fourth crime added

now that the auditor general report on the Alberta Securities Commission is public, we can see the lineup of how many people co-operate to cover up regulatory failures.

First crime is within the industry, when a client, a whistleblower, or an employee is abused.
Second crime is when the regulator brushes aside the complaint without reason, without process, and without realizing that the law has been broken.
Third crime is when said regulator fools their bosses above them that everything is fine, that the complaints you are hearing from the public are unfounded.
Fourth crime is when the bosses above, in this case Alberta Finance Minister Shirley Mclellan buys into the "see no evil" line, and parrots it back to the public.

Each and every one of them has a motive and a self interest in hiding or covering up the problem. Regardless that they also each have a duty to act professionally and in the best interests of those they represent. this does not appear to happen.

If it means that claimants or complaints, made in the last decade or so to the regulator, have to join into a class action and demand recourse for the many failures documented by this regulator, then so be it. It would be rather unfortunate to have to take this step, but it appears as if those in charge just might choose to bury the issue, rather than address it head on.

(on a related issue for but one example of regulatory failure, it has become more and more obvious that the IDA is simply a industry trade body. People have complained of this false role, or "title inflation" when the IDA has tried to proclaim itself a regulatory agency of some kind.
Now it appears ever more obvious that the IDA has the mandate to regulate it's "membership" (registration, behavior etc) only, and not Provincial Securities Acts. With provincial Securities Commissions across the country having delegated (abrogated) thier responsibility for the securities act to this trade association for years now, it is time they are held responsible for the lives, the finances, the careers and the rest of the ruin they have allowed by not doing the job they purport to do.

see IDA and ASC forums at www.investoradvocates.ca for public discussion and progress towards accountability.

I am beginning to figure out (I think) the cause of what investor advocates find offensive inside the investment industry. The underlying causes are not limited to this industry only, but can be seen in many, many ethical failures. The tainted blood scnadal, accounting scandals, medical, phamacuetical, nuclear power, you name it. Lets take a look at the common themes.

Three essential ingredients and three separate crimes are typically found.

One ingredient is corporate and or personal greed. Found everywhere. Not difficult.

Second ingredient is beaurocratic indifference. Workers etc who just dont care enough to do their jobs correctly. Also fairly prevalent.

Third ingredient is regulatory failure, which may be related to number two above, but more likely is not just laziness. Most regulators find it difficult, if not impossible to admit large systemic problems exist under thier watch, so they become co-conspirators instead. They become part of the problem instead of part of the solution.

First crime is the actual abuse of trust, whether it be a financial advisor taking advantage of his client for personal gain,, child abuse, malpractice, embezlement, bribe, whatever.

Second crime is the cover up, involving individuals of considerable power or influence who were not involved personally in the initial wrongdoing, but whose sense of loyalty is stronger than their attachment to honesty and openness. Since exaggerated loyalty may be the very quality that gives such people power and influence (think Liberal party hacks and Adscam), it is hard to know what can be done about loyalty as self serving weakness.

Third crime is the hoodwinking of police and the public with false assurances that all is well.

(last three crimes taken from the book "DARK AGE AHEAD", by Jane Jacobs, from recommended reading list of Nick Murray, one of the self styled gurus of investment advisor behavior. The book points to the "failure of professionals to self regulate properly" as one of the five pandemic symptoms of a society that is in dangerous decline

From Wed, Sept, 28, 2005 Globe and Mail article titled, "Ontario ruling clears path for police-misconduct suits".

This article suggests that residents of Ontario can sue agencies for misconduct when substandard performance of important (police) duties. The ruling may have impact on various government agencies that have regulatory rules to follow, and have been accused of ignoring them in the name of convenience or other reasons.

Names that come to mind include the ASC, OSC, IDA, the Competition Bureau and I am sure others will come up over time. Any agency that has a mandate of protection of the public interest and following the rule of law, may be accused of regulatory failure if it is found that they did not follow their own process, or if they followed them arbitrarily and selectively. This story follows a recent news item of a citizen initiative to act as watchdog over police in Ontario, when complaints are made against them.

In the past the police were the ones responsible for investigating the police, and this was found to have some obvious conflicts of interest. In due time many are hoping that this same level of reason will be applied to the betterment of the investment industry reputation in Canada. So far, members of the Securities Enforcement Coalition are saddened to say that Canada is earning a well deserved reputation for being a buyer beware game, as far as consumers are concerned, and the United States is the only player that is enforcing ethical rules. They are even the only player enforcing the rules here in Canada, while we stand by and watch our rep go down the drain.

Motley Fool a valuable Tool

I found this advice and commentary from the MOTLEY FOOL to be accurate. After many years inside the industry, I find myself agreeing with much of the comments they make.

read along and learn:


NEVER ACT ON RETIREMENT ADVICE FROM ANYONEWHO EARNS A COMMISSION AT YOUR EXPENSE!

Totally independent, practical, realistic help and advicefrom an honest, trustworthy -- if sometimes unpopular -- retirement authority.

Is there anybody out there that's not totally full of it? Not simply trying to put their hand in your wallet?
I understand that when it comes to planning and managing your retirement, you'd probably welcome some honest and authoritative help. After all, most people feel overwhelmed by the future and tend to get bogged down wondering what steps to take now so their retirement lives up to their dreams.
But, to whom dare you listen? Who the heck can you trust, given that the stakes are so high?
Stockbrokers? Ha! They wrecked more retirement plans than anybody when they pushed lousy stocks like Enron and WorldCom right up to the crash.
Financial planners? Estate planners? Nix that too! Most work for big banks and financial firms and are nothing more than insurance or annuity salesmen in disguise. They're after a fat commission that will come out of your pocket.
Your brother-in-law? Probably not! Let's face it -- to really be on top of everything that impacts how well you live in retirement, you'd need to be a tax expert... Medicare benefits guru... stock picker... economist... senior's law expert... and Social Security advisor all rolled into one.

In case you don't remember, while the financial world was trying to convince everyone that they needed help -- that managing a portfolio was more difficult than brain surgery -- we made ourselves thoroughly unpopular by proffering a shocking opinion: "You are the best person to manage your money."
In case you've forgotten, The Motley Fool derives its name from Elizabethan drama where...
Only the court Jester (the "Fool") could tell theKing the truth without getting his head lopped off.Granted, there are mutual fund managers... insurance agents... thousands of stock brokers... annuity peddlers... fancy estate planners... and big-fee financial consultants who would just as soon lop off our heads because we dare to question their results, integrity, ethics, and motives.
(advocate says:
Yes, I was once one, butI found myself not agreeing with so called advisors who took advantage of clients trust instead of respecting clients trust. I was not very welcome in my industry for my views and found myself drummed out of the business as a result.
I am suing RBC, my former employer for practices I found distastefull and not in keeping with their published codes of conduct, as well as for making my work life rather difficult and risky. So far they have not been able to answer the charges very well, and their strategy so often appears to be "drag it out with legal tactics". I will happily wait for my day in court, and find solace in the fact that each day they delay, only adds one more news story about greed, corruption, and irresponsible corporate behavior to the list.

What is wrong with Securities Commission enforcement?

What is wrong with this picture?
NEWS RELEASE
[Print]
2005/51September 14, 2005
White Rock mutual fund salesperson who committed fraud in stealing clients’ money hit with maximum $250,000 penalty
Vancouver -- The British Columbia Securities Commission has issued the maximum penalty it can against a former White Rock, B.C.-based mutual fund salesperson who defrauded his clients of about $1.6-million during a six-year period.
Paul Robert Maudsley has been banned for life from trading securities, being a director or officer, and engaging in investor relations. He must also pay a $250,000 administrative penalty – the maximum fine the commission can impose on an individual -- as well as almost $60,000 in costs related to the hearing.
A commission panel found that Maudsley and his company, Shaylor Management Ltd. violated the Securities Act in committing fraud when Maudsley convinced 23 clients to redeem about $1.6-million in mutual fund holdings to invest in other securities. Maudsley did not invest any of the money, instead taking the clients’ money for his own use to fund his personal and lifestyle expenses, including, a self-admitted substance abuse problem described by a witness as “his cocaine and gambling habit and alcohol addiction.”
The panel also found that Maudsley failed to deal fairly, honestly and in good faith with his clients – nearly half of whom were elderly or vulnerable.
“He simply took their money, or caused Shaylor to do so – about as stark an instance of deceit as there can be,” said the panel.
“The evidence provides clear and convincing proof that Maudsley had subjective knowledge of the deceit, and that it would result in the deprivation of others.”
Maudsley committed his violations when he was a mutual fund salesperson at Investors Group Inc.’s South Surrey Regional Office in White Rock between 1996 and 2003. He was fired from the firm on Mar. 3, 2003.
The commission panel also permanently cease-traded Shaylor’s securities in the sanctions decision. The firm is permanently banned from trading securities and must also pay an administrative penalty of $500,000 -- the maximum that the commission can order against it. Shaylor must also pay costs of the hearing.
The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. You may view the decision on our website www.bcsc.bc.ca by typing in the search box, Paul Robert Maudsley or 2005 BCSECCOM 577. If you have questions, contact Andrew Poon, Media Relations, 604-899-6880.
© BC Securities Commission 2004

Here is what Ken K thinks is wrong:

Here's the point. He stole a lot of money and doesn't spend even 5 minutes in jail. Note the low limits on fines in BC.His employer isn't even sanctioned or given a wrist slap fine.Investors don't get a nickle back. Soon , abusive provincial limitations Acts will swing into action putting tight time pressures on investors for civil action.This is the kind of regulatory enforcement regime that simply does nothing to protect investors.ken kivenko http://www.bcsc.bc.ca/release.asp?id=2748

Here is what Larry thinks is wrong:
These Securities Commissions do nothing for investors, and white collar criminals have to practically kill their clients to get any sanctions whatsoever. The crimes described above are so very very obvious that third grade children could do an improved job of sanctioning them and providing some recourse to investors. Where the commissions fail is in the more subtle, more cleverly crafted methods of duping clients of their moneys, by "trained, trusted and professional", salespeople who take advantage of the clients faith and trust.
The securities commissions cannot even make a dent into the various frauds, deceits, misrepresentations in 99% of cases. I feel they do not even have the will to do so, since it would reflect so badly on how they have run the system under their watch. It seems they can only stand by and watch now, while the smarter or more ethical among them are leaving.
Even if they had the ethics to address white collar frauds, they have nowhere near the strength. the RCMP is on record as saying they only have manpower to investigate 5% of the commercial crime reported to them, and I suspect the Securities Commissions are similar.
It is still "buyer beware" for clients and white collar crime heaven for fraudsters here in Canada.

