GET YOUR MONEY BACK!

[admin]

Part of the reason for the letter templates, is to assist those who are abused to "think outside the box". They may be feeling lost and vulnerable, and it is my experience that if you go directly to the "industry sponsored" avenues of recourse, you will be abused once again.

Industry sponsored groups are hired, paid and loyal to the investment industry. I do not feel that they are objective, or that you will receive an honest assessment of your case. They are "referees" who are bought so to speak.

This is one of the failures of the financial industry, and of the government, to have no independent agents to oversee fairness and honesty in financials. The USA is better prepared and more aware of this, and taking steps. Canada is still happy with the status quo, and until you make some noise, we learn nothing, we change nothing.

Best of luck and let me know if I can help you.
advocate

[admin]

Letter outline to send in attempt to force a refund of money lost to a predatory and misleading financial relationship:

change this as you see fit.

Date____________

To: Various destinations suggested below**

From:_____________

Dear Sir,

I write in regards to money lost in my investment account, due to what I believe to be misleading and misrepresentative marketing practices. I would like your help in obtaining a full refund of my money lost due to these misrepresented practices. I ask you to immediately prevent such practices, which I believe to be illegal under our Canadian criminal code and also under the misleading marketing terms of our Competition Act of Canada, and to cause those responsible to be held responsible and accountable for such practices.

I specifically state that after learning that my investment person was legally licensed, registered, and paid in the capacity of a "salesperson" which is a legally defined license and registration category, I now realize that this information was not conveyed to me accurately. It was in fact witheld, concealed or misrepresented, and I was led to believethat my investment person was in fact an "advisor" (another separate and totally distinct license that my person did NOT hold) and that they were acting in my interests. I refer to their marketing materials, advertising, and the marketing and advertising promises of the investment firm that they sold for.
I was not made aware that I was in a relationship with a "salesperson", but rather led to believe it was with that of a trusted professional. This is clearly not the case.
I ask your immediate help to stop this misrepresentation to the public, and to compensate myself and others for the losses and damages suffered as a result. It is possible that the investment salesperson, the firm, their self regulatory bodies, as well as the provincial securities commissions have all participated in this misrepresentation. All may thus be liable, up to an including our provincial government which oversees, regulates and should protect us from such industry behavior.

I understand the many options for remedy might include industry complaint, criminal complaint, civil action, competition act complaint and possible class action. I ask you to work with me in those areas which you are empowered to do so, in obtaining my full refund of moneys lost due to misrepresentation, and I ask that you act to protect the public interest from these types of misrepresentation in future.

I look forward to your help and response and I thank you for your time.

Best Regards.


____________

PS. Enclosed are three criminal code sections which may apply to the type of misrepresentations or deceits involved:


Fraudulent concealment
341. Every one who, for a fraudulent purpose, takes, obtains, removes or conceals anything is guilty of an indictable offence and liable to imprisonment for a term not exceeding two years. (applies to the financial scheme to take advantage of clients interests as well as the resulting legal manipulations)
False Pretences
(1) A false pretence is a representation of a matter of fact either present or past, made by words or otherwise, that is known by the person who makes it to be false and that is made with a fraudulent intent to induce the person to whom it is made to act on it.
Negligent Misrepresentation

[admin]

This template is intended to be sent to a provincial MLA, but could also go to your federal politician. The feds have managed to dodge involvement, when push comes to shove, by claiming that finances are a "provincial" responsibility, and they may be correct, but I see no reason why they should so easily avoid the issue. Those that are in power should act like it, or perhaps they should not be in power. Send it where and to whom you think it will find an audience. Media, whomever.

Also of note is that this letter may or may not reflect your exact violation, and your exact concern, but I ask you to consider this:
If each and every one of us takes our individual concerns, or our individual case to authorities in this manner, it is likely that none of us will find an ear. However, by concentrating on the largest, most abusive cases (of which these two qualify) and if we combine efforts to have them heard, we may get an action that will benefit us all. (I have no personal connection with either of the two case studies presented, they are just the best examples of what I am opposed to, and the best documented I have seen in thirty years. United we stand, divided we fall. Lets get united behind something and get it done.

Date _____________


To: Your provincial MLA

Re: Financial abuse, misrepresentation fraud, negligence, breach of trust

I am writing to request a public inquiry under the Provincial Inquiries Act. Specifically, an inquiry into two well known and well documented abuses of the public interest and abuses of the economic health of every citizen.

Case Study #1 refers to the nearly twenty times that provincial laws were knowingly violated in order to assist financial firms to sell substandard and toxic investments, sometimes referred to as “asset backed commercial paper”.

Case Study #2 refers to the permitted violations of the “commission rebating” laws of the provincial Securities Act, which allowed an investment firm the ability to profit to the extent of $800 million at the expense of each and every client affected.
Both case studies are discussed at www.investoradvocates.ca and further information can be obtained there.

Thousands of other examples exists, of our financial firms and our regulators knowingly co-operating to violate our provincial laws. This co-operation was done in each case without public ability to have a voice, further without public notice in any way. Billions upon billions of dollars have thus been “harvested” from our economy in this manner, unbeknownst to the average citizen. We are now able to demand that this matter be looked into.

Criminal charges such as Fraud, Breach of Trust, Negligence, Negligent Misrepresentation as well as a violation of the principles of “honest services”, are but a few of the possible discoveries to be expected to come from such an inquiry.

Beyond the two case studies above, beyond the thousands of legal tricks played upon the public using legal exemptions, are the ordinary victims, their abuse, their stories, their financial health and the health of our economy.

You are in a position of authority in this matter, and we are asking you to exercise this authority now to make this matter come forward into public view. We ask you to immediately call for a public inquiry into well documented crimes against the public interest.


Regards

copy to
MLA
MP
MPP
Letter to Editor
Media
etc
_______________________

[admin]

After some discussion with a financially abused client who has started to figure out how he was misled and is off to see a lawyer, I decided to search the recent CSA (Canadian Securities Administrators) most recent changes to registration categories.

What I found was a shocking move by people who are supposed to protect the public, people who have failed badly in this effort, and let the industry "own" their ethics and their opinions, changing the securities rules in order to protect the industry further.

Pasted below were some comments and thoughts (disjointed yes, sorry) as I skimmed their recent amendments and found what I was afraid of, namely a change that removes the word "saleperson" from securities categories and replaces it with something that is less difficult to show that the public is being misled and misinformed. No change to the qualifications, nor the job description, just a word to protect the industry legally. Sad.

