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Politics, hungry lawyers and media help abuse the system

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Re: Politics and hungry lawyers help abuse the system for gain

Postby admin » Thu Sep 16, 2010 9:04 pm

response to ted morton calgary herald op/ed column in adjacent post:


What's the problem Ted?

Former industry insider responds to Ted Morton’s comments on a proposed National Securities Regulator.

Mr. Morton, I am going to say that the problem is yourself, combined with a “protect your job” mentality, when you should in fact be working in a “protect the public” mentality.  Shame on you for forgetting this.
Let me explain.
Investoradvocates.ca   (www.investoradvocates.ca) are members of the public and also investment industry specialists who do not believe Alberta Finance Minister Ted Morton speaks in the public interest.  We submit the following in response to his Sept 16, Calgary Herald opinion piece, to try and set the record straight.
“Allegation: The current system is dysfunctional and puts investors and companies at a disadvantage.”
Fact: This is true.  Albertans lost one billion dollars on just one type of investment (the asset backed sub prime based securities) that the Alberta Securities Commission let be sold to consumers without full disclosure that these products  skirted our laws in order to be sold.  Don’t Alberta consumers deserve public notice on all material facts before they buy investments Mr. Morton?
(there are several thousand other exemptions, no single notice to investors, and no single answer on the hard questions by Mr. Morton, or the ASC)
“Allegation: The current system is recognized as one of the best in the world.”
Fact:  Mr. Morton is aware of, and choosing to ignore our own former bank of Canada Governor David Dodge who claimed that other countries were skeptical of Canadian securities regulation, that they appeared somewhat “wild-west” like.  Perhaps that is exactly the global reputation Mr. Morton is working towards?

“Allegation: The current patchwork system is fragmented and bureaucratic, with 13 regulators and 13 sets of rules.”
Fact:   This is true. Most of the heads of the 13 commissions earn more than the head man with the SEC in the United States, and Ontario alone is said to have more than 90 staff who earn more (findlayongovernance.com) than the very top man at the SEC.  (top salary at the SEC is $162,900, while Canadian regulators earn over $600,000 in some provinces)
“Fact: Canada does have 13 securities regulators, but nobody actually deals with 13 regulators and has not for at least one decade.”
True:  Canada has a passport system, which is a system of copying and rubber-stamping of each provincial regulator’s homework, thus making “none” of them responsible for original investor protection work or due diligence.  (and thus none of them accountable)  They can all point to another province.  Like the attorney general in Saskatchewan said to me while filming BREACH OF TRUST, “Manitoba did it first”, in response to an investment question which involved one persons suicide.  It is the perfect environment for passing the buck and ignoring the public interest.  If this is the kind of financial environment that Mr. Morton endorses and seeks, then he has succeeded.  Unfortunately all Albertans have to suffer for his success.  www.breachoftrust.ca chapters 3-4 

“Fact: There is no tangible proof that a single regulator provides better protection or securities regulation.”
True:  But there IS considerable tangible proof that the patchwork system of securities regulators is costing Canadian investors and taxpayers more than the cost of each and every other crime in Canada, by a conflicted ability to overlook financial industry indiscretions by those who pay its salaries.  See www.breachoftrust.ca  chapter five.  (Columbia University professor John Coffee studied and concluded that the cost to all Canadians of our current patchwork of regulators is $10 billion each year)
“Allegation:  Canadians are well-protected through provincial regulatory bodies, and this continues to improve as provinces work together. Provincial regulators are in the best position to monitor and deal with securities law violations and scams because of their proximity to individual investors and knowledge of local markets and participants.”
Fact:  The investment industry are the only Canadians who are well-protected by provincial regulatory bodies.  If the Canadian food inspection agency were to allow tainted and knowingly toxic products to infect our food supply, Canadians would be dying.  As it stands, it is just Canadians “financial health” and retirement prospects that are dying due to the “help” they receive from the ASC and the current finance minister.  Perhaps that is acceptable to Mr. Morton.
“Allegation: A single federal regulatory system would be voluntary.”
True: When I met with finance department members in Ottawa after my testimony to a standing committee on finance, (April 10, 2008, available on “Ottawa testimony at www.breachoftrust.ca”) they told me it was difficult to set up a national regulator with a minority government and provincial opposition.  I suggested that they simply set up a national securities “protection” system of some kind (as Canada has none who are not paid by industry) and raise the bar.  “If any province could not join in and raise the bar on ethics, integrity and investor protection, they will simply be making a choice to be left behind.”   Like the dinosaurs.  Clearly Ted Morton chooses to see Alberta left behind.  This fits with his recent behavior to allow our own provincial bank, the ALBERTA TREASURY BRANCH, to “invest” 47% of all customer deposits into toxic, failed investments approved for sale (but not within the laws) by the ASC.  He allowed our own bank to be virtually broken and in need a government hand to remain in business and still he hides from all the difficult questions.  Ted, you are truly not measuring up to the task at hand.  
“Allegation:  Proponents of a single securities regulator have failed to provide any empirical evidence that such a system is better than Canada's current system.”
Fact:  Quite true, but how can one prove an untried and untested?  You provide not an argument, but simply a hollow mindless attack.  We can only point to the serious conflicts of interest, the secret decisions, the failures to protect the consumer under Ted Morton’s style of securities regulation.  We only need look at the written record of this agency to say “enough”, you have helped the investment industry enough.  It is time to look forward to an agency which might now be willing to help the public.
larry elford, former CFP, CIM, FCSI, Associate Portfolio Manager, retired.
lelford@shaw.ca     403  328-0391    403  393-4742
youtube channel about professional investment abuses:
http://www.youtube.com/user/investoradv ... ature=mhum
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Re: Politics and hungry lawyers help abuse the system for gain

Postby admin » Thu Sep 16, 2010 9:02 pm

recent calgary herald op/ed bit from alberta finance minister ted morton in support of the ASC:
then followed in next post by response to his op/ed by investor advocate



What's the problem?

Push for a centralized securities regulator unnecessary

BY TED MORTON AND RAYMOND BACHAND, FOR THE CALGARY HERALD SEPTEMBER 16, 2010 COMMENTS (25)


In his recent guest column in the Calgary Herald, federal Finance Minister Jim Flaherty once again relied on outdated, inaccurate and overstated arguments to support his government's push for a single national securities regulator (The case for a Canadian securities regulator, Sept. 13).

As the ministers responsible for securities regulation in Alberta and Quebec, we would like to set the record straight.

Allegation: The current system is dysfunctional and puts investors and companies at a disadvantage.

Fact: The current system is recognized as one of the best in the world. Canada has vibrant, healthy, safe, and globally-competitive capital markets that continue to attract record levels of investment from around the world.

The World Bank, the Milken Institute, and the Organisation for Economic Cooperation and Development have all ranked Canada's system of securities regulation as one of the best in the world, especially when it comes to investor protection and the ability to raise capital. The U.S. and the United Kingdom, two countries with single regulators and to which we are often compared, do not fare as well.

Allegation: The current patchwork system is fragmented and bureaucratic, with 13 regulators and 13 sets of rules.

Fact: Canada does have 13 securities regulators, but nobody actually deals with 13 regulators and has not for at least one decade.