Mutual Fund Industry Sales Practices Study

Canadians tired of high fees, lack of transparency in investment industry, survey finds
Sep 8, 2005 - Canada Newswire
Investors seeking low fees, transparent pricing, unbiased advisors
TORONTO, Sept. 8 /CNW/ - Canadian investors believe they are paying too much in fees to those who manage their money, and many find the complex fee structures of the investment industry confusing, according to a new survey by Decima Research.
The survey, commissioned by Stratos Wealth Management (Stratos), a division of MD Management Limited, reveals a troubling picture of frustration and dissatisfaction among Canadian investors when it comes to understanding and receiving value for the fees they pay for investment products and services. Stratos is a new business venture from the MD Financial Group, one of Canada's largest independent financial services organizations.
The survey also reveals that while many feel the investment industry lacks clarity and transparency in disclosing the fees investors pay, many have little or no idea what they pay - leaving a large proportion of investors in the dark when it comes to their personal financial management.
"It's clear that investors are dissatisfied with the fees they pay - and those who aren't should be, given the negative effect high fees have on investment returns," says Sandy Wilson, chief operating officer for CMA Holdings, the parent company of both MD Management and Stratos Wealth Management. "Canadians are looking for clear, competitive and transparent pricing - with no hidden fees."
Here are some key findings of the survey:
Investors tired of high fees, low transparency
- 48% of Canadian investors believe they are paying too much in fees, compared with just 40% who are comfortable with the fees they pay. A further 12% don't know one way or the other. Of those who offered an opinion, therefore, 55% believe they are paying too much.
- A surprising number of investors - 43% - believe that the investment industry lacks clarity and transparency in disclosing the fees investors pay.
Investors in the dark
- It seems that the information provided by investment firms is not doing the job. 44% have only "a vague idea" or "no idea" of the fees they pay on the management, purchase and sale of investments by their fund managers, securities dealers or investment advisors.
- Of those who do know what they are paying, 43% report paying 3% or more of their total investment portfolio in fees. Of that number, an incredible 6% claim they pay more than 10% in fees. This contrasts with data from Investor Economics, which show that, on average, Canadians pay between 2.2% and 2.8% of their portfolios in fees(x).
- Individual financial advisors seem to get a passing grade: 67% agree that their advisor or investment company has taken the time to provide information on fees. Still, almost one-third (31%) disagree, notwithstanding regulatory efforts to improve disclosure of fees.
Stratos Wealth Management is modeled on its highly successful parent company, MD Management Limited, part of the MD Financial Group, which manages more than $19 billion in assets. The company plans to leverage this experience by providing wealth management to all busy professionals seeking more customized, comprehensive and cost-effective services.
Stratos is based on a simple idea: offering quality investment products and ongoing financial advice and service - all for a low fee. The new company offers one other point of differentiation: its unbiased financial advisors are measured and rewarded based on client satisfaction - not sales commissions.
About the survey
This telephone survey was conducted with 376 Canadian investors between the ages of 25 and 64 between August 18 and August 21, 2005. It was conducted by Decima Research Inc., on behalf of Stratos Wealth Management. Results to the survey can be considered accurate to within plus or minus 3.1 percent, 19 times out of 20.
About Stratos Wealth Management (www.stratoswealth.com)
Based in Toronto, Stratos Wealth Management is a division of MD Management Limited, one of Canada's largest and most respected independent investment companies. With more than $19 billion in assets under management, MD Management has been serving members of the Canadian medical profession and their families for more than 35 years.
About MD Financial Group
MD Financial Group(TM), refers to various CMA Holdings Incorporated companies offering financial planning through MD Management Limited, mutual funds by MD Funds Management Inc. and MD Private Trust Company, discretionary investment counselling and portfolio management services through MD Private Investment Management Inc., executor and trustee services through MD Private Trust Company, banking referral services in collaboration and through National Bank and insurance products by MD Life Insurance Company and Lancet Insurance Agency Limited.
(x) For Canadian industry wrap products, "The Fee-Based Report," Investor Economics, Winter 2005, p. 87.

Advisor title misleading? Misrepresentation?

Read this if you are interested in discussion, debate, or the exploring some legal aspects surrounding the question of whether investment advisors are really salespeople masquerading as something that they are not. I am quite willing to be proven wrong on the topic by healthy debate.

Taking a short tour of some of the rules and regulations surrounding the use and or misuse of the “advisor” title, as it is either used or misused by a large majority of investment salespersons in Canada.

Starting with this OSC web site:
http://www.osc.gov.on.ca/Dealers/RegistrantList/regcategories.html#857

This site gives us a glimpse into the more than one thousand (yes,1000) registration categories in the investment industry

1 Category number one, “advisor” is found in approximately NONE of the fifty five pages of registrants at the largest investment firm in the country.


2 Category number 1083 (salesperson)is by far and away the most common category of registration found at this same firm.

And yet, most of the registered salespersons at this firm are claiming the title of “advisor” on their business cards, their web advertising, and their promotions, and have done so since shortly after 1987 in an effort to improve or alter the public image and the marketing results of their sales job.

http://www.osc.gov.on.ca/Dealers/Requirements/OSA/rrq_20050401_osa-ac-securities.jsp

For each individual seeking registration in an advising capacity, we require confirmation of education and investment experience to demonstrate that the relevant proficiency requirements of OSC Rule 31-502 have been met; i.e. the requirements of either per s. 3.1 of Rule 31-502. The details should be provided in the proficiency and employment sections of the 33-109F4. The individual should include letters from previous supervisors, or, in the alternative, the contact information for those supervisors, to confirm the investment experience. This information should be provided in paper format to the Registrant Regulation Section of the OSC.

http://www.osc.gov.on.ca/Regulation/Rulemaking/Current/Part3/rule_20000623_31-502rule.jsp

(From this page we see the proficiency requirements for advisors, in short, they need to be finished the CIM course or partly finished the CFA course etc. to call themselves this title)

PART 3 PROFICIENCY REQUIREMENTS FOR ADVISERS
3.1 Securities Advisers and their Representatives, Partners, Officers, Branch Managers and Compliance Officers
(1) An individual shall not be granted registration as a securities adviser or a representative, partner or officer of a securities adviser unless
(a) the individual has been granted registration previously as a representative, partner or officer or an associate partner or associate officer of a securities adviser, investment counsel or portfolio manager or as a securities adviser, investment counsel or portfolio manager;
(b) the individual has
(i) completed the Canadian Investment Manager Program or the first year of the Canadian Financial Analyst Examination Program, and
(ii) established that the individual performed research involving the financial analysis of investments for at least two years under the supervision of a registered adviser; or
(c) the individual has been granted registration as such by his or her principal regulator, as that term is defined in National Instrument 31-101 Mutual Reliance Review System for Registration, and that registration has not been suspended or terminated.
(2) An individual shall not be designated by a securities adviser as the compliance officer under section 1.3 of Rule 31-505 Conditions of Registration or as a branch manager under section 1.4 of Rule 31-505 Conditions of Registration unless the individual has been granted registration previously as a representative, partner or officer of a securities adviser, investment counsel or portfolio manager.


“After two decades, I have yet to meet a registered salesperson, calling themselves an advisor, who had actually completed the requirements necessary to lay claim to the “advisor” title. Yet it was used extensively, as mentioned above, for marketing reasons.”

“It was (and is today) misused, in my opinion, in order to lead clients into the false sense of security that they were not dealing with self-interested salespeople, but instead were dealing with client-interested professionals. It was used to lend credibility and trust to client relationships that were then often abused and used to pursue the greatest sales commissions for the occasional bad sales rep. In addition, most of the firms advertising and promotion supported this trusted professional stance.”

“However, when push came to shove, as it did when 92 year old Norah Cosgrove of Toronto took RBC to task in small claims court, their statement of defense spoke to the truth and spoke volumes about the misleading aspect of claiming trusted professional status:

RBC stated something to the effect that at no time were they acting in a fiduciary capacity and they felt they owed “no duty of care” to this and presumably all other RBC clients. See Norah Cosgrove V RBC DS, Ontario Superior Court of Justice, small claims court file no. 03-SC-083313 for the exact wording of their statement of defense.”

“In summary, firms may talk the talk (when talk is easy), but fail to walk the walk. And when called onto the carpet by this disgruntled 92 year old client, to use one public example, they may recant even the talk. I maintain that use of the title, “advisor” on investment salespersons business cards commits each and every one of them to a fiduciary level of responsibility to the client, and to claim anything less is misleading and damaging to the public interest. This fiduciary level of responsibility to the client should and could be used by class action lawyers to obtain redress and compensation for all clients over the past decade or two, who have received a sales pitch by sales people, rather than the professional investment advice, as the firm and the representatives promised instead.”