For M & C, copied to http://www.investorvoice.ca

I checked into the recent announcement by the CSA on changes to registration and found what I feel to be devious alterations to protect and further misrepresentation of the public, please take a look at some of the changes and shoot me a note

The first several apply to the codes of conduct violated for your case Mike, and the final one of changing the word "salesperson" is indicative that they have been misleading you and another several hundred thousand others. read on

tricks of the trade lesson 900

If you find that you have done wrong for the investing public........change the rules to make it look legal

see the new rules and changes by the CSA (Canadian Securities Regulators) and spot the legal tricks they have applied to cover misrepresentations, and misleading of the public. They apply to your case, and to your investments.

http://www.albertasecurities.com/securi ... ly_8_CM%20[+%20attachments%201%20-%208].pdf

Conflicts of Interest

Firms must identify and respond to existing and potential conflicts of interest by avoiding, controlling or disclosing them. (Larry says, "your sales firm did not disclose to you the conflict that they had in encouraging you to buy DSC funds, and earn them a higher commission........")



Relationship Disclosure

An outcome-based provision in the Rule requires a registered firm to provide clients, other than permitted clients, with all information that a reasonable investor would consider important about their relationship with the firm. (Larry comments "your firm did not disclose to you all the information that a reasonable investor would consider important..........such as the "salesman" license that your "advisor" posessed")



Know your Client (KYC) and Suitability

The obligations to "know your client" and to determine whether an investment is suitable are fundamental to investor protection. (Larry comments "Your salesman failed to comply with the "suitability" requirements of his industry (as did the investment firm) by selling you mutual funds at the highest possible commission when an identical, but lower cost to you option for the same fund was available..."



General Principles

Dealers and advisers must deal fairly, honestly and in good faith with their clients. (larry comments.........they took advantage of you instead of helping you.......they helped themselves in all manners of the process.......DSC......leverage, etc)



Integrity

Registered individuals and firms should conduct themselves with integrity and in an honest manner. (larry comments ....."ditto")



On page 84 (out of 109) I see part of the motherlode that I am looking for........."a change from the existing category of "salesperson" as an official license and registration category, to a new title called "Advising Representative". Thus with the stroke of a pen, the CSA, which is supposed to protect the public, has tried to indemnify all licensed salespersons who have for years now been misrepresenting themselves as "advisors". They have succeeded in tricking us all into accepting a guy with a 90 day securities course and a license to sell, tricking the public into believing that this person (who is paid by sales commissions) is going to be a trusted advisor.

http://www.albertasecurities.com/securi ... ly_8_CM%20[+%20attachments%201%20-%208].pdf

Alberta
Section 13.5(2)(b) of National Instrument 31-103 Registration Requirements and Exemptions



I would like to do some further research into this section when I have more time (Larry)



from pages 109/110 the following changes designed to protect the insdustry and further enhance the misrepresentation of the public:

14. Section 71.1 is amended

(a) by repealing clause (1); #3240830.5 9

(b) in clause (2) by striking out "salesman" and substituting "representative";

(c) by repealing clauses (3) to (8);

(d) in clause (9) by

(i) striking out "(1)(d) and (h), and", and

(ii) striking out "salesman" wherever it occurs and substituting "representative"; and


(larry.........this is the most flagrant example of self protection while misleading the public that I have put onto this site so far.........if this does not display an arrogance and a predatory treatment towards the investing public by this group of securities commission people............they are proving that they are not in any way qualified to call themselves protective of the public. They are bought and paid for by the industry.)

[admin]

Sorry Larry, Ive discovered the literature Im after on your site. I am also researching an article on fiduciary duty in court called http://www.classaction.ca/pdf/publicati ... Common.pdf

I dont know if it will help me understand much but have you seen this document, what do you extract from it?

further discussion re statement of claim against an investment person for negligent misrepresentation (basically lying to the public by salesmen and saleswomen who mislead the public into belief and trust that they are professional advisors)
http://www.classaction.ca/pdf/publicati ... Common.pdf
In addition to this above document:

I have a fair amount of info on fiduciary duty, and duty of care. I also have some of the industry training manuals used to help us get our license's, that deal with the matter. Basically they go like this. Everything they tell us (employees of the industry) is that we have a duty to care for our clients, and they describe fiduciary duty as it applies to the relationship. But when push comes to shove, they go into court and sing an entirely different tune, which is pretty much a lie. I think a good lawyer can use this two faced approach to easily show that they are acting in bad faith.

(see Patricial cosgrove vs RBC case on www.investorvoice.ca under "cases". RBC told a 92 year old lady that they did not owe here a fiduciary duty since she did not sign away "deiscretionary authority" over her account to RBC. That argument would mean that 90% of RBC clients are NOT owed a fiduciary duty. That would also negate hundreds of millions of dollars of industry advertising which basically says, "trust us, we are your expert".

The stuff on negligent misrepresentation (page one of the PDF above) has a good deal of useful info. You have the five elements that need to be met to have a claim for misrepresentation as per The Queen vs Cognos. You also have the five or so elements that can be used by many courts to determine if a fiduciary relationship exists. Did I read somewhere that the regulators claimed that you were a sophisticated enough investor to not be vulnerable or some such argument. Basically that means they are claiming that you were too smart and thus it would be fine and well to mislead you???

The comments about rule 10b-5 about manipulative and deceptive devices (page 3 of the PDF above) certainly include three examples that have been applied to you to gain your trust and more of your money for commission purposes, not for investment purposes. You have a perfect argument to demonstrate that at NO TIME did the employee or his firm bother to tell you that you were dealing with a person who is only licensed as a "salesperson".. This is a clear and material "ommission" of a material fact. Again, the analogy would be for to "forget" to tell my passengers that I were not licensed as a pilot. Convenient for me, but probably a fairly material omission for them.

The web site of this firm claims another two faced approach. to the clients they make public representation that they are there to work in your interests...........to the sales recruitment side of their site they clearly make public representation of a sales capacity. Which one is it? Is it a sales role, paid in a sales capacity? or is it investment advice, centered not on sales but on what is best for the client.

The industry is all powerful and has been getting away with both sides of this argument for a couple of decades now. It is time for a good lawyer to point this out, while they calmly ask for all of your money back.

Section138.3 (1) on page 12, suggests that securities commission rules forbid the release of a document which contains a misrepresentation.............and this appears to apply to allowing salespersons to advertise and promote themselves as something they are not licensed as.

Securites Act in each province will provide you with the license requirements to call oneself an "advisor". Another item that the industry has been getting away with by default, but perhaps needs to be help accountable when this deceit causes damage to the public.

Page 13 about section 138.3 (4) discuses a right of action for failure to disclose a material fact...........which is apparent in your case (I assume your guy never informed you that he was only licensed as a "salesperson"?)

