Further on the topic of investment industry rules of two basic types. Type one are rules intended to protect investment clients from harm. Type two are rules intended to protect investment firms from harm. I contend that some investment firms do a much better job of enforcing rules that are to their own benefit, while often ignoring rules that are to client benefit. Here is but one example.
Today, march 11, 2005, the Globe and Mail contained a story titled, "RBC's Blackberry-addicted feel withdrawal pangs". It described how a "new" RBC policy, driven by regulatory requirements to overse electronic communications was causing RBC to question employees use of blackberry devices. It seems employees could send or receive e-mails without them residing on the RBC computer servers and this is a no-no.
Is it a no-no because of client interests, or due to the interests of the firm? Here is one opinion. As a nearly twenty year veteran of the firm in question, my experience has been that there has always been a rule that all outside communications by employees must be monitored. The rule was often haphazardly enforced due to new technologies making it difficult to do so. Managers of each office simply cannot read and monitor each type of letter, e-mail or correspondence coming from each salesperson to thousands of clients, so the rule is often ignored. (the rule would typically be intended to protect clients from receiving false or misleading investment promises etc)
However, now that CIBC has discovered that ignoring these types of employee communications can be detrimental to the firm, others are jumping to attention and trying to enforce a rule that they have conveniently ignored for a decade or more. Ignored due in part because it was intended as a rule to protect clients and not of particular concern to the firm's interests. Now that the interests of the firm, and not just the customer, have been demonstrated by the CIBC case, things will just have to change. Big brother will have to step in and folow this one, rather than choose to ignore it. I am adding it to the list of several dozen industry rules that are either ignored or enforced on a daily basis, depending upon the benefits or the preferences of the firm. I wont bore you with all the details. I will save the extended list for a Senate Committee on Banking and Finance.