Over the past 10 years, the provinces and territories have harmonized and streamlined securities laws, rules and standards, and created what is known as a passport system. As a result, market participants now only have to deal with one provincial regulator to have access to markets across Canada.

Canada's regulatory regime already is a national system, just not a centralized system. All of this meets the needs of the local market and local industry, while ensuring international access to a robust national economy.

Allegation: A single national regulator provides better regulatory enforcement.

Fact: There is no tangible proof that a single regulator provides better protection or securities regulation. Case in point: the U.S.'s single regulator, the Securities Exchange Commission, did not prevent Bernie Madoff from scamming billions of dollars from people over 17 years. Nor did it prevent the Enron or WorldCom scandals or the failures of Bear-Stearns or Lehman Brothers.

Canadians are well-protected through provincial regulatory bodies, and this continues to improve as provinces work together. Provincial regulators are in the best position to monitor and deal with securities law violations and scams because of their proximity to individual investors and knowledge of local markets and participants.

Allegation: A single federal regulator responds more quickly to emerging issues.

Fact: Any system can sometimes require extra time to reach a decision, especially when emerging issues have to be dealt with. What matters is whether that decision is the right one.

A rapid response to a scandal can often create more damage to capital markets than the scandal itself. For example, one-third of public companies listing on London's successful AIM marketplace indicated that the initial swift American reaction to the Enron and WorldCom scandals played a significant role in their decision not to list in the U.S.

The Canadian consultative process facilitates input from industry and investors across the country so they may participate in developing the right response. Does the federal proposal intend to change that?

Allegation: A single federal regulator is more cost-effective.

Fact: The fee structure for the federal government's proposed securities regulator has not been developed, so there is no way to know at this point what the fee will be, and if it will be cost-effective.

It is hard to see how costs would be lower in a centralized system given the plan proposed by the federal government aims to keep local offices and current staff while adding new staff as well. The plan also includes extensive travel-related costs for its executive team, board of directors and tribunal members, along with other operational costs.

Further, a 2010 study by Suret and Carpentier shows that raising capital in Canada is not any more expensive than anyplace else in the world. In fact, they argue a national regulator would increase costs by almost 50 per cent.

Allegation: A single federal regulatory system would be voluntary.

Fact: If it is a voluntary system, and not all provinces sign on, how will this improve securities regulation in Canada? The result will be a passport system of another kind. Why reinvent what already exists, works very well, and is already in place?

Proponents of a single securities regulator have failed to provide any empirical evidence that such a system is better than Canada's current system. We do, however, have proof the system we have today not only works, but works well -- and it does so while respecting provincial jurisdiction.

It is still not clear what problem the federal government is trying to solve. If it's not broken, don't fix it.

Ted Morton is Alberta 's Minister of Finance and Enterprise. Raymond Bachand is Quebec's Minister of Finance and Revenue.



Read more: http://www.calgaryherald.com/news/What+ ... 23comments#ixzz0zkwNshXf
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Re: Politics and hungry lawyers help abuse the system for gain

Postby admin » Sat Aug 21, 2010 12:14 pm

Screen shot 2010-08-21 at 1.12.59 PM.png
Screen shot 2010-08-21 at 1.12.59 PM.png (17.11 KiB) Viewed 15856 times
When Wall Street Rules, We Get Wall Street Rules
from HUFFINGTON POST FILES http://www.huffingtonpost.com/dean-bake ... 88866.html
Dean Baker, Co-Director
Center for Economic and Policy Research

Posted: August 20, 2010 at 09:47 AM
The middle class is getting whacked by the Great Recession.
n Fifteen million people are out of work,
n another 9 million workers can only find part-time jobs, and
n millions more have given up looking for work altogether.
n Those lucky enough to be employed are unlikely to see any substantial wage gains for years to come.
Millions of homeowners are facing the loss of their home and more than ten million are underwater in their mortgage. Most of the huge baby boom cohort is approaching retirement with little other than Social Security to support them, now that the collapse of the housing bubble has destroyed their home equity and much of the rest of their savings.
This pain is infuriating for two reasons.
n First, this was an entirely preventable disaster. The housing bubble was easy to see. Competent economists had long warned of its dangers.
and
n The second reason why the current situation is infuriating is that we know how to get the economy out of this mess. We just need to boost demand. This can be done either with much more government stimulus, more aggressive monetary policy from the Fed, or pushing the dollar down to boost exports.
If this disaster was preventable and we know how to get out of it, why didn't our leaders try to stop it before it happened? Why don't they take the steps necessary now to get the economy moving again?
The answer to both these questions is simple; the politicians work for someone else.
n On Election Day, the politicians might need our votes, but they won't get to be serious contenders unless they've gotten the campaign contributions of the big money crew. And the moneyed elite has been using its control of the political process to ensure that an ever larger share of the economy's output is redistributed upward in their direction.
The reason that there was little interest in cracking down on the housing bubble is that Goldman Sachs, Citigroup and the rest were making a fortune from the financial shenanigans that fueled the bubble. Former Treasury Secretary Robert Rubin personally pocketed over $100 million from this fun. Why would they want the government to rein it in?
Of course, when the bubble did finally blow and threaten their banks with bankruptcy, the Wall Street crew just ran to the government for help. And they got trillions of dollars in loans and loan guarantees to ensure that they would not be victims of the crisis they had created. Now that they are back on their feet, with Wall Street profits and bonuses both again at near record levels, they see little reason to concern themselves with the measures that might set the economy right for the rest of us.
After all, the steps necessary to revitalize the economy could mean some inflation. This would reduce the value of the debt owned by the wealthy. And the wealthy don't see any reason that they should risk any of their wealth just for the good of the economy.
We have enormous ground to cover to restore an economy that works for the vast majority, but the first step is to know where we are. The upward redistribution of the last three decades has nothing to do with the market and a belief in "market fundamentalism." This is about a process where the rich and powerful have rewritten the rules to make themselves richer and more powerful.
For example, they wrote trade rules that were designed to put downward pressure on the wages of the bulk of the U.S. workforce by placing manufacturing workers in direct competition with low-paid workers in China and other developing countries. This had nothing to do with a belief in "free trade." They did not try to subject lawyers, doctors or other highly paid workers to the same sort of international competition. They only wanted international competition to put downward pressure on the wages of workers in the middle and bottom, not those at the top.
This elite has instituted a system of corporate governance that allows top executives to pilfer companies at the expense of their shareholders and its workers. Top executives are overseen only by a board of directors who owe their hugely overpaid sinecures to the executives they supervise. And of course the Wall Street barons themselves are given a license to gamble with the implicit promise that government picks up their tab when they lose.
No progressive movement will make any progress until we understand the battle we are fighting. Our income is a cost to the rich. They will look to cut it wherever they can, whether this is wages for private sector workers, pensions for public employees, or Social Security for retirees. That is their target.
We have to fight back using the same logic. Their income is our cost -- the multimillion dollar bonuses for the Wall Street wizards is a direct drain on the economy. So are the bloated paychecks of top executives and their lackey boards. Progressives must be prepared to use all the same tactics to bring down the income of the rich and powerful that they have used to reduce the income of everyone else.
This means restructuring the rules of corporate governance to put serious downward pressure on the pay of top executives. The highest paid workers (doctors, lawyers, and economists) must be subjected to international competition in the same way as manufacturing workers have been subjected to international competition. And, we should sharply limit the extent of the patent or copyright protections that are exploited by the drug industry and the entertainment and software industries.
We have to put the focus on the ways the rich have rigged the rules and place this at the center of political debate. The three decade-long battle over tax cuts for the rich is important, but at the end of the day it is a side show. If we let them steal all the money at the onset, it really doesn't make much difference if they end up letting us tax a little of it back.

http://www.huffingtonpost.com/dean-bake ... 88866.html
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Re: Politics and hungry lawyers help abuse the system for gain

Postby admin » Thu Jun 03, 2010 12:12 pm

June 3, 2010

The Edmonton Journal
10006 - 101 Street
Edmonton, Alberta, Canada
T5J 0S1
johnmcdonald@thejournal.canwest.com
amayer@thejournal.canwest.com

Letter to Editor:

Preserve and protect the ASC?  We might as well be protecting fraud.

