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GET YOUR MONEY BACK! Misconduct and malpractice. Investment industry "best and worst practices". Information to improve public protection. Expert witness services for industry and investors. Forensic investment analysis. • View topic - Royal Commission or Judicial Inquiry Case #1

Royal Commission or Judicial Inquiry Case #1

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Re: Royal Commission or Judicial Inquiry

Postby admin » Wed Jul 29, 2009 8:26 am

THE PERFECT CRIME
A HOW TO GUIDE
Written by Larry Elford, (former CFP, CIM, FCSI, Associate Portfolio Manager, retired)

I am about to tell you how to commit the perfect crime. A crime worth billions, and one in which no police become involved. Impossible you say. Sit back, relax, and let me tell you about my former career.............

You only have to promise to honor the “code of silence” by which all white collar criminals abide. Tell no one!

It begins like this. If you wish to rob a bank, you are subject to the criminal code of Canada, and that is a bad thing...............however, in order to make it the perfect crime, I have to change your line of thinking. I encourage you to stop momentarily, and turn the entire crime around. Imagine putting on a suit and joining the financial services industry. When a bank wishes to rob the public, there is no police force in the country that has figured out this “reversal robbery” that we have perfected in Canada. Now you are getting into an area where crime really does pay.

By now I probably do not have to convince you that far too many financial types are greedy enough to lie and steal from the public. The recent economic crisis has given us enough examples to convince the most trusting financial fan. And somehow our financial regulatory system has “fostered” this environment, has allowed it to happen.

The other shoe to drop, two shoes in fact, that I will ease you into over the course of this article is how our financial system is rigged to allow these abuses, without penalty. Lets start at the bottom of the economic food chain, with your local salesman or saleswoman selling investments and mutual funds. They we will slowly climb the ladder to learn how easy it is to commit the perfect crime against an entire economy.

There are about 130,000 registered “salespeople” in Canada (source Investment Industry Regulatory Organization of Canada, IIROC) with their three month securities course as the major educational requirement to start selling financial products by commission. They begin from day one with a major misdirection of the public. They earn the license that says “salesperson” on it, or at least it did every single day for the last thirty years until the securities commissions struck the word “salesperson” from their documents to hide this misrepresentation. They did this last month. July, 2009 to be precise. From now on you will be served by a guy with a three month correspondence course, who goes by the license category of “dealing representative”. Whatever that means. We still get to misdirect and misrepresent. We still win. You still lose.

They are trained as salespersons. Hired to sell, expected to sell or leave. In the business, the letter they get when their sales production is not high enough to satisfy the sales manager is called an “achieve or leave” letter. Client returns do not come into play, nor into measurement, it is an entirely sales and commission driven system. You are paid by an “eat what you kill” model based on commissions on transactions or fees based on your assets under administration. And yet the industry refers to it’s salespersons as advisors, trusted professionals, and advertises that “your interests come first”. “We are here to help you find the proper investment” would be a common industry promise. This is not what they deliver. For example:

According to the Investment Funds Institute of Canada, (IFIC) 80% of mutual funds sold in the past two decades or so, were sold using the highest commission paying class of funds, the DSC class. DSC stands for deferred sales charge, and it produces the biggest commission possible, in the quickest possible time, and a naturally resulting highest cost to the client. This violates the aspects of a professional advisor, the code of ethics of the entire industry, and the suitability requirements that each and every transaction must meet in this industry. The requirement to “minimize” the transaction costs to those people who you claim to “advise”, not maximize those costs. Clients have every right to ask for all their money back, but, as we shall see, this industry is self regulating, meaning we police ourselves, so they have no one to help them get their money back. We police ourselves, and you are out of luck.

The next trick of the trade, and most recent, for your local investment “salesperson” is the substitution of poorer performing and higher cost “house brand” mutual funds for independent funds. According to the Investment Funds Institute of Canada 92% of mutual fund sales in 2007 were made into something called “wrap” funds. These wrap funds include funds made up of other funds, proprietary, (house brand) funds and who knows what else. A “fund of funds” earns a fee upon fees, which is not good for you the investor. According to the Ontario Securities Commission Fair Dealing Model proposals, an investment firm earns from 12 to 26 times greater fee income when they sell you the “house brand” or the house “wrap” account. This is why you may have been sold proprietary funds, and not likely because your dealer has found a better way to manage funds than all the independent experts. They have just found a better way to get 2% more from your trust relationship. (Imagine if every doctor you visited had their own “house brand” pills to sell to you)

Double dipping, charging fees on top of commissions, or commissions on top of fee based accounts, also runs rampant by those investment types wanting to be named “vice presidents” at their firms. It is just another method of gaining or skimming an extra percentage or two in fees from the trusting client. I wont say that each and every salesperson out there is in this skimming mode, but the sales numbers paint a pretty ugly picture of an 80/20 balance of sales commissions coming before professional advice.

On to more tricks of the trade. Mutual fund fee abuse is a $25 billion dollar haircut each and every year in Canada, according to Keith Ambaschteer at the University of Toronto. Professor John Coffee of Columbia University adds that having 13 provincial and territorial securities commissions deducts another $10 billion from the Canadian economy each year. These two independent experts put us at $35 billion behind each year without even talking of specific investment examples. That is enough money to run my province of Alberta for an entire year.............money used simply to “feed” the greed and self interest of those running Canada’s financial system. Thanks guys, you are doing an amazing job.

Add in asset back commercial paper ($32 billion), junk bonds, limited partnerships, movie deals, MURBS, tax shelters, tainted income trusts, Nortel, Bre-x, YBM, Northshield, Portus, Crocus, and all the other so-called legal investments that I cannot even remember at my advanced age, and you have a perfect recipe for skimming more money from bad investment products and intentionally bad advice than the cost of each and every other crime in Canada.....combined. (Nortel alone was responsible for evaporating up to $366 Billion. You do the math on the rest)

According to Justice Canada, all the other crime in Canada is costing us in the neighborhood of $40 billion each year. I can come up with over $60 billion each year myself without resorting to much more than a napkin, but I am truly looking forward to Prof P. Puri’s upcoming study of the amount of damages due to white collar crime in Canada. Prof Puri is an associate law professor who teaches about white-collar crime at Osgoode Hall Law School at the University of Toronto and publishes insightful reports on the nature of the financial system in Canada. Reports you should read.

The police, where are they while this is going on? Prof Puri has a study on this as well, and she concludes that the crooks are rich and powerful and well funded, while the police are outgunned in all aspects. But you should read it yourself.

I have learned that the police tend to concern themselves with the criminal code of Canada, and while fraud, negligence, breach of trust, etc fall under this code, they have been sold a nice package of goods to ignore this code in most financial cases. Those instances are usually when these crimes occur within the financial industry in Canada. Why? Because the financial industry (those cunning, manipulative, wealthy power brokers who we now know are not to be trusted) have set up something called a “self-regulatory system. They have set it up, funded it, staffed it. Here is the secret foundation of the perfect crime. “Own or control the entire investigation system.” In fact, the financial industry pays the salaries and costs of even our crown agency, the provincial securities commissions, through fees paid to them. They have their own act called the securities act. They police it, they enforce it. The trouble is that they enforce it to their advantage, and not in a manner fair to the public. If there are three parties living in this financial relationship, one being the financial dealers, two being the regulators, and three being the public, two of them are sleeping together and one is alone, in the basement, in the dark. Scared. Enough about me. I am talking about the public. While the regulators (securites commissions, and self regulators) are making passionate love to the financial industry, or vice versa, the public is simply being screwed and ignored. Not possible you say? Are we not a highly civilized, developed country? Let me tell you more.

Canada is the only developed country in the world that does not have a national securities regulator. Instead we have 13 provincial regulators in an economy the same size as Texas. I have always said that each of these territorial commissions act a lot like every bad sheriff in every bad Smokey and the Bandit movie I have seen. Acting and behaving as if they are above the law. They just keep proving it year after year. Each of these securities commissions is supported by fees paid to them by the financial industry. They purport to serve two opposite interests, one being to protect the public at large, and two being the smooth functioning of the financial industry. I can attest that after thirty years of study, they are skipping the first, and serving the second. This is where the money comes from.

For one example, on each securities commission complaint intake process, is an instruction that they will not deal with a member of the public, unless they have first gone to the industry sponsored “self regulatory” body, which is often just a trade and lobby group for the industry. So we have a crown corporation, refusing to serve the public, and instead sending them with complaint to the very association of whom they are complaining about. (mutual fund or investment dealers) It is a bit like sending an abused child to go and complain the the very persons he or she was abused by. It does not work for the victim but it works perfectly for the abuser. We win, the public loses again.

The investment dealers association (IDA) (one of our industry trade bodies that posed as a regulator) split itself in two parts a few years back to place better optics on the fact that they were a trade and lobby group pretending to be a regulator.