“For a look to the future, and the potential size of the actions possible towards these firms, see the NASD web site and investor alerts: http://www.nasd.com/web/idcplg?IdcService=SS_GET_PAGE&ssDocName=NASDW_005975&ssSourceNodeId=1249



In July 2002, NASD charged a broker with securities fraud involving, among other abuses, purchasing large volumes of Class B shares that kept his customers from taking advantage of the lower sales charges available through different classes of shares.


see www.investoradvocates.ca for discussion forums on this and related topics

Full Price Disclosure (from my local auto dealer)

"If only the mutual fund and investment selling industry would be as pro-active and forward thinking as the auto selling business". Today it appears investment salespeople are lagging behind auto sales in ethics.

Two points on this topic were recently noted:

My local Toyota auto dealer has begun to advertise that it's salespersons are now called, "product advisors". In much the same manner as stockbrokers and commission investment salespersons began referring to themselves as "investment advisors", a while back. Is the change in name backed by a change in methods? Time will tell, but in the case of the investment business, the commission compensation model is still paramount. It is still either an "eat what you kill" industry for most salespersons, and an "eat what you gather" industry for those who have converted to fees instead of commissions.

Second item, last weekend, I noticed a Cranbrook, BC, Toyota dealer advertising, "full disclosure" pricing on their vehicles. This is a welcome change after the decades of buyer beware pricing tactics found in the auto industry.
If the mutual fund industry were to follow this trend toward openess and honesty in the manners of compensation disclosure (instead of prospectus confusion), it would help considerably toward restoring the reputation of the industry. Without that, it will continue to drive the reputation of the industry into the ground.

The question is, will the auto sales industry step ahead of the investment industry as far as reputation goes...........or will the investment selling industry change course and come clean?

Glorianne Stromberg comments on advisors

What “professional advisor” means
It usually brings on the legal and moral obligations of a fiduciary nature
By Glorianne Stromberg
Advertisement



There cannot be a financial advisor alive who is not having to deal with the changing expectations of clients and regulators regarding the provision of financial services. These expectations include a heightened emphasis on the advisory role and the need for professionalism. Given the controversy provoked by David Brown, outgoing chairman of the Ontario Securities Commission, when in a recent speech to the Toronto CFA Society he said that financial advisors are professionals with a duty to understand the products they recommend and the risks they entail, it is timely to look at what just what it means to be a “professional financial advisor.” The starting point is to remember that when you hold yourself out as providing advice, regardless of the descriptive words you use, you are representing to your clients that: > You have recognized expertise in your chosen field; > You are competent to provide the particular type of advice you are offering to your clients; > They can rely on you for such advice; and > You can be trusted to act and conduct your operations with integrity, objectivity and in the client’s best interests. This implicit representation normally gives rise to the legal as well as the moral obligations of a fiduciary, whether or not you are exercising discretionary authority. In the days when people simply called themselves mutual fund or insurance “salespeople,” the consequences of being in the advice-giving business didn’t arise. The public knew it was dealing with people whose job was to sell products and that any “advice” given was purely incidental to the sales transaction and usually didn’t create fiduciary obligations.One of the consequences of positioning yourself as a professional financial advisor rather than a salesperson is that you are exposed to being judged by standards that are applicable to professionals rather than salespeople. The common characteristics of a professional with a capital “P” include:> Successfully completing a common post-secondary educational program whose curriculum has been independently and rigorously designed to encompass independently and rigorously identified competencies and is delivered by institutions accredited to do so by an independent oversight body;> Being a member in good standing of a self-regulatory organization that sets standards of practice and conduct that are rigorously monitored and enforced, including standards that prohibit conduct and transactions in which the professional has a conflict of interest or in which the client is vulnerable to the influence of the professional;> Clearly disclosing in a written engagement agreement the services to be provided, who will provide them, what that person’s qualifications are, what reporting will be done, what form the reporting will take, how and when you will be compensated for your services and by whom, what conflicts of interest exist (if any are permitted to exist), and the like; and> Clearly disclosing to the client the amount of the fees and other compensation, including referral fees (if any), that you receive or are receivable in respect of the services you have provided.Professionals with a capital “P”, are not paid on a commission basis. They do not receive embedded compensation from third-party suppliers; they do not borrow money or receive financial assistance from clients or third-party suppliers who are hoping the “professional” will use their services or products. They do not accept incentives from such suppliers. Referral fees (if permitted at all) are strictly regulated, disclosed and flowed through to the benefit of the client, unless the client’s express consent to do otherwise has been obtained. Any deviation from these standards is looked on as being conduct that is unbecoming to the professional and exposes the professional to disciplinary action.These expectations of a professional financial advisor are reasonable ones for clients to have. The industry and the regulators need to work on making sure advisors meet these expectations. IE

(advocate comments...........in court with 92 year old Norah Cosgrove V RBC, RBC used as their defense that they did not owe a duty of care to this, and by similar logic to over 90% of their clients. Industry is still asking for the respect and trust of professionals and yet not able to deliver it so far.

I would go so far as to say that the use of the name "advisor" is misleading at minimum, and quite possibly illegal, (for most salesperson in Canada) according to the definition of who can use this title in the Securities Act.)

go to discussion forums at www.investoradvocates.ca for further

regulators in sympathy with those they regulate?

A brief comment on “regulatory capture ”

Gabriel Kolko is a Marxist historian, who reworked his doctoral thesis into the The Triumph of Conservatism: A Reinterpretation of American History, 1900-1916 in 1963 and followed it up with a more detailed study of a single industry in Railroads and Regulation in 1965. The first thing to note here is those dates. This is not a recent development. "Regulatory capture" is the name Kolko and others applied to a particular phenomenon: when regulators serve the interests of those they're allegedly regulating in the general public interest. It was known before Kolko's work, but regarded as a dysfunctional aberration that sound policy reliably enforced could take care of. Kolko put the heyday of Progressive regulation under close scrutiny and argued that in fact regulatory capture wasn't just common, it was the norm. He found no important exception to it emerging, and usually emerging very early on in the history of a regulatory agency.

Over time, however, regulators and regulatees end up getting to know each other and working together, with or without any real sense of cooperation. Regulatees who provide information and make a show of cooperation earn the appreciation of regulators who find that endless crusade takes its toll in energy, enthusiasm, and efficiency. Regulators find that if they cooperate with their subjects in some areas, they'll get cooperation back on others.

In addition, regulatees who gain the sympathy of regulators as "team players", "responsible, cooperative enterprises", and the like get favors. There's nothing innately sinister about this - we pretty much all give extra consideration to the people we deal with who don't screw us over, help us out, and the like. The problem is that incremental small shifts can add up to big consequences. Over years and decades, the net effect of such tweaks of the course of regulation is to draw the regulatory agency in directions that the public is likely neither to understand nor to feel represents the original intent of the legislation that created the agency. More at Political: Regulatory Capture July 3/02 http://fortunewriter.blogspot.com/2002_06_30_fortunewriter_archive.html Bruce Baugh

this posting is part of the forum titled, "OSC makes is easier for issuers to get exemptions", at the forum discussion site www.investoradvocates.ca for further discussion

Investment Advocacy Discussion Forum Worth a Look

I am finding less time to post blogs to this site, but the good news is that the forum at:

www.investoradvocates.ca

is reaching more people who either need help or are willing to be of help to abused investors.

Feel free to visit the forum. No registration necessary. Just jump in and give your best.

So far it is working to help educate the public and improve conditions for investors.
cheers
Larry

another OSC town hall question that does not hold true

39. My financial planner was charging a yearly fee, plus must have been receiving commissions from the mutual funds, which he never disclosed. Is the securities commission scrutinizing this practice?
If your financial planner is a representative of a dealer, then there are rules that require that information about commissions paid for trades be disclosed to you. For mutual fund dealers, commissions charged for a trade as well as amounts deducted as sales, service or other charges are required to be disclosed in trade confirmations.

"this advocate questions whether there is anyone out there who has a trade confirmation that shows how much commission they paid, or the advisor earned, or they became liable to pay, or any trailing commission..............I have never seen one"

IS the OSC right on this one?

go to www.investoradvocates.ca for the forum on these topics and others

The OSC answers one town hall question, and raises more.

After the recent investor town hall meeting, the OSC invited questions, and promised to answer all. I aksed them about a topic I feel is not only misleading, but contrary to the law as provided by the Securities Act. I think the answer I got confirmed my belief but brushed aside any need for the OSC to do anything about it.
my question:
18. Why are investment salespeople who are officially registered as either "registered representatives", or as "salespeople", at the Securities Commission, allowed to represent themselves to the public as "investment advisors", indicating a different level of fiduciary duty to the public, when the Securities Act is clear on which titles are allowed and which are not?

OSC answer:
The OSC registers individuals in the categories of salesperson, officer, director or partner. These categories are then further designated as trading or advising. The firm can be registered as either a mutual fund dealer, an investment dealer, or as investment counsel or portfolio manager (ICPM). The latter ICPM category is what we refer to as an adviser (spelled “er”). While advisor (spelled “or”) is widely used in the industry to represent a salesperson or representative, it is not a registration category. The OSC does not register job titles.

Did I get the brush off? Any thoughts out there? I still remain convinced that the use of this title is an abuse of the Securities Act that the OSC would find it easier to overlook. From a client perspective however, it is very misleading to let them believe they are dealing with trusted and professional advisors, onlly to find when push comes to shove that it was not the case.

White Collar Crime in Canada Less Criminal......