The ASC has allowed over 5000 financial companies to skirt Alberta laws in the past ten years.  It reminds me of the BP oil disaster and regulators who are cozy and corrupted with the industry? http://www.albertasecurities.com/Compan ... rders.aspx

They sell permission slips to exempt securities laws without telling the public who ultimately purchase the investments.  It further brings to mind  the coal mining disaster in the US where 26 people were killed, after the regulators “looked the other way” at safety requirements?

The feel they do not have to tell us (the consumers) when a company sells an investment product that did not meet our laws.

Alberta Finance Minster Ted Morton backs the ASC and will also not answer any questions regarding the public interest failures of this agency.  Minister Morton refuses to answer simple questions such as “why allow firms to violate our laws?”, and “why do this without telling the public”.  He cannot even answer the simple questions.  Are we being taken for a ride by regulators who are on the take?

After refusal to answer the simplest of questions, Mr. Morton states that “I consider the matter to be closed and will not be responding to further correspondence on this subject”.

Thank you Mr. Morton for showing exactly who you represent between the public and the money people.  Thank you for being so clear and shame on you for failing your simple public duty to serve and protect our interests.

Larry Elford former CFP, CIM, FCSI, Associate Portfolio Manager, retired

www.breachoftrust.ca
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Re: Politics and hungry lawyers help abuse the system for gain

Postby admin » Thu Jun 03, 2010 12:09 pm

June 15th


To: Letter to the editor
Calgary Herald, P.O. Box 2400, Station M,
Calgary, Alberta T2P 0W8

letters@theherald.canwest.com


Dear Editor,

Our City of Lethbridge was the victim of an investment salesperson who was allowed to sell toxic sub prime mortgage investments to our treasury, losing us approximately $30 million. Universities in Calgary and Edmonton are also victims to the tune of tens of millions. Alberta Treasury Branch had placed 47% of all deposits into these investments.

The damage to Alberta was about $1 billion dollars and according to the record, our own regulatory agency, the Alberta Securities Commission approved and allowed these investments to receive an exemption from our laws to sell these toxic products. http://www.albertasecurities.com/Compan ... rders.aspx

My reason for writing is that Ted Morton, the Alberta Finance minister refuses to discuss reasons why our own securities regulators would give permission to NOT follow our laws to sell tainted investments.

Second Mr. Morton will not tell why these legal exemptions are granted without notifying the public about the risks and the potential damages caused with these permissions to break Alberta laws.

If having the Alberta Securities Commission is such a good idea, instead of the proposed national securities regulator, shouldn’t those people in charge of it be able to professionally answer and explain such actions that have cost Alberta $1 billion?

I find it embarrassing to have our own Finance Minister fail to act in the interest of the public on this matter, and instead hide the truth. Can we afford a Finance Minister who acts contrary to our safety and financial protection? Mr. Morton you are in breach of the public trust.


Larry Elford
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Re: Politics and hungry lawyers help abuse the system for gain

Postby admin » Mon May 31, 2010 5:10 pm

Larry here, part of the reason that politicians are responsible for financial abuse in Canada is that they fail to protect the public, as they are sworn to do. Instead they come into office with great intentions, and as humans are known to do, quickly take for granted their position and power, saying in effect, "what is next?"

What comes next is a huge growth curve in their "opportunities", if only they can forget who they are supposed to serve. It becomes a choice of "advance myself, or protect the public?" What to do?

Say it fast three times and see if you get an answer:

"advance myself, or protect the public?"
"advance myself, or protect the public?"
"advance myself, or protect the public?"

Screw it, advance myself.

And so everyone in the entire investment industry has interests to protect, and the only people charged with protecting the people, get on the "interests" bandwagon, and get protecting their own. Shame.

Below is a 2002 report from former OSC commissioner Glorianne Stromberg, an example of one of the ONLY persons in the entire investment industry that was mature enough to look beyond herself and her personal interests. Here is what she said 8 years ago;

Individual investors must help push for the major reforms needed in the investment marketplace, says a former member of the Ontario Securities Commission

Public must demand change, everyone else has interests to protect


(by public, she refers to you and I, and if we know nothing, then our elected representatives....and they are too often busy learning how to get in on the game....god help us)

Sep. 21, 2002
Listen up, Bay Street

Individual investors must help push for the major reforms needed in the investment marketplace, says a former member of the Ontario Securities Commission

Public must demand change, everyone else has interests to protect

Glorianne Stromberg
Special to The Star
There is an eerie silence in the marketplace as Canadians come to grips with a frightening reality - the disappearance into thin air over the last two years of a substantial portion of the value of their invested savings.

The hope that this is a temporary blip is fading. Each day brings new revelations of corporate and individual wrongdoing, of greed, fraud and bankruptcies, and of widespread market manipulation fueled by endemic conflicts of interest.

The revelations have exposed fundamental problems with the way things are done. It is obvious that all of the gatekeeping mechanisms designed to protect investors and to ensure a fair and efficient marketplace have either failed or shown serious shortcomings. Auditors, boards of directors, individual directors, lawyers, investment bankers, rating agencies, standard setters, analysts, regulators and lawmakers have each in their own way failed the public. Their failures have produced what many are referring to as a crisis of faith in the entire market system.

The lack of trust in Wall Street (and by extension Bay Street) is said to be unparalleled since the 1930s. Polls indicate that a growing number of people believe the stock market is no longer a fair and open way to invest one's money and that the market is rigged by and for insiders. A recent New York Times article bluntly stated that the hidden hands of speculators profiting from bad-news rumourmongering, good-news insidership, and no-news accounting has made markets unsafe for ordinary investors.

Arthur Levitt, the former chair of the U.S. Securities and Exchange Commission, refers to the failures that the corporate scandals have revealed as "societal." These failures, he says, reflect a deterioration of values and the recognition that many people have no standards or values, which is something we should all be gravely concerned about.

And individual investors are concerned. But they don't know what to do about it. Many are shell-shocked. They have suffered enormous economic and psychological losses. There are stones of people in their late 50s and early 60s postponing or abandoning retirement. Those who are retired are terrified by the decline in the value of their retirement savings, the likelihood of a diminished standard of living and of outliving their retirement income. These concerns are real and will inevitably result in huge social problems that will require the allocation of substantial public resources to fund the shortfall in private resources.