Thirteen provincial and territorial securities commissions defer statutory obligations away from themselves (who are charged with handling them) and to these self regulatory agencies, who cannot even claim to know what job they are supposed to be doing.

For example, here is what the Ontario Securities Commission says to a customer with a complaint:

“The OSC has recognized the Investment Dealers Association ("IDA") as a self regulatory organization (1995, 18 O.S.C.B. 5293). As such, the IDA has the authority and the jurisdiction over its members to enforce Ontario securities law as well as IDA rules, regulations and by-laws.” (These days they defer to IIROC, a newer version of the IDA, or MFDA (Mutual Fund Dealers Association)

“As there are no provisions to circumvent this process, the OSC is unable to consider your request for a regulatory review of your matter.” This from a letter to an abused investor dated Aug 25, 2004. They give a similar answer today, as does each of the thirteen provincial and territorial securities commissions, despite them being the statutory body charged with this duty. They brush it off.

Here is what the IDA (what todays Industry body used to call itself) claimed in 1998:

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

Here is what the IDA’s Paul Bourke said to the Financial Post in 2004:

"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." Nov 3, 2004


"The IDA is a private organization and can set its own rules."
Financial Post May 9, 1999.
"...the IDA is not an arm of the government.  We are not acting as an agency or a delegate of the securities commission."
This from former IDA legal counsel Brian Awad
National Post Newspaper titled “IDA called on constitutional grounds”

It appears that the relationship between the provincial securities commissions and those self regulatory agencies employed by the Investment dealers and also by the mutual fund dealers is a very confused and troubled, but incestuous one. They are in bed together, and the stories of the affair do not match each others version.

Need more convincing that the provincial regulator may be bought and paid for?

From Alberta Auditor General report
“ASC is the industry-funded organization responsible for overseeing the capital
market in Alberta. It administers the Alberta Securities Act, the Securities
Regulation and Securities Commission Rules.”
source
Report of the Auditor General on the Alberta Securities Commission’s Enforcement
System

The Alberta Securities Commission collected some $24 million in fees in 2009, (source Alberta Securities Commission 2009 annual report) some of those fees no doubt came from the unique and interesting practice of selling exemptions to the law as described above, our Securities Act. Did you read that correctly? I will repeat it just in case you missed it. They collect money for giving financial firms “hallway passes” to skip out of having to follow our provincial laws! There are several thousand investments and investment companies who have paid money to your government protective commission, and purchased permission to violate the laws. This list can be found at any securities commission in the country by searching the word “exemption”. How would you feel if your Food Inspection Agency were knowingly allowing tainted and defective food to be sold? How would you feel if your Health Agencies were earning “fee income” from granting drug companies the right to spread infection? Your provincial securities “regulator” is doing something very much like this, and has done so several thousand times without so much as a peep of honest and transparent disclosure. This is not honest services and if looked at carefully, it may not even be legal.
This is the second shoe I told you I was going to drop on you, earlier on in the article. The second conspirator in being able to commit the perfect “reverse” bank robbery.

Need a very specific example or two?

The Alberta Securities Commission granted “approximately twenty investment firms” (Source, Alberta Finance and Enterprise) the right, for a fee, to sell tainted and toxic subprime mortgage investments, called Asset Backed Commercial Paper. Honest disclosure would call them Liability Backed Commercial paper but that shows just how easily the securities commission can be fooled into subservient compliance to the finance industry. There was no public debate on whether laws should be violated for these particular companies, nor for these particular investments. This was done behind closed doors. There was no public notice given that certain investments were being sold into our economy while not meeting our laws........or did they meet our laws once a legal exemption has been purchased? Or were they illegal investments that had somehow been made “legal” on paper, but not in actual substance? It matters not, they are your problem, not ours. What matters is that the crime is perfect if you have bought a pass to make that which was illegal, legal. You cannot lose.

They are $32 million worth of a problem for the City of Lethbridge. They are $18 million worth of a problem to the University of Calgary who were probably told by an investment person, that these were top rated, safe investments. I suppose the legal exemption needing to be met because they were precisely the opposite of top rated and safe, was forgotten in the zeal to make an $18 million dollar sale. Understandable in light of the excitement. Can you imagine what a used car salesman would tell you in order to make an $18 million dollar sale? Now apply that to a guy with a 90 day securities course and you pretty much have the picture.

The Alberta Treasury Branches were in a position of failure by having placed nearly half (47%) of each and every dollar of deposit that they held into these toxic investments. Source Report of the Auditor General of Alberta,  www.oag.ab.ca/files/oag/Oct_2008_Report.pdf The irony here is that Iris Evans is the Finance Minister in charge of the ATB, which nearly failed under her watch, by being infected with toxic investments which were allowed by the ASC, another agency under her watch.

Our economy was infected with a known toxic product, which the financial firms in Canada wanted to dump, knowing that they were not up to par? Securities Commissions are and have been “hesitant” to investigate this crime due to their part in approving the stuff. They are starting to come around, now due to a public awareness campaign by a small group of investor advocates. How am I so sure they knew in advance they were crap? Because they had to apply for an exemption to our securities laws in order to sell them. They had to put in writing the exact shortcomings of these investments. They had to file an application to exempt, which in itself is an admission that these products did not meet the law.
Why did the securities commission grant this permission to sell crap into our economic food chain. Here is the exact wording which grants the decision to grant them this permission from thirteen provincial and territorial securities commissions:

“Each of the decision makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met”.

In other words “we have no freaking clue what we are doing but our salaries (at the securites commission) are approaching $200,000 and we will go along with whatever we are told to do by the people that pay these great salaries”. (authors interpretation)

The Saskatchewan Financial Services Commission even has a booklet on their web site called “How to Raise Capital Using Exemptions”. It indicates how to approach and work with the SFSC to assist in selling securities in Sask that need a little help going around the law.

I could dwell on this a bit further, and may come back to it, but I have to digress just a little to further look into a favorite word at the securities commission. “Decision”.

In the case of retired Calgary firefighter Gordon Simpson, who had a bad experience with his investment dealer, and made a complaint to the Securities Commission. He was told by this crown agency to go elsewhere, that he had to take his complaint instead to the industry sponsored investment dealers association. An industry trade body that we have already looked at and the supreme court of Canada has decided that this trade body “does not owe a duty of care to the public. Only to their own members. Of course Mr. Simpson’s case was dismissed by the IDA, as most often happens when you take any complaint to the very association of members of which you are complaining. He appealed this “decision” by the IDA. Guess what? His appeal was denied. They would not even hear his appeal. There were two strange reasons given. One is that the IDA has their own special meaning for the word “decision”, (like Bill Clinton does for sexual relations) and they say this to Mr. Simpson, “a refusal to carry on with investigating a complaint was not actually a “decision” and therefore could not be appealed”.
In further argument, they say further that “Therefore, not every decision meets the definition of “decision” for the purposes of the Act.”

In case that logic was not bulletproof enough, they had a backup reason to go with. Another reason given for not allowing Mr Simpson to appeal the brush off decision was that Mr. Simpson was “not a party directly affected by the decision” not to pursue his case and therefore he was not allowed to appeal. This is the second time I have heard the investment dealers association pull this excuse out of imaginary lawyer land......they gave the same foolish logic to a Mr. Jim Roache of Ottawa when his case also was dismissed out of hand. Mr Roache is quoted as having said, “if I was not a person directly affected by this, who the hell was? It was my savings, my retirement, my failed marriage.......” The Investment Dealers association was unable to grasp this simple logic (something about $200,000 salaries) and they were unable to answer Mr. Roache.

Where was I, now that I have gotten the “decision” thing off my chest? Oh, we have covered how the securities commission appears to be doing a one sided job of refereeing the relationship between the public and the investment dealers. We have confirmed that this referee is indeed paid by the investment dealer side of the relationship, and that they (securities commission) refuses to deal directly with the public. They will, however take money from, and deal directly with any industry player who wishes to violate the laws and place the public at harm. Thanks. You guys are awesome!

Where do we go from here? Need a few more examples? A few hundred more? How about several thousand? What will it take? I have submitted documents into the legislatures of several provinces and into Ottawa, with two “poster child” cases of knowingly abusing the public trust with legal exemptions, and with a failure by the Alberta Finance minister (and the Finance Minister before her) to rein in this abusive behavior. I have requested a provincial inquiry under the provincial inquiries act, but that would mean that the Alberta government would have to investigate themselves. What odds do you give that the Alberta government is honest enough, and transparent enough to look into its own participation in doing billions of dollars of damage to Albertans and to our economy? How about the other 13 governments involved? Any bets?

I am getting ahead of myself. I was still focused on the securities commission in Alberta, fighting for their very lives (salaries) against the threat of a national securities commission. What would they possibly do to earn salaries as high as $700,000, if their jobs were taken away. Who would print all the paper? Who would do the job of not protecting the public, while strenuously claiming to protect the public?