[admin]

Below is a rough outline of a something that could be turned into a statement of claim by a lawyer. It was written for a specific case where I felt the clients were knowingly misled and misrepresented. The same might apply to tens of thousands of investors in Canada, due to our self protective, self enriching, self regulatory financial system in Canada.


This claim is for damages suffered as a result of being financially taken advantage of by someone purporting to be a trusted professional investment advisor.  Specifically this company and it's salesperson failed to accurately represent their relationship to ourselves as one of commission salesperson, and instead repeatedly and constantly led us to believe they were acting in our best interests in financial matters.

Specific misrepresentation involved misinforming the plaintiff as to the qualifications and the license and registration of the defendant, namely that of "salesperson", under the provincial securities act, such representation is a violation of the securities act, the self regulatory rules of the MFDA, and the criminal provisions of the Competition Act of Canada on misrepresentation.  

Specific failures to act in the best interests of the plaintiff, and provide investment recommendations that meet the test of "suitability" for the plaintiffs is the example of both encouraging the plaintiffs to leverage their investments to the maximum, which has the effect of maximizing the compensation to the defendant, while not being in the best interests, nor being a matter of "best practices" by an investment professional.  Further, that each and every investment thus purchased by the defendant was purchased using the highest choice of compensation to the defendant, the DSC (deferred sales charge) which places a long term commission penalty for redemption on the plaintiff.  This unsuitable choice of compensation to the defendant is further evidence of a taking advantage of the trust and the vulnerability of the plaintiff, while maximizing the revenue to the defendant.

From the web site advertising of the defendant: 
OUR COMPANY
XXXXXXXXX is a young and dynamically growing Mutual Fund Dealership, committed to providing its Sales Representatives a broad range of products services, and support needed to expand an advisor's practice.
At no time did the defendant inform the plaintiff that its employee was a sales representative.  Instead all efforts were made to misrepresent this relationship as one of trust and professional advice for the benefit of the plaintiff.
From the license and registration section of a provincial securities commission:

Broker name removed -Mutual Fund Dealer, Limited Market Dealer, & Scholarship Plan Dealer ==> SalespersonAt no time did the defendant make efforts to inform the plaintiffs of the license category of the defendant, and instead took extensive efforts to mislead and misinform the plaintiffs in order to maximize the trust of the plaintiffs and to misuse this trust to maximize the commission revenue available to the defendants.

From the defendant web site:

As a XXXX representative, you are essential in helping clients find the right solution to their growing financial needs-today and in the future.

This "right solution" was not provided to the plaintiffs, under the promise and the suitability requirement of the industry, when highest cost and highest compensation investment products were chosen in each and every instance.  And in each instance an identical version of the same mutual fund investment was available at lower cost and greater benefit to the plaintiffs.

Also from the defendant web site:
XXXXXX is a dynamic financial services firm shaping the financial future of Canadians. As part of the XXXXX team, you can help offer Canadians an array of financial solutions to meet their needs including education savings plans, life and disability insurance, mutual funds, stocks, bonds and other investments."   At no time did the defendants properly inform the defendants that they were acting as commission sales persons, and instead made every effort to mislead the plaintiffs as evidenced by the foregoing.

From the defendants web site:

XXXXX offers:
Opportunities to grow and manage your own future
On-going training and development
State-of-the-art technology
Back-office service and support
Superior integrated compensation grid
Sales incentives and exotic trips
The above "sales incentives and exotic trips" is indicative of the culture of commission driven sales rewards of the defendant, and further illustrates a failure to inform and properly represent this to the trusting clients of the firm, namely the plaintiffs.  The plaintiff intend to call upon documents from the defendant to illustrate the compensation grid, the training and to show a clear bent towards commission sales and away from best practices in financial advice.

The plaintiffs claim damages in the amount of $$$$$$, for financial loss suffered by financial abuse by someone claiming to be a trusted professional financial advisor, pus legal costs incurred by the plaintiff to effect this claim.  In addition the plaintiffs claim $1,000,000.00 for the pain and suffering, mental stresses of being victimized financially by someone they trusted, and then having to engage in costly, timely and stressful litigation with the defendant in order to be fairly compensated by the defendant.

(if you wanted to make this into more of a newsworthy case (your only help at this point is the media and the law, the investment industry will be no help to you at all), you could also name the provincial securities commission and the MFDA for knowingly allowing this misrepresentation to go on with their knowledge (negligence?).  their web sites also say how their mandate is to protect the public........this depends on how creative, expensive and aggressive your lawyer would like to be.

I myself would find a small town lawyer who understands right and wrong better than he/she understands billable hours, in other words, one who will not take advantage of your situation like the last guy did.  Talk with a few of them and get a feel for how they understand your case, learn something new from each one, and use it to move forward with one who will give you some estimates and assurances of cost.  If they bullshit their way through the costs discussion, you might want to avoid them.  tell them you are claiming financial abuse, and you want to be very clear up front, that you want a legal rep who understands and respects this.

For filing a statement of claim and getting a ways into this, I would estimate a legal cost to you of $25,000 (and it should be less from my small town experience) and another $25,000 to take it to court.  that is simply a guesstimate, and may be off by thousands and thousands, but I would hope it not be off by tens and tens of thousands.  You have to decide whether your case of wrongdoing is strong enough to "bet" this much money in an effort to get it back. I personally think it is a better investment than your last one, but I am very biased. (that is disclosure)  Your mutual fund dealer is likely to go broke over this, and you might have difficulty collecting.  You should also name the owner and the salesperson personally so that you can collect from them.  (The company looks very low class and low capital from the site)

Efforts like this (in addition to a formal complaint of misrepresentation to the Competition Bureau and perhaps to the police for fraud (if you want to be rejected one more time), will be ground breaking steps which a client in Canada has never used in my experience.  Or if they have, they have received settlement out of court and signed a confidentiality agreement not to disclose the settlement.  You will be testing the morality and the ethics of the investment industry in a public venue, and asking if they can be held accountable and responsible for everything they do.  So far, your experience with MFDA and OBSI probably tells you that they can now get away with just about anything within their own cozy system.  Your job, if you take it on is to change that and make a positive change for those who follow your example.

I will be happy to be of any help I can be with this, including finding you the investment industry experts who can and will speak to the abusive, commission driven tactics that were used on you.  They will likely not charge you to speak of what they know and believe, nor will I.