For the present, individual investors have quietly moved to the sidelines. Some have taken their money out of the stock market in an attempt to stop their losses and preserve their capital Many are not reinvesting this money in new securities. This is unsettling for financial services providers. The withdrawal of the individual investor from the stock market is an unforeseen and very serious development for these providers It has a negative effect on market liquidity. And it significantly reduces the income they earn while their fixed expenses remain high.

The silence of individual investors may well be the calm before the storm. As the reality of what has happened to them sinks in, it is likely that their discontent will grow. They will want answers. They will want to know how their capital could be wiped out when they followed the advice of financial advisors who assured them that the investments they were recommending were suitable to meet their investment objectives and tolerance for risk. It is likely that the confidence of individual investors in their financial advisors will be undermined. They are likely to be looking closely at the advice they were given and questioning how appropriate it was. And then they will start thinking about whether they have any right of recourse against these financial advisors, against the regulators and possibly against governments.

The actions of securities regulators (such as the Ontario Securities Commission) and of the self-regulatory organizations (such as the Investment Dealers Association) have already come under close scrutiny. There are lawsuits in progress that raise serious allegations about how these bodies carry out their investor protection mandate. The actions raise fundamental issues about regulatory structure, accountability, due process, transparency and timeliness. These issues cannot continue to be ignored by regulators and governments and those who advise them.

This is a gloomy situation. What can be done to turn it around? Lots. But it will involve the concerted effort of everyone involved in the capital markets - investors, regulators, the other so-called gatekeepers, government, and industry. Each group (including the public) needs to focus on the improvements it can make.

The Public:

The most important thing the public can do is to improve its ability to make sound economic and other decisions. Individual investors should take responsibility for their own economic and financial well-being by using every opportunity to enhance their education, improve their life skills and increase their knowledge and awareness of issues that will help them make these decisions. A growing number of employers, as part of their employee benefit plans, are offering programs designed for this purpose. It's important to take advantage of them.

Auditors, boards of directors, individual
directors, lawyers, investment bankers,
rating agencies, standard setters, analysts,
regulators and lawmakers have each in
their own way failed the public.
One of the first steps in taking control of your economic and financial well-being is to develop an action plan. Start by identifying what matters most to you and what your personal and family goals are. Then make a plan to achieve these. Don't assume you have to buy something like mutual funds, segregated funds or other investments. Sometimes, the best plan is to pay off your debt or cut your spending. Your financial plan should centre on your needs, not your advisor's. You may find it helpful to use some of the new dynamic life-planning software that has been developed such as VisionWorks Life Planner (http://www.visionsystemscorp.com ).

Don't expect a financial advisor to do your thinking for you about what matters to you. Although a good financial advisor is an invaluable resource and can help you, a bad one can hurt you Sometimes it is hard to tell if you've got a good or a bad advisor before the harm is done.

It's almost impossible to find out whether a financial advisor or the affiliated firm has a history of complaints or has been the subject of regulatory or legal actions. Ask these questions before you get involved and make a note of the answers. Beware of bad apples.

It's also important to understand what your financial advisor specializes in. Despite their title, some do not provide over-all planning advice. Their advice is only incidental to selling you mutual funds or insurance products and tied to what they sell.

You will find information about choosing a financial advisor on Web sites such as those of the Ontario Securities Commission (http://www.osc.gov.on.ca) and the Financial Planners Standards Council (http://www.cfp-ca.org). Some fund companies and other financial services providers have helpful information available on their Web sites.

Don't be lulled into thinking your needs will be met by filling in dots on a questionnaire. This method often results in high-cost products being sold to you that generate initial and ongoing commission revenues for the financial advisor and fees and charges for the fund or other product manager, which is affiliated, or has business relationships, with the financial advisor.

When someone tries to sell you financial products, ask lots of questions about them. They are not all created equal Comparison shop. Look for low costs, consistent returns, freedom from conflicts of interest, and sound governance procedures. Find out whether there are restrictions on transfer, redemption fees, surrender fees or transfer fees.

Your refusal to buy is the only way that financial services providers will be induced to lower costs, remove restrictions, implement better governance procedures, and eliminate conflicts of interest Be sure to make your concerns known. Speak loudly and speak often. It's easy for financial services providers to ignore individual customers but as the number of dissatisfied customers increases, so will the pressure to change. No one is going to reduce costs or take other action unless the marketplace - which means you, the consumer - forces them to do so by refusing to deal with them It is an opportune time to do this when financial services providers are already feeling the pressures of investors moving to the sidelines.

As your next step, set realistic goals centred on what you can control. You can't control rates of return Nor can you control taxes. Do not be mesmerized by the prospect of high rates of return. They usually involve substantial risk, high costs and unexpected tax consequences.

Think carefully before chasing after the projected returns offered by hot products such as income trusts, hedge funds and private investments that are being promoted by financial services providers. Ask yourself whether you can withstand the loss of your total investment and the possibility that you may be called upon to pay taxes and/or make other expenditures to protect your position.

Financial Services Providers:

… remedial steps need to be taken to
restore investor confidence and ensure
that the stock market becomes a fair and
open way to invest one's money rather
than one that is rigged by and for insiders.
The most pressing issue for financial services providers is the irreconcilable conflicts of interest created by the deregulation of the financial services industry These conflicts have not received much public attention. But this is changing as people learn the details of the widespread conflicts that underlie the investment banking and corporate transactions that are the subject of federal and state investigations in the United States as well as lawsuits launched by investors. Similar conflicts exist in Canada but somehow they have not received sustained public, regulatory or governmental attention. Eliminating conflicts will be an important part of regaining the confidence of the public. This will involve the restructuring of your business, eliminating some business activities and developing new business strategies It will involve recognizing and dealing with the major problems presented by many (if not all) of the industry's compensation systems. These create huge conflicts that are inconsistent with advisory and trust relationships and the promoting of ethical conduct.

In designing products and services, it's important to recognize that costs matter to your clients. Costs are a major deterrent to capital accumulation. The reality is that many people would be better off in the long term (or at least no worse off) if they confined their investments to Government of Canada bonds and bank deposit certificates rather than expose themselves to the increased risks and expenses embedded in many of the products and services offered by financial services providers.

Governments, Regulators:

They have a tough job. If they provide too much oversight and regulation they are criticized. If they provide too little they are criticized. Their problem is to find the right balance. They haven't found it yet and this has contributed to the current crisis of confidence.

Part of the problem is that governments and regulators are slow to act. When they do act their actions reflect what the financial services industry wants or is prepared to accept. Seemingly little regard is given to the needs of consumer/investors or fairness despite the fact that everything is said to be done "in the public interest."

Where individuals turn to the regulatory system for help when they encounter problems with financial advisors, they often run into a stone wall. Very little information is made available to them. The actions taken to resolve the complaint often seem inadequate or are too late to prevent further harm occurring to others.

There is seldom a public record of complaints and dispositions that might serve as an early warning to other investors. When private actions are settled, there is usually provision included that prevents disclosure of the settlement. This needs to be remedied. There ought to be reporting requirements and a national data base that the public can access that contains this information.

The industry has fought this for years. It's time to strike a better balance between the legitimate industry concern respecting the potential misuse of this information, the benefit the industry enjoys by requiring settlements to be kept secret, and the benefits the public would derive by being alerted to problems with dealers and their representatives.