These agencies will tell you that they have changed, that they have seen the light and they are new and improved. Each year and each scandal they tell us that. Certainly they have changed some names, some have even changed the name of the organization (The Investment Dealers Association having split it’s lobby group apart from the regulatory side, The Investment Industry Regulatory Organization Of Canada IIROC). Perhaps some of this change is true. It is my belief that these organizations are not coming clean, not admitting wrong in any case, and simply making optical moves to appear clean. They continue every day to violate the public trust and sell off the public interest in favor of their own interests. It is your financial future at stake. Your economic health. Are you willing to place it entirely at risk to foxes and lawyers who pay themselves hundreds of thousands to do things like this?

A few years back the Alberta Auditor General was trying to do an audit of the Alberta Securities Commission. There were allegations of two tier treatment, one for the rich and powerful, and another for the rest. There were ASC employees who were attempting to come forward to tell of this. There were stories of blow up sex dolls in the ASC office, and an atmosphere that was simply inappropriate. Did the ASC submit willingly, as does a group that has nothing to hide? No. They paid about $1.2 million in legal fees to challenge the right of the auditor to audit this crown agency. After a lengthy debate, the auditor was finally allowed to do his job, and he found a systemic failure to follow practices and procedures of any kind in too many cases. They failed. To add insult to injury, they fired a few of the very people who were trying to help the public interest and tell the truth about the commission. Those people violated the industry code of silence, which says that your loyalty to your employer must always take priority over your loyalty to the public interest. No leaks. No losses.


The top person at the ASC earned in excess of $700,000 last year. (source 2009 annual report of ASC). At the Ontario Securities Commission there were at one time some 90 employees who EACH were earning more that the very top man at the SEC in the US. These salaries paid by the very industry that they are purporting to regulate. In my opinion and experience they are paid this much to say “yes” to the industry. Is it impossible to imagine that this government regulator would become overly influenced and biased by this lucrative arrangement? At the very least it does not follow a process of best practices.
“With 90 OSC employees making more than the chairman of the SEC, it’s time to look at the Ontario securities regulator’s performance and accountability
Its chair and just one of its vice-chairs together make more than all five members of the U.S. Securities and Exchange Commission combined, including SEC chairman Christopher Cox” http://finlayongovernance.com/


Studies of the enforcement activities of US and Canadian securities regulators and police tell us that the USA did over 600 times more prosecutions than done in Canada during the same time period. Source Canadian Business Magazine Editorial Board, Aug 2007. For the time period 2002 to 2007.

Financial penalties are 10 times higher in the United States than the average Canadian fine. Source Prof P. Puri, Osgood Law School of Canada.

In the US fraudster Bernie Madoff was found guilty and in jail within 6 months. Jailed for 150 years. In Canada, by contrast, Livent Inc. founders fraud trial took the Canadian system eleven years. Six months verses eleven years. Conrad Black had to be prosecuted in the US despite his Canadian background and business interests.

When a broker is fined in Canada by the Investment Dealers self regulatory body (IDA, IIROC, whatever comes next) you will be surprised to learn that the dealership body keeps the money. That is correct, they keep it for themselves. The victims get nothing. I suppose it helps pay their salaries. While at the Ontario Securities Commission, the vice chair Susan Wolbergh Jenah earned $446,000 according to OSC filings. Here she signed exemption orders allowing toxic investment paper to violate securities laws and be sold, which we have talked about earlier. She then jumped ship, and moved to the investment industry self regulator, earning some $700,000. In this capacity she then made the announcement that most investment dealers did not understand this toxic investment paper that they were selling (headlines Oct 2008 lethbridge herald and national). It is ironic that she herself signed the paper allowing these products to be sold in Canada, and then with a doubling of her salary, she then learns that this product she exempted was not understood. It makes me wonder if we double her salary again, to $1.5 mil, what would she then say? I makes me wonder how much money it would take for a public officer to do the job of protecting the public and ignore for a moment the focus on simply protecting ones job. It is also ironic, that I find that the more a person is paid, the greater the likelihood that they will instead act to protect their own livelihood. Strange beast this capitalism that I have worshiped for so long. Time for me to grow up, and move beyond the sandbox mentality that only knows three words, “me, mine, more”.

Where was I? Yes, we were looking at how new and improved these regulatory agencies and self regulators are, and how proactive they are at keeping ahead of the white collar crime curve. Compared to Europe, Australia, and USA, they are at least ten to twenty years late and a few billions short. But hey, the good news is that they are earning a good salary to protect us from crooks.
Where are the regular police agencies when fraud, forgery, negligence, breach of trust and other occur? They are busy with the criminal code, and not very involved with our securities act. They too, are believers that the securities people have things under control. Needless to say, the securities people take care of their own, and rarely even refer criminal offenses to the real police. The RCMP has had a few of these regulators and self regulators join the force, (while keeping their six figure salaries) as volunteers, so some of these financial people have actually infiltrated the RCMP commercial crime unit. This quote from a senior RCMP investigator when asked

“Unless the matters you are concerned about are referred to the RCMP IMET through one of our participating agencies (OSC, IDA, MFDA,MRS) it will not be considered for investigation.”

Source:
Supt. Craig S. Hannaford
Officer in Charge
GTA Integrated Market Enforcement Team
Royal Canadian Mounted Police

Are you beginning to see how “perfect” this system is for getting away with anything?
Remember, shhhhhh. Code of silence.
These investment regulators have truly infected our entire system. They have taken over. I have spoken to many financial victims who have gone a few years trying to solve their financial abuse, and they agree it is almost similar to a hypothetical situation: imagine your local police agency decided to lower their work load, and they “designate” the Hells angels as the “self regulatory” body capable of policing all cocaine and prostitution offenses. After all they are the largest market participant. That would be a very logical “decision” according to some of the self regulators I know of. Then when you have suffered a crime by any drug user, and you go to the police, they would say something like the ASC does, “we have recognized the Hells angels as the regulatory body in this area, and thus we are unable to process your complaint and we ask that you contact the Hells Angels in this matter.............” Off you would go, to try and have your problem resolved by the self regulator. If they get your money, or your property back from the druggie that stole from you, do you think the Hells angels would keep it?
The investment dealers do.

Top industry experts across Canada are calling for a national Securities Crime unit. The RCMP is truly incapable of doing the job. In 200? They were on record of having a full caseload with only 8 cases. By 2007 they had only one prosecution in canada while during the same period the us authorities had over 1200. This national securities crime unit would include investment experts, and might be expected to owe a loyalty only to the public, and not to the very criminals they are investigating. They would certainly not be allowed to be paid by those they are investigating, as is today’s system. A proceeds of crime funded agency could operate with very little public cost. The sooner we get started towards “best practices”, the sooner the stealing of your economic efforts will begin to slow.

We have looked at the crooks, the cunning and clever financial manipulators who manage to steal about half of the economic production of the entire financial system and investment returns the average man is hoping to live and retire on. We have looked above them to the self regulators who are hired and paid by these very people. We have gone up a level to the government regulators who we find, amazingly are also funded by the industry. The only area left untouched in this expose is the role of Purdy Crawford, a private industry lawyer, and why he became the head of the $32 billion dollar restructuring plan, with no government regulators in sight. Another day. Another story.

Where does the buck stop? With your finance department or attorney general who is usually in charge of each provincial securities commission? I have asked Iris Evans of Alberta Finance, in addition to the ASC, for years now, to answer a few questions, if they can, for the benefit of a confused public:

In what public interest are the legal exemptions that were granted to the “twenty” firms selling ABCP , and to mutual fund companies, who applied for and received a legal exemption to “rebate” or “kickback” commissions while they worked diligently to switch clients from independent mutual funds to their own house brand. Two simple case studies out of thousands of legal examples of breaking our laws. These two deserve a public inquiry. I wont say trust me because that saying is usually reserved for people who are NOT to be trusted, but believe me if you will, there are two case studies that will shock and amaze you. What public interest is served by exempting the laws Mrs finance Minister?
What public input or debate was allowed (or why not) into these permissions to violate our laws prior to them being granted?
What public notice was given (or why not) to those people or organizations to warn them prior to purchase
Where is the public inquiry into these matters? Where is the honest disclosure and transparency, or will we have to take your word that everything is fine?
Can you please protect the public in these matters, or will we continue to see protection of the possible crimes, the regulators and politicians in these matters?

So far our finance minister in Alberta (and every other province in the country) cannot answer these simple questions.


Not even Las Vegas lets people count the money unsupervised. Canadians, wake up. This country is your casino. Each person in this country owns a slice of ownership of this great economy of ours, good, bad or otherwise. If it fails, you fail. If it suffers, you suffer. And we are allowing clever, powerful folks to count the money unsupervised. I am here to tell you that they are putting as much as they possibly can in their pockets. It is documented. It is part of the public record. It is something that they can and will refuse to investigate. They win, we all lose.