White-collar criminals need own court: study
'Meaningful reform'
Theresa Tedesco, Chief Business Correspondent
June 15, 2005
Securities regulators should place greater emphasis on restitution for aggrieved investors and Canada should create specialized criminal courts specifically for white-collar crimes, concludes a study on capital market enforcement.According to the study, How Effective is Capital Market Enforcement in Canada?, the role of regulators needs to be re-evaluated because of a "disconnect" that exists between how they view their mandate and what investors expect."Securities regulators have historically interpreted their mandate as forward-looking and deterrence based," said associate law professor Poonam Puri during a presentation at the Joseph L. Rotman School of Management in Toronto yesterday. "On the other hand, individual investors who have lost their savings due to the misconduct of regulated market participants are most concerned about being compensated or made whole."


JEFF CHRISTENSEN / REUTERS
What if Martha Stewart had been prosecuted in Canada instead?
To bridge the gap, Prof. Puri recommended re-evaluating the role of securities regulators. "Moving forward, perhaps the securities regulator should act more as a facilitator or catalyst to assist investors in receiving compensation," she told the gathering of 200 investigators, lawyers and regulators.Among the findings in her discussion paper, Prof. Puri, who teaches at Osgoode Law School in Toronto, said securities regulators in Canada have historically been reluctant to pursue quasi-criminal sanctions through the courts - and that in turn has partially contributed to the lack of expertise among judges in dealing with white-collar cases.She referred to existing studies that indicate judges have historically imposed "disappointingly light" punishment on white-collar criminal offenders. According to Prof. Puri, these miscreants were less likely to be imprisoned, received lower average sentences and served less time than offenders involved in more traditional crimes.Although Prof. Puri argued many reasons explain the discrepancy, she suggested the main cause for this leniency is the lack of expertise among most Canadian judges to determine whether an offence adversely affects investor confidence or the stability of the Canadian economy."The Canadian judiciary needs to recognize not only the magnitude and impact of corporate misconduct on large segments of the population, but also the broader ramifications of corporate crime on the Canadian economy," she concluded.To that end, Prof. Puri advocated a two-pronged approach: "meaningful reform" for judges to help them better understand white-collar crimes, which should result in tougher financial penalties and imprisonment; and the creation of specialized criminal courts to deal exclusively with corporate and white-collar crime, similar to those that deal with young offenders and family law matters.Although Prof. Puri did not explicitly recommend the creation of a national securities regulator, she suggested the significant differences in enforcement trends among Canada's 13 provincial and territorial securities commissions "may have an adverse effect on enforcement."For example, Ontario is focused on registrant-related misconduct and prosecuting insider trading, while British Columbia has made it a priority to clamp down on the distribution of securities without a prospectus.At the same time, she said the commissions differ on how they dole out punishment at sentencing. To wit, Alberta does not take into account the personal circumstances of the person or company being disciplined, while regulators in Ontario, New Brunswick, Saskatchewan and Manitoba do make it a factor.As a result, the differences among the multiple provincial regulators "may lead to sub-optimal enforcement actions being taken on the whole, in contrast to a national or consolidated regulator, which would be more likely to act in the national interest," she said.As well, Prof. Puri said a national or consolidated regulator would enhance enforcement effectiveness in Canada because it would allow policies and priorities to be created at a national level and reduce costs to regulators and market participants.Not surprisingly, her paper reiterated the widely held view that when compared with their U.S. counterparts, Canadian regulators do not engage in enough enforcement activity and are less effective when they do.To support her assertion, Prof. Puri cited statistics that showed Canadian securities devote a smaller percentage of their total budget to enforcement than their U.S. counterparts. For example, the enforcement costs at the Securities & Exchange Commission represent 29% of the total budget. That compares with a range of 13% to 19% at each of the four major Canadian provincial securities commissions.As well, Prof. Puri found financial penalties are 10 times higher in the United States than the average Canadian fine.Furthermore, many of the high-profile white-collar cases in the U.S. have been pursued by attorneys general, such as Eliot Spitzer in New York - not the SEC. In Canada, Crown prosecutors have not embarked on a sweeping crackdown on corporate and white-collar crime.

Perfect logic by financially abused client

Sandra Gibson
Financial Post
Monday, June 13, 2005
Your comments are grossly unfair -- my broker conducted 18 trades in February, 2003, which resulted in significant losses for me.
I had written to the broker in January, 2003, regarding a minor infraction and in that letter I stated that "no further transactions were to be conducted without my prior knowledge." That letter went to my broker's compliance department.
I was in Mexico when the 18 trades were conducted in February and did not learn of them until my return.
What more could I have done to protect myself? If, in fact, the industry operates on a "buyer beware" basis, then IDA, OSC, etc., should declare same. (Advocate comment, "I agree 100%, anything less is misleading the public")
Many investors are intimidated (no matter what their level of intelligence or education) by brokers who imply that their knowledge is so specialized that the client could not possibly apprehend enough info to make an independent decision. (advocate comment, "yet when called into court, many bank owned dealers claim "no duty of care" to the client on a technicality, saying, in effect that the client was responsible."
I would also remind you that, unlike you, most investors are focused on other areas of knowledge with which they earn their living and many simply do not have the time to gain the know-how to make a truly informed assessment.
Who was flogging Portus? Were they all "grey" and "white" hats who grabbed their 8% to 12% fees? The problem is that corruption is the norm, not the exception. "I will say for sure that self dealing is the norm, rather than putting client interest first, and if that is corruption, then she is calling a spade a spade.
How can an investor protect himself when we have such a lack of transparency in so many areas?
"The vast majority of advisors" are being instructed to sell in-house wrap funds etc., in order to meet their $500,000-per-year quotas, so how can they "try to align themselves with the needs of their clients"? Brokers are afraid to speak out. (Advocate comment with twenty years in, TRUE)
You belittle that which Stan Buell, Joe Killoran, Robert Kyle etc., have sacrificed so much of their personal lives to achieve.
Sandra Gibson, Toronto

Securities Regulators in Canada follow similar line

At most times, investors feel they are protected. At all times, provincial Securities Commissions say they are doing thier job. However many within the industry feel otherwise, that most investment abuses are slipping through the cracks and that regulators are mostly "posing".

The below article sheds some light on the kind of information the public needs to learn about, so that they can stop being misled into a false sense of security in matters if investment protection. The article pertains to RCMP investigations not having the people power to do the job, and most securities commissions use the same excuse when seriously questioned............they just dont portray this truth to the public.

http://www.fin.gc.ca/news05/05-041e.html

How ironic???

Sun, June 5, 2005
Dirty money tips ignored
Mounties fail to pursue one-third of financial sleuths' files, report says

By DEAN BEEBY, CP

The RCMP did not pursue more than a third of the money-laundering tips passed on by Canada's financial sleuthing agency, largely because the force lacked the manpower, says a newly released report.
The Mounties did not open investigations on 45 files turned over to them by the Financial Transactions and Reports Analysis Centre of Canada, better known as Fintrac, says the document.
The agency was established in 2000 to gather financial intelligence from banks and other institutions on potential money-laundering schemes. After careful analysis, Fintrac forwards information on the most suspicious transactions to the RCMP and other police forces. The agency also monitors terrorist financing.
'LIMITED RESOURCES'
An internal Fintrac report, obtained under the Access to Information Act, found the Mounties did not chase 45 of the 131 high-quality tips the agency had produced to the end of 2003. Virtually all of the cases not pursued were suspected schemes in Vancouver, Toronto and Montreal, where the force places most of its proceeds-of-crime investigators.
And about three-quarters of the abandoned tips were not investigated simply because the RCMP had "limited resources."
"There is no shortage of evidence against these individuals committing crime, just a shortage of investigators to bring all the criminals to justice," says the 31-page report from 2004.
The findings suggest the extent of money-laundering in Canada, most of which stems from drug trafficking, far exceeds the ability of the RCMP to investigate.
Fintrac found that the Mounties were abandoning almost half of the tips they were given in Canada's three biggest cities.
The report also showed that cases were much more likely to be followed up if the suspects' names were already in the Canadian Police Information Centre database, which contains criminal records of known offenders.
The value of the suspected money-laundering schemes appeared to have no bearing on whether the tip would be followed up. Six of the abandoned files were worth more than $5 million.
CRIMES UNKNOWN
The Mounties also tended to avoid files where the original crime that produced the allegedly laundered money was not known.
A spokeswoman for the Mounties said even though some disclosures from Fintrac are set aside, the information may still be useful at some future date.

Illegal in US, Standard Practice daily in Canada

NASD fines RBC in the United States $1.7 mil for mutual fund mishandling. Article from June 9, 2005 Financial Post describes the fine. The NASD web site is a wealth of information on investment abuses in the United States. Unfortunately, Canada's regulatory system still allows almost any and all abusive mutual fund practice to continue unchecked. I still do not understand how this occurs, but I am sure the class action lawyers will figure it out and eventually correct it in Canada. It is, after all, a multi billion dollar damage to clients if you look carefully at double dipping, triple dipping, churning DSC funds, moving clients to proprietary and higher comp funds, adding advisor fees to inactive accounts, prescribing the highest comp fund under the guise of "professional advice", etc., etc., etc.

