one night, and Wekerle literally gave him the shirt off his back. When a co-worker named Mark Arbour needs him in a meeting, I ask to tag along.

Arbour is actually the director of operations at the Waterloo Innovation Network (WIN), yet another Wekerle venture. Earlier this year, Wek personally bought an office building in Waterloo that once belonged to BlackBerry, with a plan to build a centre of excellence for tech companies, a place to house startups and form partnerships with corporations around the world. In July, Difference put $2 million in a fund associated with WIN that will invest in local tech companies. In the meeting room, Arbour is already sitting with a banker who’s there to discuss financing for the building’s renovations and expansion. Wekerle darts off again, leaving Arbour and the banker to gape in confusion. “Does Mike want you in on this meeting?” Arbour asks slowly.

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Wekerle returns with our iced lattes and starts walking the banker through the plans for Waterloo. He lays out the terms of the financing he’d like, reeling off numbers, percentages and expected returns with his eyes closed, one knee bouncing up and down. The banker opens his mouth to interject when Wekerle’s BlackBerry rings. He picks up. From the sounds of it, the caller is pitching him on an investment opportunity. As the call drags on—Wekerle even spells out “difference” in his e-mail address—Arbour turns to the banker to break the silence. “You know, Wek took RIM public,” he says.

“I know,” the banker replies.

Finally, Wekerle hangs up. “Some of these prospects, man, I don’t know,” he says. “But I don’t want to be an asshole, so I was quite nice.” And then he’s dictating numbers again.

One of the many impressive things about Wekerle (or maybe one of his most frustrating traits) is his ability to do three or four things at the same time. He thrives on constant stimulation. In fact, he seems to function best that way. People who work with him have come to expect that his time and attention is limited. In a way, it’s the ideal personality for a trader.

Wekerle was born in Toronto and attended York University for a year before dropping out to work on Bay Street. In 1982, he scored a job on the floor of the Toronto Stock Exchange with a long-forgotten firm. He spent a lot of time fetching bagels and coffee for other traders. “I’d have, like, 17 different orders, and if I fucked one up, I wouldn’t hear the end of it,” he says. When the firm downsized, he asked for a job from the head trader at First Marathon Securities, who told Wekerle he could have a job if he lopped off his unkempt mane and returned within 15 minutes. That haircut essentially launched his career.

Inside of a few years, Wekerle had moved from the trading floor to the desk. In simple terms, he was a matchmaker, putting together buyers and sellers of big blocks of stock. If he couldn’t find a buyer, Wekerle would use the firm’s own money to purchase the block until one could be found, a practice called liability trading. It’s often used as a loss leader designed to bring more business to a firm, and Wekerle brought in business like no one else. His gregarious personality had quite a bit to do with it, and he socialized a lot. “He’s the guy who knows everyone, and everybody likes Mike,” says Cindy Tripp, a fellow trader at First Marathon. “You’ll never have a bad time when you’re with Mike Wekerle.” With so many connections, he always had a line on who was interested in acquiring or shedding stakes in companies. Then there was his famous ability to multi-task. “It was not uncommon to see him on the desk working two phones, barking orders at a trader and giving personal financial advice to his friend who might be sitting there,” says Henry Kneis, who worked with Wekerle at First Marathon and is now Difference Capital’s chief financial and operating officer.

But the real key to Wekerle’s success as a trader is his gargantuan memory. He carried around the details of countless trades and knew who owned what and how much of it. “There is a bit of a savant element to his brain,” Kneis says. Wekerle’s mental catalogue of the market proved to be a tremendous advantage in locating buyers and sellers. (Despite his prodigious memory, Wekerle has a habit of losing things and wears his house key around his neck.)

Word about Wekerle travelled fast, and one person who took notice was securities lawyer Eugene McBurney. Along with Brad Griffiths, head of investment banking at Gordon Capital, McBurney wanted to start a new financial firm. There was only one person McBurney wanted to run the business’s trading operations. Wek joined the company, then called Griffiths McBurney & Partners, in 1995, a few months after it formed. Kevin Sullivan, another First Marathon employee, came with him to run the sales side. Together, the four of them built what would become GMP Securities. A handful of colleagues from First Marathon, including Tripp, defected to the new firm, which immediately became one of the biggest block traders on Bay Street. GMP also worked on some historic deals, such as co-leading the IPO for Research in Motion in 1997.

Wekerle continued his prolific streak, and the mystery around his abilities grew. McBurney once asked a client what made Wekerle such a great trader. “He just makes you do stuff you don’t want to do,” the client said. McBurney stresses that Wekerle wasn’t simply a guy taking orders from buyers and sellers; he was constantly coming up with investment ideas for clients. “Most of the time he was right,” McBurney says. One of his most legendary calls was foreseeing the commodities bull market early and pushing clients toward resource stocks.

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For Tripp, Wekerle was an ideal boss. “He treated me fully like a professional. I never felt like I was paid less or wasn’t promoted because I was a chick,” she says. When Tripp was pregnant with her second child, she approached Wekerle about job-sharing with another woman on the desk. Wekerle agreed to the arrangement without thinking twice.