In a fair world, your case is strong and you will win it.  Unfortunately, this in not a fair world, and I cant speak to the knowledge or the integrity of the judicial system.  They are pretty damn close to the financial guys.  Last advice is to ask in your statement of claim to have this trial heard in from of a jury, so that you have everyday folks making the call instead of one lone single judge.

all of the above includes spelling errors, grammar, and missing quotation marks.  i hope you can digest it, clean it up and add to it, and run it past at least three lawyers for thoughts.  then i hope to hear from you

[admin]

As I look at avenues for clients to recover money lost to predators, posing as professionals. To salesmen posing as supporters. I see the following.

If you work "within" the system, you will be turning your fate over to what I see as a very incestuous and well designed system that will not treat you fairly. You will be baring your soul and sharing your case to people who are in my opinion bought and paid for by the investment industry. Look at the record, look at the research. Check out www.investorvoice.ca .

Your salesman, his manger, his regional manager, his national manager etc., etc are not motivated to help you either get your money back, or admit wrongdoing within their company. Neither is their compliance officer. The compliance officer is hired and paid to protect the company first and foremost, and secondly the client.
The self regulators are nothing but a loose knit association of industry members, who also have no motivation to truly reveal rot from within, so they will be referees on the take, so to speak.
The provincial regulator, (the securities commissions) are government agencies in the worst possible way. They have delegated far too much work down to self regulators and they will go to any lengths to support this action, rightly or wrongly. They are the greatest dissapointment in the bunch, since they, at least, should have some motivation to protect the public. Unfortunately protecting themselves is a far stronger motivation, and you will be sadly disappointed if you rely on them for help.
Ombudsmen, industry mediation services, etc., etc are an extension of the "referee on the take" as they are all industry paid and sponsored.
There is very little hope of finding independent thought or judgement within any of these organizations. A customer of the financial services industry is entirely at the mercy of this "system". Even the police defer their involvement to this financial system of self regulation. The financial industry has succeeded in telling us that they are capable of policing themselves and they have put in place a support system to get away with it. To get away with fraud, forgery, negligence, misrepresentation, nearly anything that is typically criminal. They get to deal with it "in house", meaning they get away with it. Until this system is altered to something fair and honest, we continue our economic decline. It is like having termites eating away at the very foundation of our economy. No matter what economic condition we experience, good or bad, those feeding in the dark, on the very foundation will always win and we will always lose.

[admin]

various destinations** for the previously posted letter intended to get ones money back

Take it personally to your local member of parliament, your provincially elected member of the legislature, and your opposition members. Speak to their staff about the issues, the problems, the abuse.

Local Police Detachment. They are being coached by the financial industry to allow the industry to "police itself". Do not allow criminal violations to be swept under the carpet. Speak to your local police commission, attend a police commission board meeting and have your voice heard.

RCMP is a broken organization, but it needs to be in the loop none-the-less.

Provincial Securities Commission

Investment Firm Involved

Competition Bureau of Canada (if they receive 6 letters of similar complaint they are obligated to report back to you the status of the investigation, otherwise they blow a person off claiming confidentiality)

Local press

national press

local talk radio (and call them and talk to them. believe me, they understand the problem, they just have never met a Canadian who will stand and complain very loudly)

three reputable class action law firms (imagine them getting thousands of such letters.......)

myself (investoradvocate@shaw.ca)

public internet forums/bloggs/floggs/start your own, they are free after all

[admin]

letter outline to send in attempt to force a refund of money lost to a predatory and misleading financial relationship:

change this as you see fit.

Date____________

To: Various destinations suggested below**

From:_____________

Dear Sir,

I write in regards to money lost in my investment account, due to what I believe to be misleading and misrepresentative marketing practices. I would like your help in obtaining a full refund of my money lost due to these misrepresented practices. I ask you to immediately prevent such practices, which I believe to be illegal under our Canadian criminal code and also under the misleading marketing terms of our Competition Act of Canada, and to cause those responsible to be held responsible and accountable for such practices.

I specifically state that after learning that my investment person was legally licensed, registered, and paid in the capacity of a "salesperson" which is a legally defined license and registration category, I now realize that this information was not conveyed to me accurately. It was in fact witheld, concealed or misrepresented, and I was led to believethat my investment person was in fact an "advisor" (another separate and totally distinct license that my person did NOT hold) and that they were acting in my interests. I refer to their marketing materials, advertising, and the marketing and advertising promises of the investment firm that they sold for.
I was not made aware that I was in a relationship with a "salesperson", but rather led to believe it was with that of a trusted professional. This is clearly not the case.
I ask your immediate help to stop this misrepresentation to the public, and to compensate myself and others for the losses and damages suffered as a result. It is possible that the investment salesperson, the firm, their self regulatory bodies, as well as the provincial securities commissions have all participated in this misrepresentation. All may thus be liable, up to an including our provincial government which oversees, regulates and should protect us from such industry behavior.

I understand the many options for remedy might include industry complaint, criminal complaint, civil action, competition act complaint and possible class action. I ask you to work with me in those areas which you are empowered to do so, in obtaining my full refund of moneys lost due to misrepresentation, and I ask that you act to protect the public interest from these types of misrepresentation in future.

I look forward to your help and response and I thank you for your time.

Best Regards.


____________

PS. Enclosed are three criminal code sections which may apply to the type of misrepresentations or deceits involved:


Fraudulent concealment
341. Every one who, for a fraudulent purpose, takes, obtains, removes or conceals anything is guilty of an indictable offence and liable to imprisonment for a term not exceeding two years. (applies to the financial scheme to take advantage of clients interests as well as the resulting legal manipulations)
False Pretences
(1) A false pretence is a representation of a matter of fact either present or past, made by words or otherwise, that is known by the person who makes it to be false and that is made with a fraudulent intent to induce the person to whom it is made to act on it.
Negligent Misrepresentation

[admin]

it may be nothing,l but I have started to notice a change in the advertising and presentation of the investment industry:

1. I no longer see the RBC YOUR FIRST!! ads that were so prevalent a few years back. I believe it to be due to the lawsuit potential of an advertising promise saying the client comes first, without adequate fiduciary backup to this promise by investment salespeople.

2. The radio commentators who come on at news time to tells us what the market it doing, are strangely no longer referring to themselves as advisors, but as financial consultants, financial planners etc., etc. Another legal issue I believe.

Go back a few years, and look at all correspondence, advertising, promises and business cards for your investment salesperson. Keep these, and compare the promises or impressions they conveyed with the license category of your salesperson (see securities commission web such as www.osc.gov.on.ca and look up their license there) I think you will find them misrepresenting their license which I feel makes them civilly liable for the misrepresentaion.

Fight it, and get your money back.

on following posts I will put up sample letter outlines to get you started down the road of getting your funds returned to you from a misleading and predatory financial relationship.