ASC Hobbled, Edmonton Journal

Fixing the hobbled ASC should be a priority:Alberta's powerhouse economy deserves first-class watchdogEdmontonJournal Saturday, June 4, 2005 Page: F1 / FRONT Section: BusinessByline: Gary Lamphier Column: Gary Lamphier Source:

The Edmonton JournalIf the Alberta Securities Commission was a publicly traded company, theevents of the past six months would have been crippling. In alllikelihood, the ASC's share price would have tanked, its shareholderswould be in open revolt, lawsuits would be flying, senior execs would bejumping ship (as indeed some are), and company directors would benervously checking their liability insurance. An independent committeeof the board would likely have been struck to explore the damagingallegations against senior management, contained in a report presentedto the ASC board in February. In the brave new world of corporategovernance, this is called transparency and accountability. But the ASCisn't a public company. It's an arm of the Alberta government. And as such, it is neither transparent or accountable, in any meaningful way.It is, in fact, subject to all of the usual meddling and politicalsubterfuge that afflicts any government body, especially in a one-partystate like Alberta. Most of the time, this wouldn't matter much to manypeople. Most are simply too busy making a living to care much about thearcane goings-on at the provincial securities regulator. Besides,compared to the stench exposed daily by the Gomery Commission, thesleazy vote-buying antics of the federal Liberals, or the possibility ofsex-killer Karla Homolka moving into your neighbourhood next month, theongoing soap opera at the ASC might seem more cartoonish thancataclysmic. After all, Alberta's economy is on wheels, the oil and gassector is booming, everyone is making money, and business is good. Sowhat if some disgruntled ASC staffers claim former chairman StephenSibold and exec director David Linder ran the ASC like a private club (aclaim they deny)? And so what if the ASC was seen by 10, 20, or 30staffers (sorry, I've lostcount) as a bastion of favouritism, bullying, intimidation, sexistjokes, and lax enforcement practices? What's the big deal, you mightask. Even if (as some say) relations between staff and ASC bosses remainpoisonous under interim chairman Peter Valentine -- an ex-provincialauditor who was brought in when Sibold's five-year term ended in May --you might see this as much ado about nothing. Every company has unhappyemployees, you may say. The kind of rapid staff turnover we're seeing atthe ASC -- where four executive positions are now vacant, including thatof former legal services director Patty Johnston, who left Tuesday -- ishardly unique. So what if a few people get fired, a few self-styledwhistleblowers get exposed, and the remaining staff learn to shut up andtoe the line, you may ask. You might even agree when Alberta FinanceMinister Shirley McClellan, who oversees the ASC, calls this strictly aninternal matter. Well, I'm afraid I don't. There are big issues at playhere. Alberta is an economic powerhouse, with world-class companies thatcompete for international capital. We can't afford a securitiesregulator that's so badly impaired by internal strife that it can't doits job. This isn't merely a messy in-house personnel spat between ASCstaffers and management -- a dispute that was first uncovered byFinancial Post reporter Theresa Tedesco in March -- it's also areflection of Alberta's parochial view of how to regulate the capitalmarkets. Like many other provinces, Alberta has long opposed thecreation of a national securities regulator. Forget the fact that theASC, like other provincial regulators, has far fewer enforcement staff,per capita, on its payroll than the U.S. Securities and ExchangeCommission. Or that scams like Bre-X and YBM Magnex were born right herein Alberta. For the provincial government, any talk of a nationalregulator is a non-starter. "Maybe a national securities commissionwould be ineffective too," says Toronto forensic accountant Al Rosen, avocal critic of the current regime of provincial regulators. "But Ican't imagine it being worse than what we have now. I think in general,investors should be very concerned." Amen to that, Al.

Ken Kivenko describes a complaint process

When the ombudsman comes calling

You’ve filed a complaint regarding bad advice and unsuitable investments that cost you money. At some point the ombudsman (or customer service or compliance officer) will come calling. You should assume that they are an adversary trying to nullify your complaint or minimize the amount of restitution. Ombudsman use the same biased restitution decision criteria as the firms that employ them or fund their operation. Don't be taken in by comforting words or a friendly smile. Your goal is to get your hard earned money back. If possible, have a friend or relative accompany you on any visits to act as a witness. Frankly, we view prevailing dispute resolution mechanisms and practices as industry- biased and unfair to small investors, seniors, retirees and immigrants. It is not an exaggeration to classify industry malfeasance as financial assault. There’s a reason Ombudsman don’t conduct or publish client satisfaction surveys –less than 1 person in 20 wins and of those, very few get the full amount of the claim.

First off, you don't have to answer every question they ask. You do not need to provide information that will be harmful to your case or is not relevant to your case. For instance, if they discover that you have substantial assets elsewhere they may attempt to argue that you implicitly have a high loss tolerance. They can and will use any data you provide against you if it helps limit restitution

Second, don't let your ego get in the way. If you really don't understand what that e-commerce fund was all about don't fake it. Ombudsman often try to present clients as more investment savvy than they really are. This provides them an argument for disqualifying or reducing claims. If the advisor didn’t prepare a Investment Policy Statement {IPS] for you or he/she breached it, your case is enriched. An IPS is regarded as one of the most basic documents between clients and advisers. The lack of an IPS is a sign of unprofessionalism. Note too that an unsuitable investment could also include one with inappropriate leveraging, a DSC early redemption penalty or one that causes you to be unduly exposed to tax liabilities. An adviser’s failure to effectively disclose investment risks, hidden commissions and high fees are also part of the equation-inform the investigator if this is the case. If you discover the brokerage firm or dealer failed to tell you that it received extra payments or incentives for recommending specific funds, your claim position is enhanced. The Portus hedge fund scandal is a recent example .

Third, they will point out to you that your monthly client statements clearly indicated you were losing money. So, they argue, you should have mitigated the losses and not let them accumulate. If however the statements are hard to interpret, you were told to buy-and-hold or cautioned that a whopping DSC early redemption fee would be applied, you'll have a stronger case. If you or your spouse were in ill health during the period, make this known to the investigator-this highlights the reason that loss mitigation wasn’t your priority at a time of serious family distress. There is an inherent conflict between the advice that mutual fund and stock investors receive to ride out the market downturns and stay the course for the long haul, and their duty to mitigate their losses as asserted by Ombudsman. If the firm's marketing literature portrays them as professional advisers, you should hand a copy to the investigator. Don’t hesitate to cite any firm –specific or industry conduct rules such as those from the MFDA (www.mfda.ca) or IDA (www.ida.ca) that support your position. Advisors have a role in loss mitigation; in fact the industry emphasizes that investors with advisors achieve better performance than those without. The stated purpose of ongoing embedded trailer commissions is to provide investors with continuing advice with respect to their portfolio, so hold them to it since you’ve already paid for it. If they didn’t suggest disposing of unsuitable investments, their case is weakened. Financial advice isn’t only about buying –it’s also includes selling.

Fourth, they may concede that you were sold inappropriate investments but may unfairly attempt to limit your compensation. Specifically actual market losses, sales commissions paid, DSC early redemption penalty fees incurred, impact on taxes especially in RRIF’s [gross-up], account closing fees, account transfer fees and accumulated interest from the agreed date of loss to the time of restitution payment should be included. Some argument can also be made for recovering the costs to file the claim if it involved out of pocket expenses to independent third parties to assist in articulating the complaint.

Fifth, Ombudsman also believe that inaction is evidence of agreement. Thus acquiescence on disputed unauthorized trades, will be used to negate claims. There should be positive two-way communication between a consultant and client. Since the consultant is the one providing advice, the obligation is there for confirming a transaction and ensuring the client understands the rationale for the transaction .If you have any evidence you queried the transaction, bring it forward.
Sixth, they may attempt to encourage you to walk away or settle for a token amount. You will be given a take- it- or- leave- it date for a decision on their proposed restitution. You might counter by demonstrating a strong level of determination. Some cases have settled successfully perhaps because of the threat of complaining to superiors, informing regulators, contacting the media or even involving law enforcement. In a presentation to the Ontario Legislative Committee on Finance and Economic Affairs, August 2004, John Hollander, a litigator, with the Ottawa firm of Doucet, McBride LLP, offered some insightful comments about the IDA and the OBSI. Mr. Hollander stated:
“The IDA and the OBSI routinely provide legal advice with substantial consequences to the investor and without accountability to the investor for the accuracy of the advice given. They tell clients there is no validity to the claim. The IDA and the OBSI provide legal advice, with neither the safeguards nor the accountability that apply to my profession. They tell clients their claims are ill-founded. My settlements and experts prove these opinions were wrong. Simply put, the IDA and OBSI are practicing law without a license”.

Finally, be aware that your NAAF or KYC may be used to support their argument. that you were greedy and willing to take on substantial risk. The problem with NAAF’s is that the terminology is imprecise and too often the salesperson fills in the form and has the client sign them. We are also aware of cases where clients signed blank forms and advisers signing on behalf of clients to provide a paper trail to cover their improper actions. KYC’s are notoriously inaccurate and often outdated -sometimes they are retroactively fabricated or altered to legitimize them. If you can demonstrate that your risk and loss tolerance is less than they portray, your case will be enhanced and the controversial KYC moved off the evidence table.

It seems fundamentally wrong to put the onus on the small investor who has lost a significant amount of their savings to prove his case, and accept the commission motivated adviser's word rather than place the onus on the firm to prove that they had taken every precaution to prepare an appropriate investment strategy that would not place a senior, retiree or trusting investor at risk of unacceptable consequences.

If the financial services industry insists on investors being liable for ascertaining whether the investment products sold to them are in fact suitable for them, and that investors are solely responsible for mitigating their losses when they become aware that something is wrong, then it is indeed a BUYER BEWARE industry.

There is a lot more to cover when dealing with an industry- paid or industry -sponsored ombudsman and we'll discuss these points in future issues. For now, this little article should heighten your awareness of what you’ll face and how to deal with some of the ploys.

Ken Kivenko April, 2005

Eliot Spitzer does the job, where others fail to

NY-AG Eliot Spitzer has explained clearly why he takes action in the U.S. securities marketplaces:
1. "if the agencies of the federal government—the SEC, the FDA, the FCC, whatever—abdicate their authority to protect that marketplace, Spitzer says, "I view it as my responsibility to twenty million New Yorkers who are investors, who work in the marketplace," to assume it."