Another of the many areas that needs attention is the issue of regulatory accountability. It is virtually impossible to hold regulators accountable for their actions or inactions no matter how deficient they were or how extensive the resulting harm was. While statutory immunity may be necessary, its existence demands that the legislatures exercise oversight over what their regulatory agents are doing or not doing. Such overview is virtually non-existent today.

These and other remedial steps need to be taken to restore investor confidence and ensure that the stock market becomes a fair and open way to invest one's money rather than one that is rigged by and for insiders.

Individual investors - the public - will have to play a crucial role in bringing about change if there is to be any hope of change. Everyone else has vested interests to protect. However, their common interest is that their respective survival depends on meeting the needs of the public. The public must speak up and demand change. They must make their voices heard by governments, regulators and industry. This is not easy to do but it can be done, one voice at a time growing into a chorus that cannot be ignored.

Glorianne Stromberg is a securities lawyer, a former Commissioner of the Ontario Securities Commission and a frequent commentator on the financial services industry.
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Re: Politics and hungry lawyers help abuse the system for gain

Postby admin » Mon May 31, 2010 11:12 am

Ted Morton MLA Foothills-Rockyvoew.jpg
Two perspectives, first one from Ted Morton, second from investor advocate. You be the judge of where the predators lay.

#1
The system works

By Financial Post Staff May 28, 2010 – 10:18 pm

Passport model makes national regulator unnecessary

By Ted Morton

There has been much commentary in the media lately on the federal government’s proposed new legislation that would form a single, federal securities regulator, and Alberta’s position as it relates to this move. Much of this commentary is based on misinformation, and I would like to clarify where Alberta stands.

Advocates of a single, federal securities regulator continue to mislead Canadians about how Canada’s markets are regulated. Claims that Canada’s current system requires companies and registrants to deal with 13 individual regulators and 13 different sets of laws are simply untrue. The passport system provides market participants with a single window of access to Canadian capital markets.

Over the past five years, provinces have harmonized and streamlined their securities laws. The result is that all market participants across Canada now follow a single set of rules when raising capital or providing trading and advising services.

Under the passport system, once a registrant or issuer receives approval from their home province, all other participating jurisdictions in the country automatically grant access to their markets. Ontario is the only province that does not grant automatic approval, but Ontario market participants continue to have access to markets in other jurisdictions. And within this system, there still lies the ability to meet the unique needs of the local market in a way that a federal securities regulator cannot.

Interestingly enough, this “mutual recognition” system is the same type of system being suggested as the basis for free trade in securities with the U.S. and other G8 countries. In all likelihood, we are going to have to use this system for international trade, so why isn’t it good enough to use inside Canada?

Federal Finance Minister Jim Flaherty continues to cherry-pick information and use it out of context, doing a disservice to those who have worked hard, and continue to work hard, to make the passport system successful.

When it comes to the proposed legislation, two sections in particular need to be addressed. First, the ability for provinces and territories to opt in or out of a national regulatory system will only serve to create a complex, messy system. And second, having regional offices will only duplicate what already exists, creating additional costs — costs which will likely be passed on to investors. There is also no guarantee that these regional offices would survive a change in government, when political decisions take precedence.

In 2006, our securities regulatory system was ranked second in the world by the Organization for Economic Co-operation and Development, behind New Zealand and ahead of the United States, United Kingdom and 25 other countries. And for the last five years (2006-10), the World Bank’s Doing Business reports have consistently ranked Canada as one of the top five countries for protecting investors, ahead of the United Kingdom and tied with the United States. Further, the recent global financial crisis has demonstrated that our system works well. I would suggest this is very clearly a time to follow the axiom about not fixing something that isn’t broken.

Financial Post
Ted Morton is Alberta Minister of Finance and Enterprise.

Read more: http://opinion.financialpost.com/2010/0 ... /#comments#ixzz0pX2eRuNy

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#2

As Finance Minister Ted Morton tries to protect the Alberta Securities Commission (ASC), and the ASC desperately tries to protect the investment industry I have to ask a few questions for Mr. Morton:

Who is protecting Alberta investors? It is certainly not you.
Why does the ASC let investment firms violate alberta securities law?
Why are these exemptions granted without notifying the public?
How many investors know that there are more than 500 such legal passes granted each year in Alberta, on investments they may own?

Finance Minister Ted Morton needs to tell the public why he will not answer any of these questions, nor will he force the ASC to answer these questions about the public interest. Investments are a consumer product and the public should be asking exactly why this regulator (and Minister Morton) would allow thousands of investment products to be sold to consumers without meeting the laws. Is there a special form of treatment for financial firms? Is there some kind of exemption from consumer protection laws that we should know of? Is somebody on the take that perhaps we should know about Mr. Morton? They (and you) are required to act only in the public interest and yet they (and you) cannot answer these questions. That is an answer unto itself.

Mr. Morton, you are trying to protect a crown agency that has been the subject of years and years of controversy. An agency that has recently allowed $1 billion in toxic, sub prime investments to be sold to Albertans without explanation. Will you tell us why toxic investments were given permission to violate our laws? (see forum topics at http://www.investoradvocates.ca)

To support regulators whose salaries are paid by the investment industry, and to help cover over a cozy, possibly corrupt relationship between the regulator and the industry is to fail in your duty to the public.
You have earned our vote. Now Mr. Morton will you work to earn our respect?

Further, Mr. Morton, if you are concerned about Alberta jobs, why not simply negotiate a Calgary office location for the new National Securities Regulatory body. That would seem easier to accomplish and perhaps wiser than supporting an already corrupt and negligent regulator, the ASC.

Albertan investors should write their own letter to Finance Minister Ted Morton at Fin-Ent.Minister@gov.ab.ca and copy me with your letter and or any response you may get. See if Mr. Morton will refuse to answer these questions to you as well. I promise to keep track of this matter until investors can be protected like any other consumer, and not preyed upon by regulators who cannot or will not demonstrate that they are not on the take.

Larry Elford (former CFP, CIM, FCSI, Associate Portfolio Manager, retired)
lelford@shaw.ca

Lethbridge Alberta, founder and director of http://www.investoradvocates.ca
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Re: Politics and hungry lawyers help abuse the system for gain

Postby admin » Mon May 24, 2010 11:21 am

OpAd2-Bankers.jpg
The Canadian ‘good banks’ myth

Posted on May 22, 2010 by murraydobbin
http://murraydobbin.ca/2010/05/22/the-c ... anks-myth/

The sorry spectacle of Conservative cabinet ministers flying around the world defending banks from a tax to cover their next, inevitable, meltdown is bad enough. What is perhaps worse is that it is being largely justified by the perpetuation of the myth that Canada did not have to bail out its banks.
Wrong.

We are, according to the IMF, actually the third worst of the G7 countries, behind the US and Britain, in terms of financial stabilization costs.
First, we put up $70 billion to buy up iffy mortgages from the big five banks, through the Canadian Mortgage and Housing Corporation, taking them off the banks’ balance sheets. That is almost the exact equivalent the US bailout – it spent ten times as much, $700 billion, and its economy is about 10 times as large.