[admin]

Lawsuits against Fisher Investments may lead to other
adviser litigation
<http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20090517/REG/30517
9967>

Meanwhile, firm's founder says cases "will run into a
concrete wall'

By Bruce Kelly
<http://www.investmentnews.com/apps/pbcs.dll/personalia?ID=BKELLY>
May 17, 2009
If legal action against Fisher Investments is any
indication, financial advisers increasingly will face lawsuits and
arbitration claims from clients who are angry about investment losses.
This month, two sets of former clients of Fisher
Investments, whose founder and chief executive, Ken Fisher, is known for his
redoubtable marketing skills, have sued the firm, both alleging that it
failed to live up to its fiduciary duty during the recent calamitous market
meltdown.
There will be "more claims versus advisers in this type of
environment," said Theodore Eppenstein, senior partner at Eppenstein &
Eppenstein in New York, which represents investors. "I think advisers could
expect" more lawsuits and arbitration claims, he said.
After past market free falls, such as the bear market
following the bursting of the technology stock bubble, stockbrokers and
broker-dealers have been by far the most common target of arbitration claims
by stunned investors looking to recoup losses, industry observers said.
But the historic severity of the recent market fall, coupled
with investors' making little or no distinction between stockbrokers and
investment advisers, make the latter increasingly vulnerable to such claims,
some attorneys and industry observers said.
Mr. Fisher, for his part, brushes off both claims, one a
lawsuit filed this month in federal court in Houston and the other an
arbitration filed this month in Atlanta.

Tom Iannuzzi

Ken Fisher: "The person who will be sorry in
the end is the client, who will wind up spending money on lawyers and
getting nothing."
'INCOMPETENT' LAWYERS
In an interview Thursday, he stressed the mere handful of
legal claims by investors Fisher Investments has faced, and said that the
lawyers who are representing the clients in both matters are "similarly
incompetent."
Both cases "will run into a concrete wall," Mr. Fisher said.

"The person who will be sorry in the end is the client, who
will wind up spending money on lawyers and getting nothing," he said.
Mr. Fisher, discussing one of the plaintiff's lawyers in the
arbitration claim, Andrew Stoltmann of the Stoltmann Law Offices PC in
Chicago, said he wanted to teach Mr. Stoltmann "a lesson he won't forget."
When told of Mr. Fisher's comments, Mr. Stoltmann,
co-counsel in the claim, said: "Bring it on, bring it on."
Mr. Fisher, however, acknowledged that the financial
services industry as a whole is likely to face an increasing number of legal
claims.
During a presentation he made last month at an industry
meeting in New York, he pointed out that in the aftermath of every bear
market, there is a pickup in arbitration claims and litigation.
Both the lawsuit and the arbitration claim allege that
Fisher Investments of Woodside, Calif., failed to protect the clients' money
before last year's stock market collapse, because the firm invested their
portfolios almost exclusively in stocks.
InvestmentNews.com on Tuesday reported one legal action
against Mr. Fisher, a $1.2 million arbitration claim.
A lawsuit making a similar allegation was filed by an
investor this month in federal court in Houston. In that suit, the investor,
Maurine Ford, claims that Fisher Investments caused "significant losses" to
a living trust that the firm started to manage in June 2008.
Prior to that, her trust was managed by Lighthouse Capital
Management LP of Houston, from which Fisher Investments bought the client
assets last year.
"Upon the transfer of the trust's investment account from
Lighthouse to Fisher Investments, the asset allocation in the trust's
account was as follows: cash 27%, fixed income 32% and equities 41%," the
lawsuit states. "Fisher Investments recommended that [Ms. Ford] reallocate
the trust's portfolio to invest 100% in equities," the suit states.
The arbitration statement of claim, which was filed May 5 in
Atlanta, alleges that Fisher Investments invested too much of a retired
doctor and his wife's $2.5 million portfolio in stocks, even with the market
in free fall last year.
FULLY INVESTED
"As the market continued to plunge throughout 2008, there
was one common theme from Fisher Investments:
* blind optimism and staying fully invested in equities," the
arbitration claim states.
"Despite overwhelming evidence of a bear market, Fisher
Investments kept its elderly and retired clients almost 100% in equities,"
according to the arbitration claim, which was filed with Jams, an Irvine,
Calif.-based private provider of alternative dispute resolution services.
The claim was filed by Brent and Michelle Murphy of
Savannah, Ga. Mr. Murphy is 61, and his wife is 60.
Mr. Stoltmann said he expects to file more claims against
Fisher Investments in the coming weeks.
Mr. Fisher declined to comment about either the arbitration
or the lawsuit, because that would violate the privacy of the clients, he
said.
However, he emphasized that Fisher Investments, which is one
of the most noted investment advisory firms in the country, has a rigorous
process of vetting clients and gathering information to review their goals
and needs when they invest with the firm.
"We are over-the-top careful in this process," he said.
Fisher Investments has $28 billion in client assets and
37,648 accounts, making it one of the largest registered investment advisory
firms in the United States.
E-mail Bruce Kelly at bkelly@investmentnews.com.

[admin]

For more info related to this topic, see also, "class actions", and "solutions, self defense" topics

there are also some communications with the Competition Bureau of Canada on the matter, to show you how difficult it can be to get bureaucrats to step up and do their jobs, when their jobs become difficult.

good luck

[admin]

In this day and age of laws, and the rule of law, I feel there are laws that you can and should be using to get a full refund of any and all losses you may have suffered with the help of a trusted financial advisor.

The laws are those against fraud, negligence, misrepresentation, negligent misrepresentation. Those laws are under the administration of the criminal code of Canada, and the Competition Act of Canada.


Fraudulent concealment
341. Every one who, for a fraudulent purpose, takes, obtains, removes or conceals anything is guilty of an indictable offence and liable to imprisonment for a term not exceeding two years. (applies to the financial scheme to take advantage of clients interests as well as the resulting legal manipulations)
False Pretences
(1) A false pretence is a representation of a matter of fact either present or past, made by words or otherwise, that is known by the person who makes it to be false and that is made with a fraudulent intent to induce the person to whom it is made to act on it.
Negligent Misrepresentation

Breach of Trust, section 122, may apply to your provincial securities commission, and any self regulator that knowingly allowed these misrepresentations to prey upon you. This may make them liable as well as the person or persons who misrepresented themselves to you.

Negligence From Canada's Criminal Code, ¶219:
"Every one is criminally negligent who in doing anything, or in omitting to do anything that it is his duty to do, shows wanton or reckless disregard for the lives or safety of other persons."