2. "We need competition. . . . . I understand that a market needs to have rules by which it lives. If you have a marketplace unbridled by rules that mandate integrity and transparency, then the market will not work."

"The Naked Investor" Tells It Like It Is

Sunday, May 29, 2005Book reveals top investing pitfalls
By Michael Kane CanWest News Service—Vancouver
John Reynolds is the author of The Naked Investor: Why Almost Everybody But You Gets Rich on your RRSP. CanWest News Service

Hans Merkelbach says he works in a business that stinks. Hans a financial adviser in an industry where most practitioners sell products instead of investment advice.
They do it because they can make a lot of money. More than many of their clients will make from the investments theyre cajoled into buying.
Merkelbach, of Bowen Island, B.C., is one of the real-life characters introduced in The Naked Investor, an explosive new book that chronicles the dark side of Canada's self-serving investment industry.
Disturbing experiences
By recounting a disturbing and sometimes moving collection of true investor experiences, author John Lawrence Reynolds dishes the dirt on how advisers can maximize their earnings, while leaving clients exposed to massive losses.
He also shows how regulators are failing to protect the ordinary investor.
Even when a few investors manage to win partial redress for bad advice, theyre prevented from alerting others by confidentiality agreements and gag orders designed to shield both the offending stockbroker or mutual fund salesperson, and his or her company, from claims by other victims.
Damning indictment
The book, sub-titled Why Almost Everybody But You Gets Rich on Your RRSP, presents a damning indictment of a system driven by greed and duplicity.
Its not about the different branches and techniques of the financial services industry, although it does show readers how they and their money are being manipulated.
Its about people and their personal experiences, coupled with practical advice that hopefully will convince many of Canada's six million RRSP investors that they can do a better job of watching over more than $400 billion in their accounts.
Rescues woman
Merkelbach, 71, enters the narrative when he comes to the rescue of a middle-aged woman who had helplessly watched her $400,000 retirement nest egg lose more than half of its value in the hands of a condescending Toronto insurance salesperson that she had considered her friend.
Most of the account was invested in abysmally performing segregated equity mutual funds carrying management expense ratios as high as four per cent or more. That meant the funds had to earn at least four per cent to pay annual fees to the adviser and the fund manager before they could earn anything for their owner.
As with all mutual funds, the adviser and the fund manager still got paid when the client was losing money.
To make matters worse, the funds were sold on a back-end load basis, which meant the adviser was paid about $20,000 up front just for placing the funds with a life-insurance company, while the investor faced exorbitant penalties if she chose to transfer her money to a better home.
The woman eventually paid $13,000 to correct a mistake that somebody else had made because the back-end load (also known as a deferred sales charge) applied to the original value of her investment, which was twice as high as the funds were worth.
Unlike many of the stories in The Naked Investor, this one appears to be on track to a happy ending. After three years with Merkelbach, the $140,000 left from the original $400,000 has grown to $330,000. The client is free to move her money at any time because Merkelbach does not sell deferred-load funds.
He is well compensated by trailer fees payments by fund managers to advisers typically amounting to one per cent per year of the assets under management and he says thats reasonable because he earns more when his clients earn more and less when they earn less. He doesnt scoop five per cent up front by saddling his clients with onerous penalties if they become dissatisfied with the way their money is being managed.
Unfortunately, many advisers do just that, often with the excuse that it helps to dissuade clients from bailing out on long-term investments when the market is in one of its periodic downturns. That kind of self-serving argument gives the industry a bad name, Merkelbach said.
When I see one of my clients, a very intelligent man, give $700,000 to an insurance broker in Vancouver who sells him six deferred-load funds and makes a $35,000 commission for writing up a bunch of papers, I think, boy, this business still stinks.
Industry shortcomings
Reynolds is inclined to agree. In a telephone interview from his home in Burlington, Ont., he said industry problems are probably equally divided between lack of transparency and the commission-based system which makes every adviser a salesperson.
He believes the industry doesnt want Canadians to know how it makes its money, or how basic the process of making investment decisions can be.
Somewhere along the line, we have to ditch the commission system, he said.
If you visited your doctor with the understanding that your physicians entire income is based upon the commissions that pharmaceutical companies pay him or her for the drugs he or she prescribes, how much faith would you have in your physicians advice? I think the parallel fits exactly with the financial investment industry.
Reynolds, the award-winning author of Free Rider: How a Bay Street Whiz Kid Stole and Spent $20 Million, isnt suggesting Canadians hide their money under the mattress. He says people need professional advice, and most financial advisers try to be professional and are as honest as any other group of Canadians.
The point of the book, frankly, is to alert people to the need for educating themselves where financial matters are concerned.
Pointedly, he says the average seven-year-old child in Canada knows more about sex than his or her grandparents know about investing. Thats a dangerous situation when vultures, jackals, ghouls and everyday thieves are after your money.
Vancouver Sun

Comments from Burgandy Asset Management

http://www.burgundy-asset.com/feb-99.asp

Too Many Regulators, Not Enough Regulation
Some free market ideologues would have us believe that regulation of all kinds is evil, and that if markets are allowed to operate freely, in financial services as in everything else, the world would be a better place. Tell it to the Russians. In the case of stock markets and financial systems, intelligent regulation is essential. The financial sector, with its vast amounts of the public’s money sloshing around, attracts crooks like no other area. Stern and consistent regulation is necessary to protect the public and maintain its confidence in the country’s financial system.
Canada’s current regulatory regime is execrable. Ten provinces share the responsibility for regulating securities markets with five stock exchanges and the Investment Dealers Association, in a world where national borders, let alone provincial ones, are increasingly irrelevant. Penalties for violations of securities laws, which are rare as hen’s teeth in any event, are applied on a province-by-province basis, meaning that scoundrels can always find a new playground. The money that is used to support small, inefficient and ineffective provincial securities commissions could be much better spent in ensuring that the public is not defrauded and bilked by any of the legions of flim-flammers who are attracted to any financial market, but especially a badly-regulated one like Canada’s. The only law obeyed in Canada’s capital markets on a national basis is Gresham’s Law, as provincial regulators and stock exchanges indulge in “one-downmanship” and take their standards to the lowest common denominator.
There have been recent reports that the provincial securities regulators have agreed on a “virtual” national securities agency, to be called the Canadian Securities Regulatory System (CSRS). They will pool their scant resources to try to eliminate some of the waste and inefficiency that make the current system so burdensome to the law-abiding and so helpful to the others. More money would be available for such things as compliance and enforcement, and some standardisation would be possible for prospectus filings. It might be progress compared to the current system, but would still be less effective than a full national securities commission. The main reason for the “virtual” structure appears to be that Alberta fears the domination of Ontario in the securities field, and petty interprovincial rivalries are a poor basis for joint action. We doubt if the proposed CSRS will get us out of the bush leagues anytime soon.

Lessons Learned – Regulators
A national securities commission is by far the best way to go. It is also, in the Canadian political context, probably an impossible dream. Quebec has not been in the habit recently of releasing any areas of control to the federal level, and Alberta’s and British Columbia’s fear of Ontarian hegemony in securities regulation (despite the smaller markets’ lack of resources to do the job) has scuppered any recent attempts to centralise Canadian regulation.
We should point out that the problems with the Canadian regulatory system are structural in nature, and our remarks are not aimed at the many hard-working and well-meaning individuals who work for provincial securities regulators. We have had some exceptional people working at securities commissions in Canada, but they are usually people who are not career regulators. Often, they are fast-track lawyers, joining the securities commissions almost on a pro bono basis. What is needed is a seamless, national, full-time, fully-funded, tough and consistent regulator for the securities industry, someone to “kick butt and take names” in the memorable American phrase. If the proposed Canadian Securities Regulatory System is able to do the job, we will be the first to give three cheers and congratulate Canada’s provinces. But we hope we can be forgiven for a degree of scepticism.

Conclusion
If these lessons are applied by Canadian investors, auditors, regulators and stock exchanges, those of us who have suffered from our country’s loss of reputation in 1997-98 may be able to hold our heads up among our international peers, and our country will be able to start realising its full potential.
It’s time for the Canadian capital markets to grow up

Who is Telling the Truth? IDA, ASC, OSC, NFG?

Having just received another carefully worded letter from the ASC, about how they feel they must delegate all matters concerning an IDA firm to the IDA itself........I am still stuck on the logic.

Why would a government securities regulator hand off securities regulation duties like enforcing the securities law to a bunch of industry trade representatives, a dealership association if you will. It appears a lot like a government consumer protection agency delegating auto dealer complaints (investigation and enforcement) to the local auto dealers association. It is neither practical nor possible to expect it to work, and in fact it is becoming increasingly clear that it is not working in Canada.

Only people who have six figure jobs in provincial securities regulation seem unable to grasp this. Perhaps they are a bit too busy figuring out how to outlive the changeover to a national securities regulator, to do the job of investor protection that they claim to. If so, that is understandable. Just not to me.

I also do not understand how a kind retired, single nurse, could write to the ASC, with evidence that her account had been not just double dipped, but turned into one more "advisor account" without benefit to the client, and thereby triple dipped.............and the ASC does nothing. Simply refer it to the dealership association. When insiders at investment firms write of elder abuse, investment abuse, double dipping etc., withint the industry, what does the ASC do? Investigate and get to the bottom of it? No. Refer it to the dealership association. End of career for anyone willing to tell the truth of investment abuses.

They turn it over to the IDA. Of course the IDA does nothing, since they are the representatives (dealer association) of the Investment Dealers. Set up and funded by same. they are the LAST folks in Canada who are going to blow the whistle on widespread abuses within the investment industry. They tend to only deal in matters of individual advisor wrongdoing, the rest is just not possible for them.