Secondly, the Harper government established a fund of $200 billion to backstop the banks – money they could borrow if they needed it. The government had to borrow billions – mostly from the banks! – to do it. It’s euphemistically called the Emergency Financing Framework – implying that our impeccable banks might actually face an emergency. It is effectively a line of low-interest credit and while it has not all been accessed, it’s there to be used. Could it help explain why credit has not dried up here as much as it has in the US?
Third, the government now insures 100% of virtually all mortgages through CMHC eliminating risk for the banks – and opening the door to the ridiculous flood of housing loans we have seen over the past few years. The result: housing has become unaffordable for tens of thousands of Canadians and new rental housing has dried up.

Why all this extraordinary effort?

If Canadian banks are such paragons of conservative virtue and prudent behaviour why did the federal government have to relieve them of mortgages that, presumably, were all carefully vetted and the borrowers scrutinized?
And why is Mr Flaherty not making any connection between the growing housing bubble (which he now reluctantly acknowledges) and the banks which lend virtually all the money (backed by CMHC) that is growing that bubble?

One of the reasons that Canadians (and international commentators, other finance ministers and global financial institutions) buy this Canadian banking fairy tale is the way the government accounts for the money borrowed to support the banks.

As Bruce Campbell of the Canadian Centre for Policy Alternatives explained in 2009:
“These measures are considered ‘non-budgetary’ or ‘off book.’ They do not show up as expenditures, which increase the federal deficit and debt. Rather, they appear on the books of CMHC and the Bank of Canada. But they have increased the government’s borrowing from $13.6 billion in 2007-08 to $89.5 billion in 2008-09, or double the fiscal deficit now projected for 2009.”
Not only has the Harper government felt it necessary to prop up Canadian banks it was this same government which created financial system risk in the first place. In 2007 the Harper government allowed US competition into Canada which prompted the CMHC to dramatically change its rules in order to compete: it dropped the down payment requirement to zero per cent and extended the amortization period to 40 years. In August 2008 Flaherty moderated those rules in response to the US mortgage meltdown. CMHC then “securitized” an increasing number of its loans into bond-like investments (if you have a typical Canadian mutual fund, you’ve got some.)

At the end of 2007 there were $138 billion in securitized pools outstanding and guaranteed by CMHC –17.8 per cent of all outstanding mortgages. By June 30, 2009, that figure was $290 billion and by the end of 2010 it was $500 billion.
In an effort to prop up the real estate market in 2008 (when affordability nose-dived), the Harper government directed the CMHC to approve as many high-risk borrowers as possible to keep credit flowing. CMHC described these risky loans as “high ratio homeowner units approved to address less-served markets and/or to serve specific government priorities.” The approval rate for these risky loans went from 33 per cent in 2007 to 42 per cent in 2008. By mid-2007, average equity as a share of home value was down to six per cent — from 48 per cent in 2003. At the peak of the U.S. housing bubble, just before it burst, house prices were five times the average American income; in Canada in late 2009 that ratio was 7.4:1 — almost 50 per cent higher.

While it was CMHC that insured these loans it was still the banks that put up the money. And they knew they were effectively sub-prime. How do we know? Because they avoided direct risk like the plague - in the two years from the beginning of 2007 to January 2009, the banks themselves took on virtually no new risk. According to CMHC numbers Canadian banks increased their total mortgage credit outstanding by only 0.01 per cent. But they were happy to put Canadian taxpayers at risk by lending to high-risk borrowers knowing their money was protected by CMHC.
Conservative? Prudent? Responsible?

In a pig’s eye.

http://murraydobbin.ca/2010/05/22/the-c ... anks-myth/
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Re: Politics and hungry lawyers help abuse the system for gain

Postby admin » Thu May 06, 2010 12:16 pm

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A comment to myself, thinking out loud while I watch the country of Greece fall to pieces, riots, cutbacks etc.

It seems to me that a perfect set of ingredients came together to put Greece into the mess it is now in, namely:

The mixing of bad politicians with bad financial rocket "surgeons" came together to corrupt, sell out, and rape the country financially.

The politicians of Greece provided the necessary ingredients of a) stupidity, and b) self interested greed, and c) political self protection
(they should now be put into jail, and perhaps that will follow)

The financial types provided the necessary ingredients of a) stupidity mixed with financial alchemy skills and b) greed

Together they managed to a) keep their jobs, and b) rape the entire country.

I only hope the world will see the lesson in Greece, since the same ingredients live everywhere, and the same result is possible anywhere.

Bring on the new industry of accountability, which could rein in the rampant orgy that now is allowed in this area.
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Re: Politics and hungry lawyers help abuse the system for gain

Postby admin » Wed May 05, 2010 8:58 am

How to give our friends on Bay Street a free ride around the law.............


Alberta wary of white-crime bill


BY DARCY HENTON, EDMONTON JOURNAL MAY 5, 2010


A white-collar crime bill reintroduced by the federal Conservatives this week received a lukewarm reception Tuesday in Alberta from both a financial crime crusader and a fraud victim.

The justice bill, which had to be reintroduced after if died on the order paper when the prime minister prorogued Parliament last winter, sets a mandatory minimum two-year sentence for frauds over $1 million.

The bill also requires judges to look at several aggravating factors that could increase the sentence and to consider victim impact statements and restitution.

Retired investment broker Larry Elford, who advocates on behalf of investors, said the new bill still appears to contain a loophole that exempts it from being applied to investment institutions.

"It's a wonderful gift to the investment industry," he said. "It would exempt the largest fraudsters in Canada. I can't understand why they would reintroduce the law with the same loophole."

Elford said the law wouldn't apply to corporations like Goldman Sachs which is currently the subject of a civil fraud suit brought on by the Securities and Exchange Commission, the national securities regulatory authority in the U.S.

"Any Bay Street operator could sell any product in any fraudulent and misleading manner and this bill would not apply," Elford said.

Edmontonian Jason Cowan has been pressing for tougher white-collar crime laws since he and a partner were allegedly defrauded of more than $2 million in 1996.

"I think it's absolutely necessary that there are some checks and balances," he said. "These white-collar criminals are getting off all the time."

Justice Minister Rob Nicholson said the legislation will make jail mandatory for fraudsters who bilk their victims out of more than $1 million.

"Our government is standing up for victims of white-collar crime," he said when the bill was reintroduced Monday.

Justice spokeswoman Pamela Stephens said the bill, originally introduced in October 2009, is expected to pass quickly.

"This bill in the previous parliamentary sitting received support from all parties so we expect it should proceed expeditiously through the House," she said.

dhenton@thejournal.canwest.com

Read more: http://www.edmontonjournal.com/news/Alb ... z0n40NlCBP
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Re: Politics and hungry lawyers help abuse the system for gain

Postby admin » Tue May 04, 2010 4:15 pm

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In 2009 the conservative government introduced a bill, (C-52) which was intended to create stiffer penalties for white collar crime. It was also intended to bolster the conservatives image and to show that they were taking the matter seriously.
http://www2.parl.gc.ca/HousePublication ... 192&file=4


The only problem with the bill as it was written, which was carefully and clearly pointed out in Ottawa and on the record, was that when drafting the bill, someone carefully and cleverly “omitted” the effects of this bill for those people who deal in public markets. (fraud section 380 (2) "missing")

In layman terms that meant that they exempted stiffer penalties for the Bay Street boys, bankers, investment bankers etc.

