(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.