To view the best research anywhere on the IDA, and perhaps on the industry overall, go to the site www.regulators.itgo.com

There you will find enough information to convince you that Canada is a mostly unregulated, buyer beware investment climate. Your only hope is to find an honest investment advisor.

Here from this site by way of example are two different and conflicting stories from IDA executives, depending on whether they were in advance or retreat mode.

For the Record

Joe Oliver,
President, IDA
"The IDA is Canada's only national entity with delegated responsibility for securities regulation and investor protection." - Joe Oliver
Evidence given before the
Senate Standing Committee
on
Banking, Trade and Commerce
02 November 1998

6 YEARS LATER (almost to the day)
Paul Bourque
SVP Regulation, IDA
"First, let's get the facts straight. The only legislative power the provincial governments "delegate" to the IDA is registration of brokers -- and even that is only delegated in B.C., Alberta and Ontario. The provincial governments do not "delegate" securities industry compliance and enforcement." - Paul Bourque
Penalties needed
03 November 2004

Given that the IDA appears to not even be clear on what they are, what they do, and what legislation they are following...........how are we to believe that the law is being followed when the Alberta Securities Commision (or Ontario, or others) reduce their own workload by referring all related complaints to the IDA.

The chickens (clients) are complaining of abuse in the henhouse, and their complaints are all referred to the Fox's Association (IDA). The ASC is in the job of doing..............what again? Protecting the public, or protecting their incomes? Shame.

Here is what is wrong with Brown's speech

(see "What is wrong with this speech article previous for OSC chair David Brown's action on Portus)

In it, he dodges responsibility for hedge funds, by saying they do not fall under OSC jurisdiction. Despite the illegality of unsuitable investments under the Securities Act. Despite the number of improprieties it took to get this investment marketed to thousands of Canadian clients, he appears ready, willing and able to do...................nothing.

He told the Toronto CFA Society that advisors should be held accountable for any inappropriate investments made by clients they referred to the firm. Yet while he talks the talk, and collects the highest paycheque in the land as the top securities regulator in Canada, it seems as if the punishment he is metting out to advisors making innapropriate and perhaps self serving advice to clients is to do............................nothing. Perhaps a stern speech. A bit of a talking to.

I found this line funny: "Many advisors have said the focus on referral fees has been unfair, saying that if they were simply "in it for the money" they could have earned more by selling their client a DSC fund. "

Funny in that 80% of all mutual funds sold in Canada (by advisors) are sold to clients under the DSC option. Are they giving investment advice, or are they "in it for the money"?

See warnings about selling the highest compensating class of mutual funds at the NASD (National Association of Securities Dealers in the US) web site for possible clarity on this issue. http://www.nasd.com

Once again I ask the question: Why are investment practices that are immoral and illegal in the United States, considered, "standard industry practice", in Canada?
The problems are so widespread and so systemic, that the poor regulators are unable to even take the first steps in Canada. they just show up, take the $000,000 pay each year, misinform the public that they are protected, and then move on to leave the system no better off for average Canadians. Very misleading.

Pointing out that hedge funds are not regulated by the OSC, Brown urged all investors who are interested in such products to, "be sure they understand what they are getting into". Ouch! What a stern talking to. I am sure that bold action like this will change the world. This sounds to me like telling criminals to "be sure and remember to register your weapons".

This inaction is of no use and little value. Forgive me my bitter tone, but without serious action, we may have just witnessed another multi-billion dollar consumer rip off successfully done in Canadian style, under the view of the country's top securities cops. And off they ride into the sunset..............to do more good work.

What is wrong with this speech?

Brown: You can't sell what you can't understand
Steven Lamb
(May 10, 2005) In one of his last addresses to the investment community before leaving his position as OSC chair, David Brown told the Toronto CFA Society that advisors should be held accountable for any inappropriate investments made by clients they referred to the firm.
"There may well be some issues to address in relation to the manufacturers of some of these investment products. But the responsibilities of the intermediaries involved are clear," said Brown. "They are professionals with a duty to understand the products involved and the risks entailed."
While refusing to answer any specific questions regarding the investigation into Portus, Brown concedes that the OSC is more focused on the advisors who sell complex products, than on the manufacturers of those products.
Some question whether there are gaps in the current regulations which allowed Portus to be sold to inappropriate clients in the first place. Brown disagrees, saying the "know your client" rule places the onus on advisors to understand the products to which they direct their clients. If they don't understand the product, they cannot possibly consider it to be suitable.
"In fact, the complexity of the foreign intermediaries involved in the international aspects of the transactions — and the lack of regulatory compliance by Portus — has made it difficult for investigators to understand this product after months of forensic accounting," Brown admitted. "You can't apply any particular investment recommendation to the client's needs, unless you have an understanding of the risk attributes of the investment."

Much of the furor over Portus is that as a hedge fund investment, it should only have been available to accredited investors. When asked if the industry has been able to sidestep such rules, Brown said it was too early to tell and he had seen no evidence of this.
"We're working with the two SRO's — the IDA and the MFDA — to make sure that our rules are adequate," he said. "We are quite prepared to look at our own rules and make sure they are explained well enough, but we also want to make sure they are being complied with by those who are out making these investment recommendations.
"What everybody involved in the recommendation of complex financial products needs to do is to reassess their understanding of the product, reassess their commitment to investors, to make sure that products are suitable for them and to make sure they are motivated with the best interests of their investors in mind."
Many advisors have said the focus on referral fees has been unfair, saying that if they were simply "in it for the money" they could have earned more by selling their client a DSC fund.
But Brown says the regulator is really interested in finding out how Portus products found their way into so many portfolios so quickly.
"The fees that were being paid were comparable to fees that are being paid on the sale of mutual funds, but these were fees being paid for referrals and we need to understand whether that indeed was a factor in such a broad penetration of this product in such a short period of time."
While advisors were comfortable collecting a similar payout as they would have with a mutual fund, they are accepting none of the responsibility that would have accompanied the transaction had it been a fund sale.
"When formerly elite investment instruments become more widely available, the industry has to take a good, hard look at them to determine their suitability for the average investor," Brown said. "We also have to make sure that the industry is clear on its responsibilities."
Pointing out that hedge funds are not regulated by the OSC, Brown urged all investors who are interested in such products to be sure they understand what they are getting into and how the product matches their own risk parameters.
"I'm asking all those involved in the distribution chain to ask themselves whether they are comfortable, whether they understand the products they are selling," he said. "It is really a call to the industry — to us as the regulators, to the SROs who are responsible for setting the education standards — to stay current."
Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com

Putting Client First. Marketing spin, or fact?

The Professional Financial Advisor
Toronto-based Financial Advisor John De Goey offers thoughts about fee-based advice, holistic planning and capital markets.
Corporate Mandate
By John De Goey Tuesday, May 24, 2005
A man (even if that man is a corporation) cannot serve two masters. Either he is serving shareholders or he is serving clients. Both are noble. Both are justifiable. But both cannot be served simultaneously.
I just finished reading Joel Bakan’s book “The Corporation”, which I received as a Christmas present. As a UBC corporate law professor, Bakan’s basic thesis is that since corporations are legally considered to be people, what kind of a personality type might reasonably apply to a corporation? The rationale put forward shows pretty convincing evidence that if corporations were in fact human, they would be seen by society as irresponsible psychopaths who lack empathy and are incapable of feeling remorse.
Corporations were brought into existence to make money. That is their overarching purpose. Senior executives, therefore, have a legal obligation to “maximize shareholder value” at the expense of all else. In fact, the law forbids all other actions and motives. When side-effects (something economists call “externalities”) do harm to society, corporations look for ways to avoid the blame. Think of the long history of harm done by corporations through time: Bhopal, Exxon Valdez, Thalidomide, Enron. The list goes on and the market timing scandal that pitted the interests of shareholders against those of unitholders is likely to go down as another fine example in a long line of externalities.
It is with this in mind that I reflected upon the re-assuring tone and content of all the web sites, newsletters and mission statements that so many investment firms (both those who create investment products and those who recommend them) show to their clients. Almost without fail, there will be a reference to the phrase “the client comes first”. Clients, always on the lookout for decent, high-integrity companies to work with, are presumably made to feel all warm and fuzzy when they read this- and to hand over their life’s savings as an expression of their unfailing trust in these reassuring words.
A man (even if that man is a corporation) cannot serve two masters. Either he is serving shareholders or he is serving clients. Both are noble. Both are justifiable. But both cannot be served simultaneously. In the majority of cases, the more money a firm makes, the higher the cost borne by clients. Conversely, the more prices are cut to benefit clients, the more shareholders will feel the pain. Profits derived from price changes, for instance, are a zero sum game. Whenever one party is doing well, it is as sure as the night follows the day that this comes at the expense of the other party.
What I found try astounding in the book is that one of the world’s re-eminent economists, Milton Friedman is of the opinion that corporate profit is a moral imperative. Friedman believes that corporate responsibility is both illegal and immoral if it compromises profits. He believes it is both illegal and immoral to put the client’s interests first.
Quite apart from the severe consequences if Friedman is right (jail time for installing SO2 scrubbers?), this could also lead to somewhat humourous situations. Imagine having a shareholder showing up at a corporate AGM brandishing a mission statement saying “It says here that you’re putting the clients’ interests first- what the hell is that about, Mr. CEO? If you don’t start charging as much as the market will bear and sending me the money in the form of higher dividends by the end of the next quarter, I’ll get you ousted.”
The simple lesson is that things are seldom as they appear. It is obviously disingenuous of corporations to suggest that they are simultaneously pursuing both agendas to the point where both sets of stakeholders’interests first. No one can have it both ways.
Even if CEOs said something like “we aim to balance the legitimate interests of all our stakeholders”, I would buy in, although Friedman likely would not. My view on the obvious disconnect is that the ubiquitous bumpf about putting clients first is really just another cynical attempt to get people to give you their money. Corporations don’t really mean it. Friedman says they would be breaking the law if they did.