When parliament was prorogued the bill was cancelled, and just this past Monday it was re-introduced with the same fanfare of how much the government was doing to protect the public.
http://www2.parl.gc.ca/HousePublication ... 626&file=4

The only thing I can see with the new bill is a new short name, “Standing up for victims of white collar crime”. Beyond that name, the bill appears identical to the old one in every respect.

Thanks means that the “Gift” of exempting stiffer penalties that the old bill gave to those who sell stocks, bonds, trusts, anything public market related still stands. In simplest terms I can state, it means that if this bill were for the United States it would exempt people like Goldman Sachs from penalties for any crimes they commit. Exempting the largest market participants is not in my opinion the way to stand up for anyone. It appears more to me the way to “sell out” to the highest bidder. God forbid.
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Re: Politics and hungry lawyers help abuse the system for gain

Postby admin » Tue Apr 20, 2010 11:51 am

I have now heard back from Alberta Finance Minister Ted Morton.   He says he will not answer questions on the practice of letting investment firms violate our laws.  It is strange to see a public servant stand so strongly on the side of financially abusive practices.

Despite $32 billion missing from the Canadian economy using such legal tricks. (ABCP toxic investments)  Despite mutual fund companies which put billions into their own pockets at the expense of the public.  Despite several investor suicides, by people who have been damaged by bad investments approved by your securities commission. By an investment industry that can buy permission to violate our laws.

Provincial securities commissions have done approx. 5000 such back-room deals with no notice to the public.  Deals that let investment sellers ignore the laws designed to protect investors.

The finance minister will not talk.  This might speak volumes about what he is hiding. Or who he is taking his “advice” from.  I suspect he gets his advice from persons at the Securities Commission with $500,000 jobs.   The Ontario Legislature is now on record as chastising it's securities commission for failing to protect the public interest.  Our politicians here are years behind even this step.

The questions are pretty simple:

“What public interest is served in letting investment firms sell products that do not meet our securities laws?”

“If there is a legitimate public interest, then why are these deals done in secret, without notice to the consumers of investment products, and no public disclosure?”

If there are sound reasons then the questions are easy.  If there is something to hide, then they become more difficult.  Mr. Morton, why are you hiding?

With no explanation after a few years of asking, (and with 30 years investment industry experience) I must conclude that our investment industry is getting away with the financial murder of our economy. That they are riding on the gifts of self regulation, corruption, connections and cronyism. Again Mr. Finance Minister, what in the world is motivating you to hide this?

For politicians to cover this up is a breach of the public trust.  Write them a note and see if they can give you an answer.  Then write me a note and I will keep track of their answers.  lelford@shaw.ca
Larry Elford (former CFP, CIM, FCSI, Associate Portfolio Manager, retired)

Founder of www.investoradvocates.ca
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Re: Politics and hungry lawyers help abuse the system for gain

Postby admin » Mon Apr 12, 2010 3:42 pm

alberta finance 20 exemptions jpeg pg 1.jpg
Thank you for your response Mr. Morton, but as you can see, this "detailed explanation" that you refer to does not even begin to answer the public interest questions as posed:

1. What public interest is served by allowing financial laws to be violated by certain parties?
2. Why are these back-room deals (eg. legal exemptions) done to violate our laws without public input and without any notice to the public?
3. Where is the open process and the transparency that best practices and the public interest would require?
4. Why is our Alberta Finance Ministry suppressing this matter, rather than protecting the citizens of Alberta?

I cannot understand why simple answers cannot be provided to simple questions, when it comes to the regulatory handling of investments and public money. Unless there is a legitimate reason NOT to provide answers, your government is appearing to condone secrecy and very damaging to the public financial practices. I am sure that this is not the message that your government is intending to send.

Please consider this matter to remain open until you find yourself able to answer the easy questions without obfuscation.

Best Regards

Larry elford

Begin forwarded message:

From: Finance and Enterprise <Fin-Ent.Minister@gov.ab.ca>
Date: April 12, 2010 4:15:05 PM MDT
To: lelford@shaw.ca
Subject: Provincial Securities Regulators - Issue of discretionary exemptions

Dear Mr. Elford:

Thank you for your March 9, 2010 e-mail requesting that I resend the detailed explanation previously sent to you by Mr. Robert Bhatia, former Deputy Minister of Finance and Enterprise, in January 2009.

As requested, I am attaching a copy of Mr. Bhatia’s January 5, 2009 letter, which provides the detailed explanation for why provincial securities regulators across Canada felt it was appropriate to issue the discretionary exemption orders in which you expressed concern.

I believe the Alberta government has taken all the appropriate steps to address your concerns. As this matter has been dealt with several times over the past year, I consider this matter to be closed and will not be responding to further correspondence on this subject.

Sincerely,


Ted Morton
Minister of Finance and Enterprise

Attachment

cc: Greg Weadick, MLA
Lethbridge-West
<<Letter.pdf>>

alberta finance 20 exemptions jpeg pg 2.jpg




Mar , 2010

To: Ted Morton, Alberta Finance Minister Fax (780) 427-5543
1, 160 MacLaurin Drive (Springbank Airport)
Calgary, Alberta T3Z 3S4

Dear Mr. Morton,

On an email from you dated March 8, 2010 to Larry Elford of Lethbridge, you state that several contacts were made to Ed Stelmach and the Minister of Finance in 2009 about legal exemptions as they apply to investment products in Alberta. (the granting of legal permission to investment sellers to violate Alberta’s laws on known defective investment products and advice)

You specifically state that Mr. Elford was provided with “detailed explanation of why provincial securities regulators, including the Alberta Securities Commission, thought it was appropriate to issue the discretionary exemption orders about which you have expressed concern.”

Would please share with me the “detailed explanation” that you refer to as Mr. Elford claims that no such information was ever provided by your Ministry. I also note from Mr. Elford that the following questions were in several Alberta newspapers and yet have not been answered by your ministry. I request that your detailed explanation as well as answers to these important public matters be provided.

The questions for your ministry:

1. What public interest is served by allowing financial laws to be violated by certain parties?
2. Why are these back-room deals (eg. legal exemptions) done to violate our laws without public input and without any notice to the public?
3. Where is the open process and the transparency that best practices and the public interest would require?
4. Why is our Alberta Finance Ministry suppressing this matter, rather than protecting the citizens of Alberta?

Here is the answer received to date from the Alberta Finance Ministry:

“In this particular situation (ABCP) it appears the commissions carefully considered the situation and acted properly in granting the exemptions.”

Here is the official reason given for the exemptions by the ASC:

“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.”

These answers are usatisfactory, and may in fact indicate that there has been a violation of the public interest. Please address this in the most professional manner possible by your Ministry. There should be no political reason whatsoever for you to be protecting the investment industry or protecting the Alberta Securities Commission, if the public is being damaged by this process.

I thank you for for providing me with the explanation you refer to, Mr. Morton, as well as the answers to the enclosed questions.

Best Regards,
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Re: Politics and hungry lawyers help abuse the system for gain

Postby admin » Tue Feb 09, 2010 11:22 pm

Feb 8, 2010

To: Ted Morton, Alberta Finance Minister

Dear Mr. Morton,

Why can investment sellers violate the law in Alberta and sell tainted products?
Why does our crown Alberta Securities Commission allow this? Profit from this?

