Securities Commissions actions in breach of trust?

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Re: Securities Commissions actions in breach of trust?

Postby admin » Thu Jun 27, 2019 9:49 pm

BETTER MARKETS – UPDATED FACT SHEET – JUNE 5, 2019

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THE SEC’S FINAL “REGULATION BEST INTEREST” IS A BETRAYAL OF ITS DUTY TO PROTECT INVESTORS
Today, the SEC finalized what they’ve been calling “Regulation Best Interest” (Reg BI), along with a set of disclosure requirements (Form CRS) and new guidance explaining the scope of the fiduciary duty under the Investment Advisers Act. All three are indefensibly weak, representing a betrayal of the SEC’s duty to protect investors from conflicts of interest among financial advisers who siphon away tens of billions of dollars of their clients’ hard-earned savings every year.

REG BI:
• Does not actually require advisers to act in the best interest of their clients, instead just adopting the weak and inadequate suitability standard that has been on the books for years.
• Misleads investors into thinking they’re receiving protections the rule doesn’t actually deliver.
• Relies far too much on disclosures that are designed by industry and delivered too late to be
helpful, an investor protection approach that has long been recognized as ineffective.
Imposes no duty on advisers to eliminate a broad range of powerful compensation incentives that will continue to corrupt advice; only prohibits a narrow group of sales contests that create high pressure to sell a specific type of security within a short period of time—incentives
already largely prohibited under FINRA rules.
• Fails even to require mitigation of all material conflicts of interest.
• Remains too narrow in scope, applying only to specific recommendations and imposing no
ongoing duty of care and loyalty absent an express agreement

FORM CRS:
• Remains too confusing, failing to deliver simple, clear, and helpful information about the services that advisers provide, the duties they owe, and the compensation they receive.
• Gives industry “flexibility” in how to convey the disclosures, allowing firms to soothe and confuse investors with what amount to marketing materials.
• Was never adequately tested to ensure that it would be effective. INVESTMENT ADVISERS ACT GUIDANCE:
• Guts the fiduciary duty for registered investment advisers under the “Investment Advisers Act” by allowing advisers to satisfy what was a heightened duty simply by disclosing their conflicts of interest in a document that their clients are unlikely to read or understand.
• Even dilutes the long-standing duty of investment advisers to monitor accounts over time.
• Effectively abolishes what was once regarded as the gold standard for financial professionals.
THE TAKEAWAY:

BETTER MARKETS – UPDATED FACT SHEET – JUNE 5, 2019
• The SEC has sided squarely with industry, abandoning investors who need a champion to protect them in the financial services marketplace.
• The harm will be substantial and longstanding, as tens of millions of American workers and retirees will continue to suffer at the hands of advisers who put their own financial interest ahead of what’s best for their clients—now with the SEC’s endorsement.

https://bettermarkets.com/sites/default ... 6-5-19.pdf

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https://www.youtube.com/watch?v=T1kCpgd ... e=youtu.be 1 min 30 seconds of SEC Senate testimony 2009
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Re: Securities Commissions actions in breach of trust?

Postby admin » Thu Jun 27, 2019 9:04 pm

SEC's So-Called Best Interest Rule is a Fraud That Protects Industry Profits, Not Investors
June 5, 2019
FOR IMMEDIATE RELEASE
Wednesday June 5, 2019
Contact: press@bettermarkets.com

Washington, D.C. – Dennis Kelleher, President and Chief Executive Officer of Better Markets, issued the following statement in response to the SEC’s vote today to finalize its misleadingly labeled “Regulation Best Interest”:

“On the 85th anniversary of the founding of the SEC, the SEC is turning its back on investors and protecting industry profits by finalizing a mislabeled rule that does not require brokers to put investors’ best interest first."
Adding insult to injury, the SEC is misleading investors about what the rule does and doesn’t do while enabling brokers to do the same. If the SEC’s own 10b 5 anti-fraud rule applied to the SEC’s own statements about Reg BI, then it would likely have to sue itself for knowingly misleading investors.

“No amount of carefully crafted, Orwellian spin from the SEC will be able to hide the stain that this rule will leave on the history of the SEC. If a truth-in-labeling law applied to the SEC, then this rule would be called ‘Broker Profits First, Investors’ Savings Second.’


“The inevitable result of this rule will be tens of billions of dollars moved from investors’ pockets into brokers’ bonuses due to the sale of high priced and poor performing products. We look forward to a future when a new SEC returns to its original mission from 85 years ago of putting investors’ best interests first.”