As his career took off, Wekerle’s good-natured personality never changed. “I’ve seen successful, wealthy guys who are just pricks,” Kneis says. “They think their wealth gives them the right to mistreat people. Michael doesn’t do that.” Wekerle is the kind of guy who will always pick up the bill, tip generously and treat the server the same way he would a CEO. He’s active on the charity circuit and is a big supporter of Toronto’s Centre for Addiction and Mental Health and the Seeds of Hope Foundation, a community outreach program. He even paid to send one teenager he met through the program to Morehouse College in Atlanta, where tuition, room and board runs upwards of $40,000 per year.

There are smaller gestures, too. Wekerle helps one of his friends, Spencer Miller, who has cerebral palsy, with living expenses. For one of Wekerle’s birthdays, he flew Miller and dozens of friends to the Bahamas for a private concert with Vince Neil of Mötley Crüe. “Mike has a reputation as being a wild and crazy guy,” Miller says, “but he’s one of the nicest, big-hearted individuals you’ll ever meet.” Tripp says Wekerle couldn’t hold a grudge if he tried, which is probably true. During one interview, Wekerle let loose on another Bay Streeter (the words “fake mother­fucker” were uttered). When asked later, he shrugged it off. “It was probably the mood I was in that day,” he said. “Water off a duck’s back.”

Around the same time as the financial market turmoil in 2008, Wekerle’s home life grew complicated. His marriage to his second wife, Lea-Anne, with whom he was raising five biological kids and one foster child, had come under strain. But there were worse things to come. In March 2010, the family was vacationing with friends in Los Cabos, Mexico, when Lea-Anne left early to head home. When Wekerle returned to Toronto with his kids, he was told by one of his sisters that Lea-Anne, who was taking prescription medications, had died of a heart attack.

The news sent Wekerle into a tailspin. “I ended up looking to drinking more aggressively in those days and kind of went by in a fog,” he recalls. Sometimes he wouldn’t get out of bed until noon, and he wasn’t much interested in GMP. A trip to Arkansas that fall resulted in a lawsuit, when Wekerle allegedly blew an air horn in a hotel lobby, tossed money from a fanny pack into the air, dropped his pants, licked a woman’s foot, made lewd comments and injured a valet when he tried to carry the man on his shoulders. (The suit, filed by the valet in 2013, is still before the courts. Wekerle’s legal team has dismissed it as frivolous.)

Meanwhile, things were changing at GMP. “I had some views about the expansion of the firm that were different from others’,” he says. “My old partners who started the firm with me were no longer there, and I felt the isolation and the loss of my wife made my role as a producer more difficult for me.” The era of the star trader was over, too, as more market activity was handled by computers. Trading commissions had fallen significantly. Wekerle’s colleagues were worried about his behaviour and subjected him to urine testing. His departure seemed like only a matter of time. In June 2011, gossip magazine Frank posted a video to its YouTube channel of a charity roast for Halifax businessman Rob Steele, a close friend of Wekerle’s. The video shows an unsteady Wekerle trying to commandeer the microphone from host Rex Murphy before being escorted offstage. By August, Wekerle and GMP had parted ways.

Wekerle talks about Mother’s Day 2012 as a turning point. “That was a tough fucking day for me,” he recalls. Wekerle learned that his two youngest kids had sat at the back of the classroom in school colouring instead of making Mother’s Day cards. He began the process of ridding himself of people he thought were negative influences and sought help to deal with his depression. “People are really afraid and embarrassed to go see someone,” he says. “It’s very important to understand there’s no difference between breaking a leg and having a meltdown. It’s time to recover.”

Even before that day, Wekerle had been plotting his next move.

When Wekerle finishes his meeting with the banker at Difference Capital, he immediately has to jet off to another one, and sets me up with Kneis. Standing side by side, Wekerle in his suit and Kneis in rumpled khakis and a short-sleeved shirt, they seem nothing alike. But they complement each another. Wekerle is the visionary with big ideas, and Kneis is the details man. The two met at First Marathon and reconnected in 2011 after Wekerle left GMP. At the time, Wekerle planned to join with Paul Sparkes, a friend and former CTVglobemedia executive, to purchase a stake in a buy-side shop called Galileo Global Equity Advisors. He asked Kneis to come along.

Kneis had doubts about the little-known Galileo, but he enjoyed working with Wekerle and decided to take a chance. On his first day at Galileo, he knew it wasn’t going to work out. “This was the sleepiest organization I’d ever seen,” he says. The founder of Galileo, Michael Waring, was the polar opposite of Wekerle. Waring wanted to keep running things the same way he had for more than 10 years, says Kneis, whereas Wekerle was a hurricane, crackling with energy and new ideas. Wekerle also didn’t seem to tell anyone he’d hired Kneis (there was nowhere for him to sit), and he got the impression that nearly everyone at the small shop resented his presence. At one point, Kneis was chastised for talking to the firm’s auditor without first running it by another executive. On his ninth day, he was fired. Kneis called Wekerle and learned that he, Sparkes and Waring hadn’t yet finalized the terms of their partnership. The whole idea flamed out.