More than a billion dollars of substandard investments have been sold in Alberta, with the permission of the Alberta Securities Commission. (ASC). In Canada $32 billion has gone missing with bad commercial paper (ABCP).

The cost of every other crime in the country is approx $40 bil according to Justice Canada, so we have that one financial crime equalling nearly every other crime in Canada combined.

Legal exemptions have allowed substandard investments and advice to be sold by the thousands to Canadians, without notice being sent to the investors.

The questions that went unanswered by Iris Evans after eight requests. Ted Morton third request.

-What public interest is served by allowing financial laws to be violated?

-Why are laws allowed to be broken without public input and public notice?

-Why is Alberta Finance suppressing this, rather than protecting the public?

Here is the answer received to date from the Alberta Finance:

“In this particular situation (ABCP) it appears the commissions carefully considered the situation and acted properly in granting the exemptions.”

Here is the official reason given by the ASC:

“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.”

There is a damaging incestuous relationship between the financial services industry and our government securities regulator. Our Minister of Finance should be moving forcefully towards honest accountability. Anything less may constitute a breach of trust.

These matters have caused billions of dollars to be siphoned out of our economy assisted by 13 securities commissions. Will you Mr. Morton please take steps to answer these questions for the benefit of Albertan’s?

Larry Elford

(Thankfully Iris Evans was replaced recently, and it is hoped that Mr Morton will have a greater understanding of the balance between protecting the investment industry and protecting the public. Time will tell if this will be the case)
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Re: Politics and hungry lawyers help abuse the system for gain

Postby admin » Tue Jan 19, 2010 4:39 pm

LEGAL
Punishing Lawyers in Corporate Frauds
January 19, 2010, 9:01 AM

Peter J. Henning, a professor at Wayne State Law School, specializes in issues related to white-collar crime and follows them for DealBook’s White Collar Watch.

Joseph P. Collins, a former partner at the international law firm Mayer Brown, received a seven-year prison sentence for his role as the lead attorney for the failed futures trading firm Refco Inc., whose collapse as a result of accounting fraud cost investors and lenders more than $2 billion. Mr. Collins was convicted of conspiracy, wire fraud and securities fraud in July 2009 for his role in the stunning demise of Refco only weeks after the firm’s initial public offering.

The company hid debts owed by its chief executive, Phillip R. Bennett, from a buyout firm in an leverage buyout in 2004 and then in the public offering in 2005. In addition to Mr. Collins’s conviction, Mr. Bennett received a 16-year sentence, and Refco’s former president, Tone N. Grant, was sentenced to 10 years for their role in the accounting fraud.

Mr. Collins was Refco’s long-time outside counsel and the firm was his largest client, generating $35 million in billings for Mayer Brown. It is rare that an outside lawyer is prosecuted for legal representation of a client, and the case can be understood as part of a growing trend in which federal prosecutors and regulatory agencies, including the Securities and Exchange Commission, focus on those who enable corporate fraud along with the officers and directors who orchestrate it. The punishment of Mr. Collins is substantial, and The New York Times’s chief financial correspondent, Floyd Norris, asked on his blog last week, “What are the longest sentences given to partners (or former partners) of major law firms, for crimes committed on behalf of clients?”

Although uncommon, Mr. Collins is not the first outside lawyer to be prosecuted for work on behalf of a client, although his sentence is among the most severe. Other lawyers are included on the list of those who have been convicted for conduct related to their legal practice:

Terry Christensen, a well known entertainment lawyer, received a three-year prison sentence for his role in the wiretapping of the ex-wife of his client, the billionaire Kirk Kerkorian,the during a child-support case. Mr. Christensen worked with private investigator Anthony Pellicano, the so-called “private eye to the stars” who was convicted in other cases.
Raymond Ruble, a tax lawyer at Sidley Austin, received a 6½-year prison term for his role in the sale of tax shelters by KPMG that resulted in more than $100 million in avoided taxes.
Melvyn I. Weiss and William S. Lerach, name partners at the plaintiffs class-action firm Milberg Weiss (which later split into two firms), received sentences of 30 months and 24 months, respectively, for their role in paying kickbacks to lead plaintiffs and expert witnesses in the firm’s cases. Two other name partners from the firm, Steven G. Schulman and David J. Bershad, received six-month prison terms.
John G. Gellene, a leading bankruptcy lawyer at Milbank Tweed, received a 15-month prison term for filing false documents in a corporate bankruptcy proceeding in 1994 that did not disclose a conflict of interest he had through prior work on behalf of a major creditor of the company. An excellent book by Professor Milton C. Regan Jr., “Eat What You Kill: The Fall of a Wall Street Lawyer,” looks at how Mr. Gellene came to find himself in a criminal prosecution.
I have not included Marc Dreier on the list because he did not act on behalf of clients in enriching himself, although certainly his standing in the legal community contributed to the fraud he perpetrated.

In-house counsel have also been the subject of criminal prosecutions, most recently in the options backdating cases. For example, the former general counsel of Comverse Technology, William Sorin, received a year-and-a-day sentence for his role in the issuance of backdated options by the company.

Not every case involving the prosecution of lawyers is successful, however, as juries have acquitted inside lawyers from McAfee, Tyco International and McKesson.

What is striking about the sentence that Mr. Collins, the former Mayer Brown lawyer, received is its length. This is largely a product of a change in the Federal Sentencing Guidelines adopted in late 2001 that substantially increased the likely sentence in fraud cases. The United States Sentencing Commission amended the fraud-loss table used to calculate the sentences so that a loss of more than $400 million pushed the potential punishment to more than 20 years and could even result in a term of life in prison when other factors, such as the number of victims, were considered.

The timing of that change could not have been more propitious for prosecutors because shortly afterward financial meltdowns at companies like Enron, WorldCom and Adelphia Communications hit. While at one time prison sentences for white-collar offenders were uncommon, and anything over two years almost unheard of, the sentencing guidelines made substantial prison terms much more likely when a large corporation collapsed. Thus, defendants like WorldCom’s chief executive, Bernard Ebbers, got 25 years; Adelphia’s chief executive, John Rigas, 15 years; and Enron’s chief executive, Jeffrey K. Skilling, more than 24 years, although that term will be reduced and he could even be back in court for a new trial if the Supreme Court reverses his conviction.

More recently, Mr. Dreier received a 20-year sentence for his fraud that cost victims at least $400 million. A Florida lawyer, Scott Rothstein, has been accused of a similar scheme that may exceed $1 billion in losses, and he is likely to receive at least as much prison time if he pleads guilty as expected on Jan. 27.

Given the sizable losses in the Refco case, Mr. Collins may be fortunate to have received only seven years, as the potential punishment under the sentencing guidelines called for a maximum of 85 years in prison. The Federal District Court rejected his request not to be sent to prison at all, an unlikely result given the amount of the loss. Mr. Collins is seeking a new trial based on recently revealed e-mails, and he is certain to appeal the conviction. Whether the district court permits him to remain free pending the appeal remains to be seen.

The substantial sentence is sure to be noticed in major law firms throughout the country, but whether it has any deterrent effect is another issue.

– Peter J. Henning
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