Fraud, section 380 “every person who. By deceit, falsehood, or other fraudulent means........defrauds the public or any person, whether ascertained or not, of any property, money or valuable security or any service”


The other laws are civil codes against misrepresentation, and other intentionally known ways and means to do financial damage to you. Lawsuit and or class action may be the avenue that you turn the tables against financial professionals, or those who pose as financial professionals, without delivering professionalism. Let me give you an example to start with:

Supposed you have dealt with someone who is licensed in your province in the category of a “salesperson”, and this person (or his sponsor firm) has intentionally misled you, the consumer into thinking and believing that you were instead dealing with a trusted financial professional. Perhaps they even used the term “advisor” to represent themselves, when they were in fact, licensed, registered, trained and compensated in the official category of a “salesperson”. Would you object to the misrepresentation? Would it fit the definitions above? Many might say yes. I say yes. I say you have ben intentionally lied to, misled, and taken advantage of for purposes of marketing.

You would not accept this coming from a “doctor”, who you find out later, is not licensed to practice medicine, but working to sell products instead. I have even see recent headlines where a person was arrested to impersonating a dentist without being licenced. “Advisor”, is an official, legal, registration category that your lawyer can research and investigate by reading the Securities Act of your province. It is a category that 99 times out of 100, your “salesperson” has not met the qualifications for, nor is he or she registered in this category.

So how does the investment industry get away with this if it against the rules?
The investment industry polices itself, judges itself, and (rarely) prosecutes itself. Almost never does it prosecute for it’s own mistakes, but rather, acts in an arbitrary manner, like self regulated industries may tend to do, and enforces rules detrimental to its profits or it’s major members very rarely.

On the MFDA topic on www.investoradvocates.ca

viewtopic.php?f=1&t=72

and the IDA (IIROC) topics

viewtopic.php?f=1&t=41&start=0

are posted attempts to get these “self” policing organizations to come clean on how rules like this are knowingly broken every day. They do not answer the question. They can not answer the question in my opinion, without either lying, evading, or admitting negligent misrepresentation. That is good news.

What? Good news?
Yes, since it means, in my view that they are caught in a lie. Caught red handed, misleading consumers, misrepresenting, and failing to enforce and enact the laws designed to protect consumers. The good news in that is that they are caught. They cannot change the paper trail. It is there, all laid out for you and your lawyer to read, to deal with, and to beg the authorities to prosecute.

Authorities, such as the Competition Bureau, and some police, are not up to speed on such matters as this, in regards to the financial industry. You will have to bring them up to speed, educate them, force them to stray from their comfort zones. Or have your lawyer take the steps for you if you have one. I will help them if need be. I do not charge for this help. I think enforcing the law might just be the right thing to do once in a while.

If you are a fighter, or can hire a fighter, or can band together with others who have been financially abused by a common group of predators, I feel that you might just be able to get your money back. Is this a legal opinion? No. It is a personal feeling from someone who is tired of seeing an entire industry be able to get away with anything, up to almost murder, without laws being applied to this conduct.

[admin]

The Investor Advocate
Ken Kivenko’s column is all about investor protection. Ken fights for investors’ rights and exposes violations and malpractices. He also runs an advisory business, Portfolio Analytics, assisting investors obtain restitution due to sales or broker abuses.


OBSI in depth


By Ken Kivenko | Thursday, December 06, 2007
Things you should know about the Ombudsman for Banking Services and Investments.
Like every product or service, the investment industry has its share of unhappy clients. You might blissfully assume that robust mechanisms are in place to promptly and fairly deal with complaints. As John Reynold’s book the Naked Investor makes so abundantly clear, nothing could be further from the truth. The financial services industry’s approach— Deny, Delay, Defend is built into the system — internal and external ombudsmen, arbitration, civil litigation and complaints to regulators — are a microcosm of the convoluted nature of the system as a whole. First you have to figure out that something is wrong. Next, you have to convince yourself it’s the fault of your financial service provider, so that it’s even worth for you begin the long battle for restitution. Then you have to understand the nature and limits of the internal complaint process where your trusted expert adviser becomes your adversary — and the firm’s formidable resources are arrayed against you. They know the process and how to game the complaint proceedings that a retail investor is barely even aware of.

Once an investor concludes he can and should complain he must go through a long, extended and stressful process with the fund dealers and brokers. Some have referred to this complaint process as “a quagmire” as the investor struggles with how and to whom to address a complaint. Before it’s over an investor must deal with his advisor, a branch supervisor, a Vice President, a compliance officer and the firm’s ombudsman. During this complex process, documents are exchanged, there are many phone calls and meetings are held. Sometimes key documents go missing or the advisor has left the company. The brokerage firm may encourage delays, with long response times and obtuse replies begging for explanations that are not forthcoming. This phase alone can take many months, if not years. Meanwhile, the Limitation Act clock keeps ticking away

The financial services provider (FSP) knows the rules of the game and you don’t so you start out at a real disadvantage. The investment firm will drag you through the ringer before it gives you back a dime. It’s not a process you’ll enjoy. Most of the usual suspects, the provincial securities commissions, the IDA and the MFDA will remind you they’re not set up to provide restitution. Often you’ll be ricocheted from one organization to another. At some point, you should, if the FSP tells you, come across a non-profit entity named the Ombudsman for Banking Services and Investments (OBSI) www.obsi.ca. OBSI investigate through what are called “inquisitorial” procedures, asking questions and reviewing material provided to us. It’s not adversarial but you can be sure the firm is an adversary. OBSI doesn’t conduct hearings involving lawyers or cross — examinations although it’s clear that the law department of the FSP is behind the scenes and crafting responses.

About OBSI

OBSI was formed in 2002 when the Government of Canada was planning to set up its own dispute resolution system for investment complaints. The financial services industry “graciously” jumped in and offered up OBSI for “free.” Today OBSI supports more than 600 participating firms across the banking services and investment sectors. As of Nov.1, 2007, dealers for registered education savings plans also come under the service. OBSI is the only national organization that offers a chance for retail investors to get some of their hard-earned money back in cases of financial assault or incompetence. You have up to 180 days after receiving a firm’s final response to get in touch with OBSI to submit your complaint. It’s therefore vital that you decide how you are going to proceed with your complaint without undue delay.

OBSI is industry-sponsored and industry-funded. It is not a government agency or regulator. OBSI is not subject to Freedom of Information legislation. It has a Board of Directors, the majority of which OBSI classifies as independent. The Terms of Reference provide the constraints under which the Ombudsman must function. OBSI’s Terms of Reference do not require it to conduct an analysis to warn other uneducated and unknowing pattern—advised and/or toxic product sold investors who may also have been abused. OBSI does however provide some interesting case studies on its website. Before OBSI may conduct an investigation, it will first have you sign and return a release letter. The release letter provides you with detailed information regarding their complaint process and outlines the terms and conditions under which OBSI will investigate. OBSI have disclosed that their ability to assess suitability is complicated by the continuing lack of industry-standard terminology in KYC forms, and the subjective nature of assessing the risk of certain securities. Recommendations are not always sent concurrently to the firm and complainant, a practice that invites cynicism.