Get financial minds out of the game of pretending to police themselves.
Or, if your tastes run to riches without morals, get yourself a suit and tie, and commit your crimes within the jurisdiction of the Securities Act of any province. The police will never even know about it. The Criminal code of Canada is for pickpockets and small change artists. The real money is made within the securities game. We own each and every referee in the game.

At the beginning of this article I asked the question.
If I wish to rob a bank, I am subject to the criminal code of Canada.........but if a bank wants to rob the public, what are they subject to?
Answer?
Nothing. No police will come. No commission will raise an eyebrow. No regulator exists in Canada that is not paid by those very banks and financial companies. No self regulator exists that does not represent the interests of its members over the interests of the public.
That is my experience. I have twenty years inside the industry, and nearly thirty now studying it from within and without.

Tell your provincial MLA to conduct a public inquiry into the two case studies, as well as the thousands of other times our laws have been hijacked. Your very economic health depends upon it.
Case study # 1 is titled “Commission kickbacks lead to an $800 million dollar windfall”
Case study #2 is titled “How to steal $32 billion dollars and not get caught”


Larry Elford is a former financial broker, and former CFP, CIM, FCSI, Associate Portfolio Manager, now retired, who left the industry after being unable to associate with the corruption involved. He documents what he experienced at www.breachoftrust.ca and counsels victims of financial abuse free of charge through www.investoradvocates.ca


The 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.

The 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.

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

(last three from the book "DARK AGE AHEAD", by Jane Jacobs
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Re: Royal Commission or Judicial Inquiry

Postby admin » Tue May 12, 2009 9:18 am

regarding case study #1 for public inquiry, as example of how to use (or misuse) the legal system to assist in financial, legal and corporate abuse of another individual I post this info on Anton Piller orders. It is relevant in case #1 since a badly flawed and abusive Anton Piller order is on the record and was used to do serious damage to a person central to the truth coming out.

How is an Anton Piller order obtained?

In order to obtain an Anton Piller order, the plaintiff must meet three tests. These are:

1 there must be an extremely strong prima facie case against the defendant

2 the potential or actual damage to the plaintiff resulting from the defendant's alleged wrongdoing must be very serious, and

3 there must be clear evidence that the defendants have incriminating documents or things in their possession, and there is a real possibility that they may destroy such material if they were to become aware of the plaintiff's application.

Because the defendant is not in court to argue against the granting of the order, the plaintiff has a duty to make full and frank disclosure of all facts that could be taken into account by the judge in deciding the matter. This includes identifying any likely defences. They must disclose all known material facts or facts that would have been discovered by proper enquiries.

If the order is granted, the plaintiff will undertake to serve the papers that were relied upon in court on the defendant so that they will know the case against them. They must also undertake to compensate the defendant and third parties for any loss that they might suffer by reason of the order having been made, if the court later decides that this should occur.
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Re: Royal Commission or Judicial Inquiry

Postby admin » Thu Mar 26, 2009 8:01 am

Relating to executive bonus’s, taxpayer bailouts, hidden deals, ...................................from the pockets of Alberta taxpayers.

I noticed with interest that our auditor general reports that Alberta Treasury Branch executives violated corporate rules and paid executive bonus’s despite losing 1/4 billion of ATB deposits on toxic investments. At one time these executives had placed 47% of all ATB deposit into toxic investments. Like my own City of Lethbridge and University of Calgary, we are now forced to wait up to nine years to see if we get any money back at on these investments. These bonus payments are a direct cost to the Alberta public, who own 100% of the Treasury Branch.

Source: Report of the Auditor General of Alberta
http://www.oag.ab.ca/files/oag/Oct_2008_Report.pdf

I cringed when I recalled that Alberta taxpayers guarantee 100% of the deposits on all ATB deposits. We may yet have to pay a second time as a result of this failed investment paper? No one knows and only time will tell.

But when I read the report of the auditor general, saying that funds and additional loans had to be provided to the ATB to support the loss from these toxic investments, I realized that Alberta taxpayers have already paid a second time for the additional funds needed to keep this bank solvent. Solvency needed after the investment managers placed nearly half the deposit funds into toxic investments.

The Alberta taxpayer has now paid a third time, when one considers that a joint federal/provincial bailout package was required in order to fund repayment to some clients who held investments in the toxic product. Clients who held less than $1 million of the bad paper, were given a full refund to help facilitate a restructuring.

When I received a recent letter from Finance Minister Iris Evans department admitting that our Alberta Securities Commission approved of permissions to “approximately 20 issuers of financial paper”, to sell this known toxic product to our Alberta citizens and institutions, I realized that all Albertans had been sold out by our own securities regulators, and by our Finance Minister. She found there to be nothing wrong, and nothing worthy of inquiry.

Alberta Finance letter posted at http://web.me.com/lelford/breachoftrust.ca/Blog

I trust that Alberta Premier Ed Stelmach will salvage this situation by convening a public inquiry under the Provincial Inquiries Act, into the actions and possible negligence involved inside our own protective financial agencies.

Larry Elford
Founder and director
www.investoradvocates.ca
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Re: Royal Commission or Judicial Inquiry

Postby admin » Thu Feb 12, 2009 10:27 am

This article refers to Anton Piller orders, one of which was used to assist in bullying and intimidating an industry whistleblower to his death. The Anton Piller order was used in such a manner as to ensure a win for the lawyer and his predatory client, and a death for the poor individual who was trying to point out fraud. Score: Millionaire fraudsters one, truthteller's zero.

Canada: The Civil Sheriff Comes Knocking On The Door — Anton Piller Orders
16 July 2008
Article by James Farley
Often cited as the most draconian of civil procedural remedies, the Anton Piller (AP) order is poorly understood by both the public and the litigating bar generally. The recent case of Nac Air, LP v. Wasaya Airways Ltd., 2007 CanLII 51168 (ON S.C.) demonstrates that this lack of appreciation for the underpinning principles of the AP order may also extend to the judiciary.

To be fair to all three sectors named, the AP order, which has been described by the Supreme Court of Canada (SCC) in Celanese Canada Inc. v. Murray Demolition Corp., [2006] 2 S.C.R. 189 as a "private search warrant," is not something one encounters every day. However, if one is on either end of such a drastic order, then it is extremely important to note just what terms, limits and conditions should prevail in the application for, granting of and execution of such an order.

The NAC case is somewhat reminiscent of the Air Canada-WestJet internal website access and garbage pickup dispute. NAC apparently had been required to file fare changes with a federal department, Health Canada. It was alleged that every time it did so, a competitor, Wasaya, immediately countered with its own change. Health Canada denied any leak on its part. NAC proceeded to obtain an AP order in the usual "without notice" way.

The nature of an AP order is that it compels the defendant to consent to a search team entering its premises to effect a review of material so that evidence for a civil suit may be preserved. Failure to consent places the target of the search at risk of contempt of court if the AP order is ignored. The target therefore has a "Hobson's Choice," i.e., a choice between taking the only option offered or not taking it. Needless to say, neither choice is particularly palatable.

The Celanese case provided that four essential conditions must exist for making an AP order:

First, the plaintiff must demonstrate a strong prima facie case.

Second, the damage to the plaintiff caused by the defendant's alleged misconduct — potential or actual — must be very serious.

Third, there must be convincing evidence that the defendant has in its possession incriminating documents or things.

And fourth, it must be shown that there is a real possibility the defendant may destroy such material before the discovery process can do its work.

It is interesting to note that the case from which the AP order originated, Anton Piller KG v. Manufacturing Processes Ltd., [1976] 1 Ch. D. 55 (C.A.), provided that there be an extremely strong prima facie case, and this is what the reviewing judge in NAC set as the test. However, that same judge required a probability of risk of destruction of material before discovery, not a real possibility as set out by the SCC.

The SCC helpfully pointed out various protections that should be incorporated in any AP order granted. These include:

In addition to the search team from the plaintiff's law firm, an independent outside lawyer should be appointed to supervise the execution of the order as an officer of the court. While such a process ideally should be conducted by independent outside lawyers, in practical terms, such an outside team would be at a "knowledge" disadvantage as to what was relevant to the case. An AP order is to be executed in an efficient and timely way. Thus practicality dictates that plaintiff's counsel may be involved, although it might be preferable to have the persons involved in the search team isolated behind a confidentiality wall from those who actually continue with the substance of the proceedings until such time as the documents would otherwise be ordinarily produced in the discovery process. This is because the intention of the AP order is to preserve evidence — not to allow a plaintiff to get a jump on the defendant in the discovery process.

An exception to the prohibition against immediate use of information obtained in the seizure is in the area of counterfeiting or piracy, where it has been found to be appropriate to give a "rolling" AP order vertically to suppliers and customers of the defendant — so as to trace up and down the supply chain those who may be involved in the alleged wrongdoing.