Looking back, Kneis suspects Wekerle wanted to partner with Galileo partly because it was already up and running, and he wouldn’t have to go through the hassle of setting up a new business from scratch. As for the differences between him and Waring, Wekerle tends to be optimistic about relationships and to believe they will work out for the best. “I can imagine he made the decision on the spot and thought they’d work out the details later,” Kneis says. (Waring declined to comment.)

Wekerle, Kneis and Sparkes decided to launch their own investment company, later taking over a publicly traded shell and renaming it Difference Capital. The investment principle behind the company stems from one of Wekerle’s macro calls, that investors are abandoning resource stocks and need new places to put their money. Wekerle is betting that money will flow to technology companies. While that may not sound revolutionary, Wekerle has zeroed in on an overlooked sweet spot: privately held, late-stage companies in which Difference will take significant minority stakes. Wekerle, with his deal-making prowess and connections, can help these companies raise more money, go public or eventually find buyers. Difference also maintains an advisory arm for growth companies, and since launching in 2012, it’s raised $185 million. One of its biggest investors is Dundee Corp., run by Ned Goodman, a longtime associate.

But the market hasn’t been receptive. Shares started trading at $4.50 in May 2012 and have steadily dropped by roughly 70%. Despite stakes in promising names like Vision Critical Communications and BuildDirect, Difference Capital has two troubled holdings that overshadow everything else. The first, WorldGaming, operates a platform that allows Xbox and PlayStation users to compete against one another for cash and prizes. Difference typically invests no more than $5 million per company, but it sunk $19 million in WorldGaming. The problem is the company hasn’t been able to nail down a revenue model. The other is Lignol Energy Corp., a Canadian renewable fuels company with a biodiesel plant in Australia that ran into trouble when a new government started dismantling clean-energy subsidies. In the last quarter alone, Difference wrote down its assets by nearly $14 million, largely because of WorldGaming and Lignol.

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Internally, the partners couldn’t agree on how to handle the files. Some wanted to invest more funds, but Wekerle disagreed. “You can’t throw good money after bad,” he says. “Longer term, the other group would have been potentially correct, but in the near term, we can’t afford the risk.” At the end of August, Difference put Lignol into receivership.

When Kneis looks at how Difference initially went about investing, he says, “there could have been more cohesiveness.” He adds that the company has brought “more rigour to the investment analysis process” and hired two experienced tech investment analysts. A difference of opinion among the partners emerged, too, with one wanting to include more early-stage companies in the investment mix. Another advocated for a venture capital approach, wherein the company would back 10 firms, knowing many would fail but hoping a couple of winners would emerge. Wekerle, the largest shareholder in Difference with a 36.7% stake, felt he had to make personnel changes to maintain the original vision. In August, Sparkes and another founding partner, Neil Johnson, left the company. (Both declined to comment.) Three board members also departed.

Kris Thompson at National Bank Financial is the one analyst who follows the stock. Although he downgraded it to market perform in August, Thompson still likes the company’s longer-term prospects. “The recent on-boarding of seasoned technology investment professionals has resulted in a more structured investment process with early signs of some promising investments,” he wrote in an e-mail.

Still, the share price performance has been disappointing, particularly for Wekerle. “He might have seen it as a vote of non-confidence by the market in him personally,” Kneis says. “I’ve tried to tell him not to treat it as a personal measurement.” Wekerle brushes aside such concerns, preferring to talk about where Difference is headed. Winnowing down the portfolio from 39 to 20 companies will allow Difference to devote more time to the highest-quality holdings, and improve the company’s finances and prospects. Wekerle’s thesis that the next era belongs to tech companies remains unchanged. “Look what’s going on in the world, man!” he says.

Wekerle’s reputation is as a trader, a high-octane role where millions can be won or lost in a fraction of a second. Operating a merchant bank and investing in tech companies with a longer time horizon is a different beast, and it requires patience and discipline. Wekerle understands that—even if the market doesn’t. “It really takes five years to build a business, and the unfortunate part of being a public company is that people look for instantaneous results,” he says. But he makes one thing clear: “I don’t like losing.”

Maybe that’s why Wekfest had the feeling of a victory party for its namesake. It’s unlikely that anyone enjoyed themselves as much as Wekerle, even if this year’s event was a smaller-profile affair than the one before, when Snoop Dogg headlined. Wekerle, in his flaming red Wekfest 2014 tank top, was tailed by a CBC camera crew for much of the event. But for the throngs of friends and colleagues in attendance, he simply appeared almost at random throughout the day: at the front of the stage, fist-pumping to whatever band was playing; onstage, peacocking like Mick Jagger; or jumping offstage and crowd-surfing. At one point, he tore through the audience and tackled 54-40 singer Neil Osborne (who had just finished performing) to the ground, where they tussled like man-children. Catching a high-five or a glimpse of Wekerle became a popular topic of conversation. “I saw Mike drive by in a golf cart,” one coworker told me in the food tent. “I think that’s all the Wek you’re going to get today.”