OBSI are committed to the privacy principles of CSA-Q830 which are, in turn, embodied in federal legislation (PIPEDA). In particular, collection, use and disclosure of client data will only be done with your consent and only to the extent required to conduct the investigation.

OBSI provides guidance on making a complaint http://www.obsi.ca/UI/ComplaintProcess/Step1.aspx If you have a question, or want more information, you can call OBSI toll-free at 1-888-451-4519 or email them at ombudsman@obsi.ca You might also want to read OBSI’s Procedures Guide https://www.obsi.ca/images/document/up- ... _Guide.pdf If you’re a mutual fund owner be sure to read How to Make a Complaint to the MFDA http://www.mfda.ca/enforcement/forms/HowToComplain.pdf

OBSI doesn’t automatically take on a case just because a client complains. Section 9(d) of their Terms of Reference gives them the right to refer the case to someone else if they judge that someone else to be more appropriate. There is no appeal [ http://www.obsi.ca/UI/AboutUs/TermsofReference.aspx ]

Governance

OBSI is a non-profit entity claiming it is independent from its industry sponsors and financiers. Governance is crucial as is the transparency of the governance. One measure of independence is the process for selecting the independent board directors and the CEO/Ombudsman. We are told that the majority of board members are “independent” but no definition is provided. OBSI’s disclosed governance process does not seem to include a nominating committee, an oversight committee, details on compensation policy/decisions or annual board self-assessment Looking at the independent members we would have expected to see some background in investor issues, modern complaint systems, dispute resolution processes — instead we see a group of folks, though talented and accomplished in their fields, representing merely diversity of occupations and geographic coverage across Canada. Some have been members’ since way back in 1996 when the service only provided banking dispute resolution services.

Many other aspects of contemporary governance are not revealed in public documents. e.g. By-laws, disclosure controls, board education, position description for Chair, board member duties, annual independent audits [financials and effectiveness], annual no conflict of interest certification, succession planning (current Chair has been in place since 1996) etc. Finally, the fact that there is no appeal to the Board or anyone else, nor can the Board influence the decisions of the Ombudsman, dramatically limits their governance potential and accountability. OBSI affects the lives of all Canadians exposed to it and more transparency of governance practices is required for a national dispute resolution service. Transparency would allow an assessment of OBSI’s operations; the opaqueness breeds distrust.

The rules of engagement

OBSI’s financiers, the financial services industry, have designed the rules under which OBSI will operate. Some of the more important ground rules include, but are not limited to:

OBSI does not deal with service complaints
the investor must first have made an effort to resolve the case with the firm, a long convoluted frustrating process [there is no defined time period wherein OBSI will automatically take on a case; as long as the firm insists it’s still working the case, they maintain control and the statute of limitation clock ticks on]
recommendations are non-binding on either party—OBSI has no power to force payment, set deadlines or impose a sliding scale of fees to encourage early settlement—the way government-imposed arbitration services do in other countries
the restitution limit is $350,000—it hasn’t changed in four years [Where the amount claimed by you in respect of a complaint exceeds $350,000, the Ombudsman will not investigate the complaint unless you and the FSP in writing acknowledge the Ombudsman’s recommendation limit and you agree to release the FSP from liability for any amount greater than the amount of any recommendation made by the Ombudsman and accepted by both the Complainant and the FSP].
if you’ve launched civil litigation, OBSI won’t take your case
only out-of-pocket losses are covered, not pain and suffering
there is no direct charge for the dispute resolution service
In most cases, OBSI will conduct their investigation concurrently with a regulator’s if you’ve filed a complaint with them. However, in some cases OBSI may choose to delay until the regulatory investigation is completed. Dangerous, unless the limitation clock is stopped.

If you meet with or are called by an OBSI case investigator you may be asked questions that try to reveal your financial literacy, personal situation, level of education, investing experience, financial objectives, employment, annual income, net worth, age and other factors that will determine the success or failure of your claim. Be very careful what you say and how you express it. If you don’t understand a question, ask for clarification. Your answers could come back to bite you. This is no time for ego.

You might think that these restrictions are not too bad. Let’s add a little more detail. In 2006, only 51% of cases ruled upon resulted in any restitution. If you reject the recommendations, you cannot go on to file a civil action. The firm will require you to sign a confidentiality agreement aka a gag order if you agree to settle. OBSI may resist taking on a case that includes segregated funds, a life insurance product, but with a little persuasion they will do it especially if the issues are a blend of segregated funds and other securities. Ensure in your statement of complaint that you clearly articulate your investment profiles and attach relevant documentation such as a signed and dated NAAF.

Wait, there’s more .All provinces have what are called statutes of limitations which are time frames during which you must file a civil claim or lose your right to a claim. In Ontario, that period is a short two years, thanks to our politicians. In the case of Ontario, and only in the case of Ontario, OBSI explicitly state that the “limitation clock” is stopped while they deal with the case. Outside of Ontario, you’ll be told to find out on your own whether or not the clock is halted while they take six months or even two years to make a recommendation—their stated target for resolution is 80% within six months. The number of cases that go beyond that is not disclosed in any public documents. When the clock actually started is a judgmental issue depending on differing and legally untested provincial criteria—a real mess.

In 2006, the number of investment cases examined was a shockingly low number given that Canada’s investing population probably numbers well over 10 million. OBSI does note in its Annual report that even of the people who did use their services, fully 40% had to find out on their own that OBSI exists. OBSI is in fact not well known by the average retail investor, a situation we hope this article will correct.

While the word Ombudsman might conjure up an image of a friendly group that will hold your hand when facing the powerful, well resourced investment industry, this is not exactly the case. The address for OBSI is a Post Office Box, their office itself is not particularly inviting and the website could be a lot more investor-friendly. OBSI makes it clear it is not an advocate for investors. The shackles on OBSI limit it to examining your case and making a recommendation. You will be told they offer no legal advice, actually no advice. You won’t even be told what the limitation period is for your province of residence. Except for Ontario, you could be flying blind as the precious limitation clock days and months tick away.

Complaints about OBSI center on their complaint acknowledgement process, the infrequent case status updates, a perceived bias towards believing FSP evidence and of course the recommendation outcomes both in percentage successful and restitution amount.