The scope of the order should be no wider than necessary. In NAC, 800,000 documents were seized. The reviewing judge found that some of these should not have been seized, including the computer records of the wife of the owner of Wasaya and Wasaya material that pre-dated any alleged problem. Further, many documents proved irrelevant to the litigation and contained a great deal of information that could possibly have given the plaintiff a competitive advantage over the defendant.

However, what is not appreciated in either NAC or Celanese is that if the AP order is to be efficiently executed, then unless a defendant wishes its premises to be tied up for months to do a minute scrutiny review, the reasonable tendency is to over-include. Is this a real problem? Not if one remembers the purpose of an AP order being to preserve evidence. Certainly the plaintiff itself should not have access to the seized material, and it would be desirable that there be an undertaking by searching counsel not to discuss the contents of what was seized with the plaintiff client. Computer records are probably the easiest to deal with as an electronic copy may be made and placed in safekeeping. Copying paper documents would be considerably more time-consuming. The winnowing down of these documents may be facilitated by a discussion between plaintiff's and defendant's counsel.

The supervising lawyer should ensure that material that is potentially the subject of solicitor-client privilege is sealed until this issue can be resolved. This points out the importance of the search team not discussing what was searched.
The AP order should limit the use to which the materials seized may be put. This again illustrates that the purpose of an AP order is to preserve evidence — subject to the rolling exception with respect to counterfeiting and piracy cases.

The material seized should be returned to the defendant as soon as possible. This may be accomplished by a proper indexing of the seized material, with the index being kept in safekeeping, and a copy given to defence counsel (or a copy of the electronic material to that counsel). Defence counsel and the defendant would know that if the proper discovery disclosure was not made, this could be checked against the electronic material or index in safekeeping.

Celanese provided for additional items regarding the execution of the search and subsequent to the search that were not an issue in NAC. These include:

the normal requirement for the plaintiff to give an undertaking to pay damages in the event that the AP order turns out to be wrongfully executed or unwarranted, keeping in mind the ex parte requirement of full and frank disclosure includes possible defences, objections or requirements of the target who is not there on the original hearing to make these points — but that lack of disclosure of immaterial points will not diminish an AP order on review (see Bell ExpressVu Limited Partnership v. EchoStar Satellite LLC, 2008 Can LII 12837 (ON S.C.) relying on Ontario Realty Corp v. P. Gabriele & Sons Ltd., [2000] O.J. No. 4341);

provision of a short wait time to allow the target to consult counsel;

a clause to allow the target to return to court on short notice;

arrangements for the search to be conducted during normal business hours;

provision that the premises not be searched except when a responsible person of the target is present;

provision that the search team be limited in number and identified;

provision that the order be explained in plain language before the search begins;

arrangements for a detailed list of the evidence seized to be made, and for the supervising solicitor to providing this list to the defendant for verification before materials are removed (alternatively, if this is not practicable, the document should be placed in the custody of the supervising solicitor and the target's counsel given the reasonable opportunity to review or make safekeeping arrangements for disputed ownership materials;

recognition that the supervising solicitor's obligations continue beyond the search to all matters arising out of the search;

a requirement that the supervising solicitor file a timely report with the court regarding the execution; and

likely a provision for an automatic court review of the execution on a short, timely basis.

However, it is perhaps troubling that the SCC assumes, without discussion, that the plaintiff will have a direct and immediate access to uncontested material seized subject to the counterfeiting and piracy exception. This ignores that the purpose of an AP order should be to merely preserve evidence.

In NAC, the AP order was voided on review and costs will ensue against the plaintiff. The reviewing judge was impressed by the fact that there was no allegation of intentional destruction of computer records, but rather the concern that these records would deteriorate with overwriting in the normal course (this problem would be solved by the provision of the electronic copy to be preserved). Also there was concern that the plaintiff had not sought the order as early as March 2007, but had waited until November. But why should this matter in the circumstances? One might easily criticize the plaintiff for leaping without looking if it rushed into court.

We have discussed the issue of a real possibility of destruction versus the NAC reviewing judge requiring a probability of destruction. However, it should be noted that in an AP situation, it is necessary to show some element of wrongdoing in the character of the defendant (or its controlling persons). Evidently, the strange coincidence of a contemporaneous change of fares did not provide this implication; something more is needed. As discussed in Ontario Realty Corp., the real possibility of destruction or suppression of records may be supported by some character flaw of wrongdoing of the deceitful nature, not necessarily linked to the case at hand; however, it is not necessary to show a past record of destroying or suppressing evidence or a previous judicial finding of fraud or deceit.

The NAC decision observed that even if the requisite degree of risk of destruction were shown, it would be "unlikely the court could fashion an order to protect from disclosure documents seized that are confidential or subject to solicitor-client privilege, or simply irrelevant to the issues between the parties." However, if the points discussed above were employed, it would seem that that could be achieved. Fortunately, in NAC, the reviewing judge did order all parties "to preserve documents relevant to the issues in this litigation and to produce such documents as may be required in accordance with the Rules of Civil Procedure." One would think that defence counsel and the defendant would be alerted to the necessity to ensure that proper discovery ensued.

The judge in Bell ExpressVu was fairly pragmatic in his review role and did not find that the various fairly inconsequential complaints of the target merited an overturning of the AP order in the particular circumstances of that case. This approach would seem to be the reasonable way of dealing with a review.

The lesson to be learned: it is better to be the applicant for than the target of an AP order — but the applicant must be careful to ensure that it makes full and frank disclosure to the court, that the proposed order provides all the appropriate safeguards, and that the AP order is properly executed. It should also be noted that the Commercial List Users' Committee is working on a model template for AP orders (which may be adjusted, with blacklining to note the changes, to meet the circumstances of the particular case). This template will likely go a long way toward regularizing this sector of the legal "Wild, Wild West."
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Re: Royal Commission or Judicial Inquiry

Postby admin » Sat Jan 17, 2009 10:58 pm

Jan 17, 2009

To: Premier Ed Stelmach,

In a Jan 15th Globe and Mail newspaper article by Kevin Carmichael of Ottawa, you were quoted as saying that there has not been a scandal in the Canadian markets that would justify having government focus its energy on overhauling the securities system instead of the economy.

The Alberta Securities Commission (ASC) has knowingly allowed tainted investments to be sold in Alberta. Investments that did not meet our securities laws. Iris Evan’s department has admitted that there were 22 exemptions to our laws to facilitate the sale of ABCP and short term commercial paper. This has hurt our economy.

1. These legal exemptions were done with the help of our very own crown corporation, the ASC, which calls into question the public interest value of this agency.

2. They were done in secret, which is why you may not be aware of them. Back-room deals, done between investment firms and the ASC, for a fee. There was no public notice, nor public input into allowing our laws to be violated. The ASC and the investment firms have effectively hidden vital information from the public on investments which have ended up costing billions of dollars. A scandal, done in secret is still a scandal.

3. The total economic costs of financial frauds and crimes against Canadians is growing to somewhere between $50 billion and $100 billion per year due to a failed securities regulatory system. (source, BREACH OF TRUST) These numbers are equal to two or three times the budget for Alberta. It is an economic tsunami, and you must deal with it.

4. The economic costs of frauds, abuses and crimes like these, against Canadians is, according to government of Statistics Canada and Justice Canada, greater than the costs of each and every other crime in Canada. Imagine ignoring financial damage sufficient to equal every robbery, auto theft, property crime, murder, mugging, break and enter etc., etc.

I have submitted to your finance minister, Iris Evans, two (2) case studies recently, that clearly illustrate how the Alberta Securities Commission has aided in pulling the wool over the eyes of the public while damaging the public. Damaging our economy.

In the interests of full public discourse, I am asking you to open a provincial inquiry into these two case studies to show the public if there is any cause for concern. You will discover that there has been more than one scandal that justifies an overhaul of the securities system.

I thank you for your time and for your timely response to this matter on behalf of all Albertans.

Larry Elford (former CIM, CFP, FCSI, Associate Portfolio Manager, retired)
Executive Director of investoradvocates.ca
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Re: Royal Commission or Judicial Inquiry

Postby admin » Wed Dec 17, 2008 6:20 pm

TOXIC INVESTMENTS? TAINTED OVERSIGHT BODY? WHAT TO DO?

Open letter and questions for the Alberta Securities Commission, Alberta Finance Department and Finance Minister Iris Evans. December 15, 2008

This letter refers to Asset Backed Commercial Paper (ABCP) that has turned out to be very damaging to the public. These are substandard investments that were allowed into each province much like a shipment of tainted meat. They were allowed by the Alberta Securities Commission despite knowledge that they did not meet our laws.
It also refers to other tainted investment products and tainted investment advice that keep occurring without apparent regard for the public interest, too often assisted by the Alberta Securities Commission.

1. Now that the securities commission has been found to have “exempted” our laws so that tainted investments could be sold to the public, will your government convene a commission of inquiry under the Provincial Inquiries Act in order to determine what liability this poses to the government, and what possible public interest was served by granting these exemptions?