What it feels like to be a whistleblower

It feels like you are doing the right thing. When you see or suspect wrongdoing by someone, against the public interest, or against a trusting and vulnerable person or class of people.

Then it feels strange when your immediate supervisors dodge, deflect, or attack you.

Then it feels shocking when you realize that so many people have so much to lose by outing the abuse, that they will actually prefer to silence you than to fix the problem.

Then it feels scary, when they turn the tables and try to silence or eliminate the problem, instead of facing it and admitting the defects.

Then it becomes downright frightening when it becomes clear that no matter who you contact, which boss, regulator, ombudsman, government, they can all find numerous reasons for, "not getting involved", if the opponent is a powerful and dangerous opponent.

Then it becomes anger at so many who maintain they are there to serve and protect, and yet they refuse to serve and are afraid to protect, lest they become caught in the retaliation.

Then it becomes confusing, to realize that everything you were taught, told, and believed was just talk, and nothing else. That wrong is often considered "right", if it makes you rich enough.
That right is often wrong, if it affects people in positions of power and influence.

Then it feels as if your world is off kilter, that either you are upside down, or your world has turned itself upside down. It feels as if you are out of control, and you need to make some corrections.

Then, like a car where someone has reversed the steering controls, so that left turns take you to the right and vice versa, each and every move you make in this upside down world turns out to be wrong. Each move you make actually makes the out of control situation more out of control.

Then you start to do damage to:
Relationships.
Families
Spouses.
Children.
Finances.
Mental health.
Physical health.
Career.
Motivation.
Medication.
Addiction.

White collar crime is a crime of violence. It affects so many in so many ways.
(Kent Shirley took his own life this past x-mas eve, after making allegations about his former employer, a Mr Mallard of Assante Investments. He was subject to "police state" treatment at the hands of the legal staulking horses sent after him....and those who live on.

No help, nor action has so far some from any provincial securities omission, nor the RCMP commercial crime department. No one has shown the will or the willingness to simply investigate and or enforce securities law.

For those needing further reading on the history and retaliatory treatment of whistleblowers, see the following well documented public or corporate cases:

Gomery
Enron
Worldcom
Environmental Protection Agency
Federal Aviation Administration
Food and Drug Administration
Hooker Chemical
Dow Chemical
DDT, Agent Orange
Morton Thiokol (Challenger space shuttle explosion)
Ford Pinto (exloding gas tank)
General Motors (exploding gas tanks)
General Motors (Corvair)
Love Canal
Frank Serpico and the NYPD
Karen Silkwood and the nuclear power industry
Firestone Tire
Tobacco Industry
Cassandra Rowley and the FBI
Haliburton

Those with nothing to hide, hide nothing.

Makes you wonder why the Alberta Securities Commission would hire fast talking lawyers to avoid having a peek into how they run their office. After all, it is the government approved and appointed auditor that is legally charged with this responsibility.

Lets let them take a look under the hood and see if any parts are indeed missing. She just ain't running right.

Assante client speaks to illegalities, while regulators turn a blind eye

Jocelyne Robidoux
9-2210 Walnut St.
Thunder Bay, Ontario
P7C 1L1 (807)623-0160
jocelyne_robidoux@yahoo.com

May 18, 2005



Mr. David Brown
Chairman, OSC
Suite 800, Box 55
20 Queen Street West
Toronto, Ontario M5H 3S8

Dear Mr. Brown:

I wish to express my sincere disgust with your department’s dismissal of serious allegations against Assante. Based on my experience with the Mutual Fund Dealers Association (“MFDA”) and its conflict of interest issues, and the fact that the Saskatchewan Financial Services Commission has limited resources, I’m assuming these regulators will not proceed further. I know that there exists overwhelming evidence against this company for its widespread practice of converting third party funds to its more profitable proprietary product. Did you comb through all those boxes of evidence? Did you question witnesses who also worked at Assante and were familiar with its practices? I didn’t think so. You conducted your investigation much like the Manitoba Securities Commission (“MSC”) handled my case in 2002.

I am a former Assante client who was a victim of the company’s fund conversion, in my situation without my consent which is illegal and yet appears to be ignored by regulators. I represented myself in a civil suit against my advisor and Assante through the Court of Queen’s Bench of Manitoba in 2003 after the MSC closed my file. I believe I was successful in proving my claims while the MSC seemed unable to find sufficient proof to charge Assante. My case also involved unregistered trades, confirmed by the Ontario Securities Commission (“OSC”) and again ignored by the MSC.

The trades in my case occurred at the same time as the trades in cases by the OSC, the Alberta Securities Commission (“ASC”) and the British Columbia Securities Commission against Assante/Summit Aurum, when the company was promoting and selling its in-house funds. The OSC settled with Assante in November 2003 for unregistered trading by over 152 advisors. No penalties were assessed. Were in-house funds involved? Were the trades authorized? What were the resulting client losses? If these issues were not investigated, is it fair to conclude that your department is negligent or incompetent or maybe more likely, that certain companies are immune
to legal action? Regulators appear to have unwritten agreements with their corporate cohorts to ignore complaints possibly to protect each others interests.
- 2 -


Despite a history of allegations from former advisors, journalists, investor advocates and
investors, Assante has never been severely disciplined. The apparent enforcement problems at
the OSC sound eerily similar to those reported by whistle-blowers at the ASC. A brave young man who was very aware of Assante’s tactics died trying to expose the truth. Shame on you for allowing his efforts and his death to be in vain. It’s not surprising that you once said, “We don’t give awards to whistle-blowers.” You treated this “truth-teller” much like you treated a Hollinger whistle-blower a few years ago. The OSC has a tendency to act when forced to do so by its American counterpart. Unfortunately, investors cannot rely on the U.S. Securities Exchange Commission to take action against Assante as it did with Hollinger.

I did not sign a gag order when I settled with Assante. I’m not done speaking out against Assante and our regulatory bodies who continue to allow corruption to grow in the Canadian financial markets. A foreign journalist once commented that, “the Canadian stock markets are the most manipulated and controlled in the civilized world and that the only reason any experienced foreign investor puts money into Canada is to launder it.” You people are doing more damage to our financial system by protecting instead of disciplining the perpetrators just as poor parents would foolishly let their children do as they please and make society pay for their unruly behavior. In his book, The Naked Investor, John Reynolds refers to a “highly respected academic” who described the OSC as “probably the most poorly governed securities regulator among those of the OECD… countries.”

The OSC announced in the Toronto Star on May 13, 2005 that it was encouraging consumers to report wrongdoing in the industry. I find it interesting and timely that the article was released within days of the OSC announcing an end to its Assante investigation. Please explain how you plan to prosecute corporate crooks based on tips from anonymous sources while you disregard cases with heaps of incriminating documents and testimony from credible witnesses who you never bother to contact during your so-called investigations.

The OSC mandate is to “provide protection to investors from unfair, improper and fraudulent practices.” Your department has not only failed to protect investors but has actually promoted “fraudulent practices.” In April 1999, the OSC approved Assante’s request to convert clients’ third party funds to its proprietary funds and then neglected to monitor and enforce compliance. If mass class action suits are ever filed by investors and huge losses are uncovered, who should be liable? What will the OSC’s defense be after shirking its responsibilities and ignoring repeated warnings of corruption at Assante. What if numerous “truth-tellers” finally come forward having been inspired by the ASC whistle-blowers? The OSC claims it “recognizes the importance of setting an example in the areas of transparency and effective governance.”

A fine example you turned out to be!

Very sincerely,


Jocelyne Robidoux
- 3 -


Cc: Mr. James McCarter Joanne Fallone
Office of the Auditor General of Ontario Manager, Case Assessment, OSC
20 Dundas Street West Suite 800, Box 55
Suite 1530, Box 105 20 Queen St. West
Toronto, Ontario M5G 2C2 Toronto, Ontario M5H 3S8

Hon. Gerry Phillips Michael Hornbrook
Chair, Ontario Management Board of Cabinet CBC Fifth Estate
12th Floor, Ferguson Block P.O. Box 500, Station A
77 Wellesley St. West Toronto, Ontario M5W 1E6
Toronto, Ontario M7A 1N3

Hon. Coulter Osborne Linda Leatherdale
Integrity Commissioner, Ontario Business Editor, Toronto Sun
Suite 1803 333 King Street East
415 Yonge Street Toronto, Ontario M5A 3X5
Toronto, Ontario M5B 2E7

Gerald Lafreniere, LL.B. Michael Watson
Clerk, Standing Senate Committee on Banking, Director, OSC
Trade & Commerce, Senate of Canada Suite 800, Box 55
40 Elgin Street, Room 1039 Chambers Building 20 Queen St. West
Ottawa, Ontario K1A 0A4 Toronto, Ontario M5H 3S8

Hon. Michael Bryant Larry Waite
Attorney General of Ontario CEO, MFDA
803 St. Clair Avenue W. 121 King Street West, Suite 1000
Toronto, Ontario M6C 1B9 Toronto, Ontario M5H 3T9

Douglas Brown David Wild
Director, MSC . Chairman, SFSC
1130-405 Broadway Avenue 6th Floor, 1919 Saskatchewan Drive
Winnipeg, Manitoba R3C 3L6 Regina, Saskatchewan S4P 3V7

Amanda Downs Joe Canavan
Investigator, OSC CEO, Assante Corporation
Suite 800, Box 55 320 Bay Street, Suite 1100
20 Queen St. West Toronto, Ontario M5H 4A6
Toronto, Ontario M5H 3S8