The Ombudsman is not bound by the rules of evidence. OBSI itself may be stonewalled by the FSP — it has little clout to demand documents or records. There is no appeal process for OBSI recommendations. Trying to contact the Chair or any of the directors is fruitless, even if you could find out their mailing or email addresses. Once they’ve opined, you should understand that none of the documents can be used in court and OBSI cannot be asked to testify in any subsequent legal or other proceedings.

In recent large cases, like the Portus and Norshied fund fiascos where investors lost tens of millions of dollars, OBSI takes the position that since bankruptcy proceedings or class actions are in process, they will not take on the case or even log it in to restrain the limitation clock.

Strangely, the OBSI web site refers to IFIC, the mutual fund industry’s official lobbyist but does not mention the Small Investor Protection Association www.sipa.ca. There is no periodic disclosure of patterns or systemic investment abuses. Details of settlement amounts are not provided nor are there any figures outlining OBSI’s operating budget. OBSI claims that in 2007 it encountered the first ever rejection of its recommendations by a firm. Critics believe the amounts are negotiated and then “accepted” so a perfect record can be publicized. In any event, investors have, over the years, turned down the recommended offers. Some went on to win satisfying awards after initiating civil action.

Even those who accept the recommendations may not be satisfied. Desperate for cash or worn out by the exhausting process, they take what they can and try to move on with their lives. The sad fact is that the culture is one in which small investors are conditioned to expect little — they are often not disappointed

Summary and conclusion

When recommending compensation, OBSI aim to “make you whole” by putting you in the financial position you should have been in if there hadn’t been a problem. They do not look at compensation for damages such as pain and suffering or medical conditions

For consumers, clients, customers or small investors, especially if they are older, the entire process can be exhausting and time-consuming. The stress of a life — altering traumatic event such as the loss of a hard-earned retirement nest egg can be so debilitating in itself that it can lead to depression and the inability to make a rational decision. In this mode, an investor may not have the emotional strength to file a claim, the energy to deal with all the interrogatories or the sometimes nasty remarks made by FSP’s. And if they do, the redress process only compounds their stress.

On the matter of decision-making criteria, their website indicates that the decisions reached by the Ombudsman take into account “fairness in the circumstances”. They look at g ood financial services and business practices, Standards established by regulators, professional associations or the firm and Laws and regulation. This is simply not good enough. As a self-governing organization representing virtually all of Canada’s banks and major investment dealers, OBSI should seek to raise the standards for services and business practices for ALL of its financial institutions by using ‘Best practices’ as the basis for determination of the resolution of a complaint.

While far from perfect, OBSI represents one of the few routes to dispute resolution without cash outlays for investigation or legal fees. Should OBSI adopt ISO 10003,Guidelines for dispute resolution external to organizations and an independent compliance assessment, many critics would feel a lot better [ a recent third— party assessment of OBSI is available at http://www.obsi.ca//images/document/up- ... ort_EN.pdf ]. Previous to this, the only observations on OBSI have come periodic critiques by investor advocates, the media, SIPA, CARP individual investors and some lawyers.

The report of findings they provide can be harvested for useful facts in pursuing the case further. Several critical OBSI observers however caution that the recommendations may not be unbiased. One key settlement criteria used is that dollar settlements, if any are reduced because the hapless investor failed to mitigate the loss at an early enough stage. Another ploy used attempts to offset the losses from unsuitable investments with the gains from suitable investments. Investor advocates warn that OBSI’s legal position on rejections may not always be on solid footing. SIPA does not recommend OBSI to its members based on limitation period uncertainties and other issues.

Regrettably, for too many Canadians, OBSI represents their only hope for restitution. The losses may be too small to justify hefty legal expenses or age or ill health may be working against the investor. If you reject the proposed settlement it is removed from the table and you’re back at square one. It’s even possible OBSI’s recommendation could be lower than one you nay have rejected from the FSP. The bottom line: Look towards OBSI for a resolution recommendation but with constructive criticality, a cast iron stomach and a lot of determination.

thanks to ken at www.canadianfundwatch.com for this article

[admin]

Who Are Compliance Departments Protecting?

Since the dotcom bust of the late 90s 'staying compliant' has become more and more of an issue. As dealers face the rising costs of investigations and litigation, due to allegations of unsuitable investments or improper supervision, ever more strenuous restrictions are being placed on the average advisor. Many advisors complain of the extra paperwork and time involved in satisfying compliance departments. Dealers justify the extra regulation citing fiduciary duty and investor protection. Who is the paperwork protecting; the investor or the dealer?

It is now getting popular for dealers to hire lawyers specializing in defending advisors and branch managers to lecture at advisor conferences. The lecture material is through and professional, and it tends to revolve around one basic premise: keep client paperwork up to date... or else.

The argument seems to make a lot of sense. If a client's know your client data is regularly updated, all disclosures are documented as received by the client, and the advisor has detailed and dated notes of all client meetings I think anyone would have to agree: the client will have little or no recourse in an unsuitable investment investigation.

For example, on April 18, 2005, Edward Graham, a co-branch manager with Credential Securities in Regina was found to have violated IDA regulation 1300.2 – he failed notice an over concentration of one particular security in the accounts of multiple clients. The IDA also wanted to make the point Mr. Graham should have been alerted to a potential problem in one particular account when updated Know Your Client data indicated 50% speculative for an investor over 60 years of age. Mr. Graham acknowledged that 50% speculative was high for someone 60 years of age, but he did not acknowledge that it was high for this particular client. The Hearing Panel had to agree with the point, and dismissed the allegation.

Here lies one of the big problems in Canada's investment industry; dealers are using regulation originally designed to protect the investor to protect themselves instead. Once this connection is understood, it makes perfect sense why a dealer would hire lawyers to coach advisors.

Unfortunately whether lawyers specialize in defending investors or advisors, neither group have any vested interest in making our industry better. Lecturing to groups of investors or advisors primarily serves to advertise the legal firm to potential clients. The lecture material serves to teach potential clients how to spot new cases for the law firm, and how to make those cases easier for the law firm to research and argue.

Instead of serving our industry on a platter to lawyers, why don't we start taking responsibility, and try to fix some of the problems internally? For example, instead of hiring legal coaches to avoid paying for problems after they occur, how about investing in education programs for investors, and better risk assessment technology for advisors to avoid unsuitable recommendation complaints before they happen? Why not institute standards of risk every member firm and advisor can agree on?

Our industry is at a crossroads. The money, technology and know-how all exist. So why don't we start embracing transparent disclosure of compensation, risk and potential conflicts of interest, and stop hiding behind ever longer application forms and lawyer created loopholes? It's time to stop paying lip service to fiduciary duty and to start building confidence in our industry again.

posted by Edward Iftody, BA, CIM
http://www.purelogix.blogspot.com/