2. With literally thousands of permissions granted to investment firms, to violate our securities laws, is it perhaps time to revisit the functionality or the usefulness of our provincial securities commissions? Are they serving the public or are they captured by the industry?

View thousands of legal permissions to violate securities laws at www.osc.gov.on.ca in category of “orders, rulings, decisions.

3. What public interest is served by allowing full and open access to the provincial securities commissions to investment firms who wish to violate our laws and sell tainted products or advice, while an ordinary citizen is not allowed to deal with this same securities commission. An ordinary citizen is referred by the commission to instead go to self-regulatory agencies, which are shown to owe no duty of care to the public. Can your commission or your government tell the public why we have two tiers within our securities commissions, one to serve the industry when it wishes to break our laws, and the other which does not serve the public when our laws are broken?

4. Will the Finance Minister or the Securities Commission please inform the public as to why they give no public notice to investors when an investment is being given permission to violate our securities laws?

5. Will the government tell us what possible public interest is served by allowing investment firms to violate our securities laws? It is now apparent that the public is being damaged by billions and billions of dollars, by permissions to give commission kickbacks, permission to sell tainted investments, permission to do just about anything an investment firm might wish to do. Can we please now find out what public interest is served, now that it is apparent that your government might be financially and legally liable for those billions of damages?

6. Is the Finance Minister prepared to face class actions against the Alberta Government for allowing its financial regulator to play loose with the Alberta Securities Act for the benefit of friends inside the industry?

7. What action will it take?

8. Having given two case studies to Iris Evans months ago, which clearly demonstrate the damages to Albertans, will Mrs. Evans be choosing to answer the correspondence or will she continue to ignore?

The investment professionals at www.investoradvocates.ca as well as the investing public are interested in your responses to these questions. Please direct your responses to investoradvocate@shaw.ca.
The general public can sign petition on securities regulation at http://www.PetitionOnline.com/rgh963/
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Re: Royal Commission or Judicial Inquiry

Postby admin » Mon Dec 15, 2008 11:11 pm

go to this site and sign the online petition if you care at all about proper securities regulation in Canada

"Canadian National Securities Regulatory System "

hosted on the web by our free online petition service, at:

http://www.PetitionOnline.com/rgh963/

if we do not change the system we have, we will keep getting the crooked results we are getting.

Please take the time to make this effort, on behalf of each and every Canadian, your sons, daughters etc.

The investment industry has completely taken over the regulatory system (if that is not already obvious) and they are powerful enough to spend hundreds of millions of dollars to tell you that all is well, that nothing need change.

Please help to be the change Canada needs in the area of how your and my retirement is funded or stolen a few percent at a time.
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Re: Royal Commission or Judicial Inquiry

Postby admin » Wed Dec 10, 2008 10:58 pm

An Open Letter to Finance Minister Iris Evans,

Now that the Alberta Securities Commission (ASC) has allowed knowingly tainted investments to be sold in Alberta, investments that did not meet our securities laws, this action has apparently made the Alberta government liable for millions of dollars of investment losses.

The City of Lethbridge, University of Calgary, Alberta Treasury Branches, as well as hundreds of unsuspecting individual investors were sold this tainted product.
The insidious part is how the vendors and the ASC knew beforehand that the product did not meet our securities laws, and yet they worked together, behind closed doors, to the benefit of the vendors, and the detriment of the public. They made adjustments, amendments or exemptions to our laws to allow them to be sold to the public without warning.

Will your government act on allegations of dysfunction (or worse) at the Alberta Securities Commission by convening a public inquiry under the Provincial Inquiries Act? This would serve to reassure Alberta citizens that our financial regulatory system works for them. Or will we have another session where the Alberta government covers for the Securities Commission, which is covering for friends in the industry, which is covering crimes against the public………..? This is institutionalized crime at its best.

I have supplied your office with documents including two case studies where the securities commission aided and abetted the violation of our Securities Act to benefit investment firms. I am aware of thousands of similar circumstances, but the case studies I provided to you are the “poster child” examples of a broken regulatory system. I would like them to form the basis of a public inquiry. They contain examples of nearly all that can go wrong when a regulatory system appears to become bought or captured. They include millions upon millions of dollars in damages to your voters here in Alberta. Most of these damages the public may never find out about unless you take some action.

For the benefit of the public, here are some of the reasons to convene an inquiry and to take action to ensure our financial system is not captured or corrupted at the provincial level.

First, the fundamental misrepresentation that the city may have relied upon, was that these investments were sold by a licensed professional investment advisor. Secondly they may or may not have been led to believe that the investments were as good as cash. Many other clients were told something to this effect to assure them before buying.

On the first point, one only has to look up the license and registration category of all those employed by the National Bank, were the product came from. (ASC web site) It is quickly discovered that the license and registration category of the persons who sold this product to the city is not, “advisor”, as advertised by this firm, but is instead that of “salesperson”, which is a separate and distinct registration category. As separate and distinct as the difference between calling myself a “doctor” if I were licensed as a pharmaceutical sales representative. (Advisor requires years of study to attain, salesperson takes 90 days. You can become a financial “salesperson” faster than you could be licensed as a hairdresser in Alberta)

This may be the first misrepresentation that should allow the city to show they were misled. I know that a bad product purchased by any other profession with such misleading sales tactics would carry some responsibility for this misrepresentation. They purchased in good faith, and the representations of the vendor should be honored by that vendor. This was not a “buyer beware” or a “back alley” transaction from my understanding of it. This was a relationship where a professional duty of care was promised and advertised by the firm and then simply not delivered upon.

In dealing with other levels of regulators and government, I have run into too many examples of “protect your job”, rather than “protect the public”. I hope that we do not find this at our local level, nor at your provincial level.

On the topic of protect ones job, whose job should it be to keep toxic investments out of the hands of consumers? Supposedly it is the responsibility of the Alberta Securities Commission, (ASC) our crown corporation charged with protecting the public interest. Strange then, to learn that it was our own ASC who assisted the sale of this known toxic investment, by granting permissions to skirt the law when selling these. Imagine living in a country where we have laws to protect the public, and the policing system becomes captured to the point where thousands upon thousands of times, these laws can be skirted, by a certain class of people, simply for the cost of an application fee. No notice to investors, no input from the public.

I cannot get a free pass to rob a bank, but if a bank wishes to rob the public…………

I must repeat for clarity, “many ABCP products did not meet our securities laws, and were only able to be sold by temporarily “exempting” these laws”. That makes the Alberta government liable, and hopefully Iris Evans, you will act accordingly on this information. You have had this information in your possession for more than two months now, without response. Unfortunately persons in a position of authority often find it in their best interest to “protect ones job”, rather than “protect the public”. Your predecessor Shirley McClellan did not act when presented with ASC corruption a couple of years back. She allowed the ASC to investigate themselves, and they gave her a very good report. On themselves. Which she accepted. Please do not do this to us Iris Evans.

The intentional introduction of this tainted product by way of legal tricks is an avenue that should trigger a full refund and an apology from the firm that sold this product. It is not the consumer’s fault if a toxic product enters the marketplace with the knowledge of the seller, the help of the regulator, and key information hidden from the consumer.

We now sit with approximately 30 million dollars that is totally unavailable to the city. We may see some, all or none of it in 2016. $30 million that was invested in a short-term product that was to be in a cash, or a near-cash position. All of it is unavailable to us now. All we have to show for $30 million is a further promise of something down the road. A promise from the same folks who sold it in the first place.

I ask you Iris Evans to immediately convene a public inquiry into the many factors which caused this, specifically the failures of our financial regulatory system to protect the interests of the public. Anything less will be a whitewash, a cover-up, and it will happen on your watch. We already did that two years ago with Shirley McClellan. Can we please choose serving and protecting the public this time around?

Larry Elford
My contact is aworks@shaw.ca if the city would like assistance, and or others would like to cooperate to help to recover money that belongs to the city of Lethbridge. If you would like to join in asking for a public inquiry into this matter, send me an e-mail in support of this, along with your contact info and I will make sure it gets to the Alberta legislature.

Larry Elford is a former CFP, CIM, FCSI, Associate Portfolio Manager, now retired. He works as an advocate to investors who have suffered abuse and loss from his former industry, and a private lobbyist for positive change in the public interest. His web flog can be found at www.investoradvocates.ca
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Re: Royal Commission or Judicial Inquiry

Postby admin » Sat Nov 29, 2008 10:40 pm

press release

Ontario to question OSC chairman on tuesday in Queens Park

One step removed from a public inquiry. Public inquiry being sought in Alberta, BC, Sask, and Ontario into failure by securities commissions to protect the public interest, resulting in damages and losses of billions upon billions of dollars to Canadian investors. Resulting in billions gained by financial and investment firms who have unique privileged access to these securities commissions.

Case studies are being presented that demonstrate clear and concise examples of favoritism towards the financial industry at the expense of the public interest. Favoritism which goes beyond the Securities Act, and possibly beyond he Criminal Code. It is expected and hoped that one or more of the thirteen provinces and territories will step forward and investigate allegations of wrongdoing by these agencies.

www.investoradvocates.ca web flogg for industry experts working in the public interest
www.investorvoice.ca top web site catalogue of regulatory failures


The CBC News: Sunday Night "Who's watching your money?" is now on the Internet at the following webpage. It was broadcast on Sunday, November 23, 2008 at 9 pm EST on CBC Newsworld and 10 pm EST on CBC-TV. The show will be rebroadcast on Sunday, November 30, 2008 at 9 am EST on CBC Newsworld and 10 am EST on CBC-TV.
http://www.cbc.ca/sunday/2008/11/112308_8.html

David Wilson, Chairman of the Ontario Securities Commission, is interviewed on this show. There is a comment section at this CBC webpage that gives feedback from Canadians on the need for improved securities regulation enforcement at the Ontario Securities Commission.

The Ontario Government Agencies Committee is reviewing the performance of the Ontario Securities Commission on Tuesday, December 2, 2008. David Wilson will be speaking and answering questions on behalf of the Ontario Securities Commission at this meeting, which is open to the public and media.

http://www.ontla.on.ca/web/committee-pr ... =en&ID=142

STANDING COMMITTEE ON GOVERNMENT AGENCIES

AGENDA

Tuesday, December 2, 2008

Committee Room 151

8:30 a.m.

Closed session

1. Report of the Sub-committee on Committee Business dated Thursday, November 27, 2008

2. Agency Review

1. Briefing by the Research Officer

9:00 a.m.

Open session

2. Ontario Securities Commission

David W. Wilson, Chair

Committee Members
Chair
Julia Munro
PC / York--Simcoe
Vice-Chair
Lisa MacLeod
PC / Nepean--Carleton
Members
Michael Brown
LIB / Algoma--Manitoulin
Kevin Flynn
LIB / Oakville
France Gélinas
NDP / Nickel Belt
Randy Hillier
PC / Lanark--Frontenac--Lennox and Addington
David Ramsay
LIB / Timiskaming--Cochrane
Liz Sandals
LIB / Guelph
Maria Van Bommel
LIB / Lambton--Kent--Middlesex
Clerk
Douglas Arnott

douglas_arnott@ontla.ola.org


thanks to Diane Urquhart for making much of this step possible.
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Re: Royal Commission or Judicial Inquiry

Postby admin » Sat Nov 29, 2008 1:24 pm

WWW.INVESTORADVOCATES.CA FOR IMMEDIATE RELEASE

Contact: Larry Elford, (former CFP, CIM, FCSI, Associate Portfolio Manager, retired)
403 328-0391 Lelford@shaw.ca Lethbridge Alberta

FINANCIAL CRISIS ALLOWED INTO CANADA
BY 13 PROVINCIAL AND TERRITORIAL SECURITIES COMMISSIONS

PROVINCIAL INQUIRY SOUGHT TO ASK COMMISSIONS TO JUSTIFY THE PUBLIC INTEREST REASONS FOR ALLOWING TAINTED INVESTMENTS THAT BROKE CANADIAN SECURITIES LAW

Investment experts from investoradvocates.ca, are seeking a public inquiry into legal exemptions (permissions granted to violate securities laws) granted by the thousands to investment firms in Canada.

These legal exemptions were and are granted to investment firms who are selling investments without public input to the purchasers of same, nor public input on the matter. While there have been thousands of such permissions to violate our laws, investoradvocates.ca is asking for public inquiry to find answers to the question, “what public interest is served in allowing investment firms to skirt our laws”?

Two case studies, which included or were triggered by the granting of legal exemptions by our securities commissions are being entered into the public record in each province being asked for inquiry. It is hoped that they will provide dramatic example of the damage that can be done by having our regulators allow investment companies to evade our laws.

One case study reveals details behind a commission kickback (commission rebating) scheme that was allowed and approved by our securities commissions, and which led to the alleged abuse of the public, and subsequent $800 million sale of the investment firm involved.

The second case study placed on the public record shows how three legal exemptions were granted to violate our protective laws, and this resulted in the current financial crisis of tainted, defaulted and much publicized Asset Backed Commercial Paper. The largest bankruptcy in Canadian history. To date, the management of this restructuring of this largest bankruptcy is being headed by a private lawyer whose background includes negotiating a “sweetheart deal”, and “get out of jail passes” for former executives of Imperial Tobacco, accused and convicted of cigarette smuggling in 2007. Why?

Where are the financial authorities in this matter? What did these financial authorities do to assist in causing this financial crisis? Why did they allow our laws to be violated?

Investoradvocates.ca feels that it is imperative that systemic foundational causes of financial abuse and predatory financial practices against Canadians must be investigated. Investoradvocates.ca feels it of importance equal to issues of tainted meat, tainted water, tainted blood, or tainted liberals.

Investoradvocates.ca represents approximately 1000 ethical investment professionals who feel that the financial industry and its regulators are failing to act in a professional manner befitting the importance to our Canadian economy. The case studies submitted to each legislature are intended to illustrate and support this.

If you would like further information, please call Larry Elford, Executive Director of investoradvocates.ca .
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Re: Royal Commission or Judicial Inquiry

Postby admin » Sat Nov 29, 2008 1:23 pm

www.investoradvocates.ca

Financial Crisis Press Release Oct 17, 2008

“The person who gave financial firms permission to break our securities laws and sell substandard financial investments to the public.”

“Is now employed at a self-regulatory agency and is pointing the finger at firms who sold these products.”

“She is the same person who signed the very documents granting legal exemption to these security laws.”

My name is Larry Elford. I am not making this up. Read on.
This release contains one Globe and Mail article, plus one comment at the end, and you will have the story.

http://www.theglobeandmail.com/servlet/ ... iness/home

Regulator says brokers failed on ABCP, sets new guidelines
JANET MCFARLAND
Globe and Mail Update
October 17, 2008 at 7:21 PM EDT
Canadian brokerage firms did little to review asset-backed commercial paper products before selling them to retail investors, according to a report by Canada's brokerage industry regulator.
The Investment Industry Regulatory Organization of Canada (IIROC) reported yesterday on a year-long compliance sweep of firms involved in selling non-bank ABCP to Canadian investors, laying out new guidelines to change the way investment firms review products before selling them to clients.
"There was very little understanding, generally speaking, of what this product really was all about," IIROC chief executive officer Susan Wolburgh Jenah said yesterday. She said brokerage firms reported they saw non-bank ABCP as little different from traditional commercial paper, even though IIROC concluded there were major risk differences.
The review concluded 76 per cent of the assets underlying non-bank ABCP were complex financial derivatives like synthetic collateralized debt obligations, whereas bank-sponsored ABCP had only three per cent of those types of derivatives and had 97 per cent traditional commercial paper assets like credit-card receivables. "The name asset-backed commercial paper was a misnomer. They were liability-backed," Ms. Wolburgh Jenah said.
The non-bank ABCP market collapsed in August, 2007, leaving investors holding about $35-billion of frozen notes, including 2,542 individuals with investments totalling $317-million. Many individuals were seniors or other risk-averse investors who reported they were assured ABCP was as safe as a bank GIC or other guaranteed product.
The report said none of the 21 Canadian brokerage firms that sold third-party ABCP to clients had reviewed the product through their internal due diligence process. Under such a process, committees assess whether new products are suitable for a firm to sell to corporate or retail clients.
IIROC said most firms reported they did not do due diligence reviews because they relied on the high credit rating the ABCP notes received from DBRS. Industry participants also reported they felt ABCP was a typical money market instrument that did not require risk assessment.
Bank-owned brokerage firms relied on reviews by their parent banks, the report added, but most of the reviews were done to establish credit and trading limits as part of financial risk control. Only one unidentified bank reviewed the product from a client suitability perspective and decided not to sell it. Toronto-Dominion Bank has previously disclosed it did not sell ABCP to clients.
IIROC said member firms that did not sell ABCP to clients reported they did not believe their clients would understand the product, or that there were simpler alternative products, or that there was little profit on the transactions. Indeed, the report said all dealer members who sold ABCP to retail investors reported the product was viewed as a "loss-leader" service to clients and not a profitable product.
No firms or brokers have been sanctioned by IIROC for selling ABCP to clients for whom it was not a suitable investment under the industry's know-your-client rules. Ms. Wolburgh Jenah said IIROC has not completed its reviews of complaints from clients.

Below is the comment from www.investoradvocates.ca :

(larry elford, from lethbridge alberta, Canada) wrote: Fascinating to see Ms. Wolburgh Jenah point the finger at Canadian Investment firms........."Canadian brokerage firms did little to review asset-backed commercial paper products before selling them to retail investors, according to a report by Canada's brokerage industry regulator"

I have in my hands two "exemptive relief" documents, signed by Ms. Wolburgh Jenah when she was vice chair of the Ontario Securities Commission. These permissions allowed major banks in Canada to sell these products to consumers without meeting our securities laws.

Perhaps it would be time for her to come forward, and explain why she granted these firms permission to break our laws with these products.

(see permissions to break our laws signed by Susan Wolbergh Jenah at:
http://www.osc.gov.on.ca/Regulation/Ord ... tdbank.jsp
and
http://www.osc.gov.on.ca/Regulation/Ord ... ntreal.jsp

By checking the OSC web page under orders, rulings and decisions, one can find several thousand permissions to break our laws granted by her or her colleagues at the securities commissions. A commission of inquiry is requested by investment professionals at investoradvocates.ca who find our financial laws a cruel joke at best, and criminal breach of trust at worst.

See www.investoradvocates.ca for a move toward bringing to justice some of the perpetrators of these cruel, clever, and cunning tricks upon the public.
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Postby admin » Wed Nov 12, 2008 9:18 am

WWW.INVESTORADVOCATES.CA FOR IMMEDIATE RELEASE NOVEMBER 11, 2008

Contact: Larry Elford, (former CFP, CIM, FCSI, Associate Portfolio Manager, retired)


FINANCIAL CRISIS ALLOWED INTO CANADA BY 13 PROVINCIAL AND TERRITORIAL SECURITIES COMMISSIONS

PROVINCIAL INQUIRY SOUGHT TO ASK COMMISSIONS TO JUSTIFY THE PUBLIC INTEREST REASONS FOR ALLOWING TAINTED INVESTMENTS THAT BROKE CANADIAN SECURITIES LAW


Investment experts from investoradvocates.ca, are seeking a public inquiry into legal exemptions (permissions granted to violate securities laws) granted by the thousands to investment firms in Canada.


These legal exemptions were granted to investment firms without public notice to the purchasers of the investments, nor public input on the decision to skirt our laws. While there have been thousands of such permissions to violate our laws, investoradvocates.ca is asking for public inquiry to find answers to the question, “what public interest is served in allowing investment firms to skirt our laws”?


Two case studies which included legal exemptions by securities commissions are being entered into the public record. They illustrate in striking clarity the damage that can be done when our regulators allow investment companies to evade our laws.

One case study reveals details behind a commission kickback (commission rebating) scheme that was allowed and approved by our securities commissions, and which led to abuse of the public, and subsequent $800 million sale of the investment firm.


The second case study placed on the public record shows legal exemptions were granted to violate our protective laws, and this resulted in the current financial crisis of tainted, defaulted and much publicized Asset Backed Commercial Paper. The largest bankruptcy in Canadian history. The restructuring of this bankruptcy is being headed by a private lawyer whose background includes negotiating a “sweetheart deal”, and “get out of jail passes” for former executives of Imperial Tobacco, accused and convicted of cigarette smuggling in 2007. Why this man?


Where are the financial authorities in this matter?
What did these financial authorities do to assist in causing this financial crisis?
Why are they avoiding involvement at this stage of crisis?
Why did they allow our laws to be violated?


Investoradvocates.ca feels that it is imperative that systemic causes of financial abuse against Canadians be investigated. We feel it of equal importance to issues such as tainted meat, tainted water, tainted blood, or tainted liberals.


Investoradvocates.ca represents approximately 1000 ethical investment professionals who feel that the financial industry and its regulators are failing to act in a professional manner befitting the importance to our Canadian economy. The case studies submitted to each legislature are intended to illustrate and support this.

(Regardless of any public inquiry request, it is assumed and expected that the people who remain financially damaged by the ABCP product in case study #2 MUST receive complete and total compensation immediately, if not sooner. Either than or there should be people going to jail in Canada for selling and allowing the sale of these products to the public.)
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Postby admin » Sat Oct 18, 2008 1:04 pm

JANET MCFARLAND

Globe and Mail Update

October 17, 2008 at 7:21 PM EDT

Canadian brokerage firms did little to review asset-backed commercial paper products before selling them to retail investors, according to a report by Canada's brokerage industry regulator.

The Investment Industry Regulatory Organization of Canada (IIROC) reported yesterday on a year-long compliance sweep of firms involved in selling non-bank ABCP to Canadian investors, laying out new guidelines to change the way investment firms review products before selling them to clients.

"There was very little understanding, generally speaking, of what this product really was all about," IIROC chief executive officer Susan Wolburgh Jenah said yesterday. She said brokerage firms reported they saw non-bank ABCP as little different from traditional commercial paper, even though IIROC concluded there were major risk differences.

The review concluded 76 per cent of the assets underlying non-bank ABCP were complex financial derivatives like synthetic collateralized debt obligations, whereas bank-sponsored ABCP had only three per cent of those types of derivatives and had 97 per cent traditional commercial paper assets like credit-card receivables. "The name asset-backed commercial paper was a misnomer. They were liability-backed," Ms. Wolburgh Jenah said.

The non-bank ABCP market collapsed in August, 2007, leaving investors holding about $35-billion of frozen notes, including 2,542 individuals with investments totalling $317-million. Many individuals were seniors or other risk-averse investors who reported they were assured ABCP was as safe as a bank GIC or other guaranteed product.
The report said none of the 21 Canadian brokerage firms that sold third-party ABCP to clients had reviewed the product through their internal due diligence process. Under such a process, committees assess whether new products are suitable for a firm to sell to corporate or retail clients.

IIROC said most firms reported they did not do due diligence reviews because they relied on the high credit rating the ABCP notes received from DBRS. Industry participants also reported they felt ABCP was a typical money market instrument that did not require risk assessment.

Bank-owned brokerage firms relied on reviews by their parent banks, the report added, but most of the reviews were done to establish credit and trading limits as part of financial risk control. Only one unidentified bank reviewed the product from a client suitability perspective and decided not to sell it. Toronto-Dominion Bank has previously disclosed it did not sell ABCP to clients.

IIROC said member firms that did not sell ABCP to clients reported they did not believe their clients would understand the product, or that there were simpler alternative products, or that there was little profit on the transactions. Indeed, the report said all dealer members who sold ABCP to retail investors reported the product was viewed as a "loss-leader" service to clients and not a profitable product.

No firms or brokers have been sanctioned by IIROC for selling ABCP to clients for whom it was not a suitable investment under the industry's know-your-client rules. Ms. Wolburgh Jenah said IIROC has not completed its reviews of complaints from clients.
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Postby admin » Fri Oct 17, 2008 8:14 pm

re an article in the globe and mail to be posted in next reply

fascinating to see Ms. Wolburgh Jenah point the finger at Canadian Investment firms........."Canadian brokerage firms did little to review asset-backed commercial paper products before selling them to retail investors, according to a report by Canada's brokerage industry regulator" (JANET MCFARLAND
Globe and Mail Update
October 17, 2008)

I have in my hands two "exemptive relief" documents, signed by Ms. Wolburgh Jenah herself when she was vice chair of the Ontario Securities Commission. These permissions slips allowed major banks in Canada to sell these products to consumers without meeting our securities laws, which Ms. Wolbergh Jenah was charged with enforcing.

Perhaps it would be time for her to come forward, and explain why she granted these firms permission to break our laws with these products.

Possibly she has forgotten all about it. After all. By checking the OSC web page under orders, rulings and decisions, one can find several thousand similar permissions to break our laws granted by her and her colleagues at the securities commissions. http://www.osc.gov.on.ca/Regulation/Ord ... _index.jsp

A commission of inquiry is requested by investment professionals who find our financial laws a cruel joke at best, and criminal breach of trust at worst.

See www.investoradvocates.ca for a move toward brining to justice some of the perpetrators of these cruel, clever, and cunning tricks upon the public. I refer not only to the folks who sold them, but also to the regulators who gave permission to these folks to break our securities laws.
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Financial Crimes Tribunal

Postby admin » Tue Oct 14, 2008 12:37 pm

The most interesting thing I heard this thanksgiving weekend, was from some financial experts who were talking about "financial crimes trials".

It was suggested that once the full measure of damage from this current financial crisis is understood, that there might be a hue and cry to hold some of those who caused it responsible.

investoradvocates.ca has calculated an annual damage to the public amount from predatory financial practices in Canada alone at more than the cost of "every property crime in Canada".

It is hoped that the average consumer will be able to grasp this at some point, and when they do, we might make some progress towards demanding accountability.
We also look forward to using proceeds of crime legislation to remove some of the ill gotten gains from top executives who may have raped their own companies in order to enrich themselves.

But first step is always the investigation, before criminal charges can proceed, so the judicial inquiry, in public, is what our leaders need to embark upon to get started. As today is election day, who knows how that will go. I personally feel that Canada is waiting for a financial hero, and the job is wide open to any one of them.
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