A one-page fact sheet is attached and accessible on line...here https://bettermarkets.com/sites/default/files/documents/Regulation_Best_Interest_Fact%20Sheet_6-5-19.pdf


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit http://www.bettermarkets.com.

https://bettermarkets.com/newsroom/secs-so-called-best-interest-rule-fraud-protects-industry-profits-not-investors

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1 min 30 seconds of SEC as the enemy of the American people: Senate Hearing
https://www.youtube.com/watch?v=T1kCpgdsCLQ&feature=youtu.be
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Re: Securities Commissions actions in breach of trust?

Postby admin » Mon Jun 24, 2019 4:21 pm

One minute 39 seconds from just after the economic looting of society in 2008 by Wall Street Organized Crime. Senator Gary Ackerman of New York State says:
"Our economy is in crisis Mr. Vollmer. We thought the enemy was Mr. Madoff - I think it is you. You were the shield - You were the protector. Your value to the American people is Worthless."


Speaking to then SEC chair Vollmer.

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Mr. Vollmer resigned from the SEC 9 days after.

https://www.youtube.com/watch?time_cont ... 1cvNG-tOtg

The significance of this when looked at over a decade or two of Securities Regulatory history in most of the developed world, is that the regulators are simple “theatre”, a stage set facade and some expensive actors, who get paid millions of dollars (plus future considerations, appointments etc) to pretend to be the protecting the public, while in reality they are protecting the financial masters they truly serve.


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Securities Regulation is looking more like well organized crime, in a perfectly designed artifice of public protection.



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It is the most amazing example of a perfect organized crime as one can ever image. Lawyers, regulators, banks, accountants, politicians, and so on it an amazingly orchestrated system of co-operation to unjustly enrich themselves while farming the public of trillions of dollars cumulatively. Tens of billions per year is the calculated amounts that I can come up with of unjust enrichment in Canada alone...compare that to the fact that all “measured” (blue collar) crime harms is Canada is also in the tens of billions.

Investment System Fraud
Small Investor Protection Association (Canada)
Canadian Justice Review Board
Industry of Accountability

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If you watch the 1 min 39 sec video below, you will see that Senator Gary Ackerman of New York State is one man who for one moment, truly gets it...THANKS Senator Ackerman!! (now retired)

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https://www.youtube.com/watch?time_cont ... 1cvNG-tOtg
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Re: Securities Commissions actions in breach of trust?

Postby admin » Tue Apr 23, 2019 8:13 pm

Soooo curious to learn more about this “discovery” I just now stumbled upon.

The Ontario Securities Commission is now branding itself publicly as an “Independent Crown Corporation”, for what appeared to my eyes to be the first time ever.

It is not the first time ever, but the change has come about so slowly and subtly that I missed it until now. Here is the notes I made in an email to others to they to understand just what caused this public re-branding of backstory of the OSC. If anyone knows I am all ears.

visit the Facebook Group titled “Investment System Fraud” is you wish to chime in with anything that might be of interest...to the public interest. https://www.facebook.com/groups/Investm ... =bookmarks

WOb0Zyer.jpeg

======

What an eye opener!

OSC now states openly that they are an independent Crown Corporation (date I first saw this particular verbiage used was April 23, 2019)

Previously, in my mind the OSC’s “story” or “public pitch” if you will, was that they were an Ontario Government agency with legislated power to regulate public markets....etc.,etc. (it was not true, and the evidence of rigging and regulatory capture was/is significant enough to ponder criminal Breach of Trust informations against those in this agency....and also to wonder aloud if the Ontario government itself would be “on the hook” (responsible) for investors losses if and when the public learned that their government had allowed them to be financially guarded entirely by foxes....

Anyway I am intrigued to learn and understand more.

in 2015 annual report it also appears (independent Crown Corporation)

In 2010 annual report not a single instance of the word “independent” in the entire OSC report.

Zero mention of the word “Independent” or the word “Crown” in 2009 report

This shift was so subtle, and slowly done, that I missed it entirely….


I am still getting over the tectonic shift in tone just now brought to my attention….


I appreciate the comments from others, and I am not picking at anything in particular, but I still wonder why they felt the need to shift to this particular wording? Were we getting a little bit close on some of our thoughts? IS CBC getting someone worried with some of their work?


I dunno what, but something has shifted.


larry

Gresham's Law: "Bad money drives good money out of circulation”

Hunt’s Law: “Fake news drives real news out of business”

Elford’s Law: "Fake Financial Regulation drives honest financial regulation out of business.”

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Re: Securities Commissions actions in breach of trust?

Postby admin » Thu Apr 18, 2019 8:53 pm

CRM2 CRIME.jpg

(Client Relationship Model #2 (CRM2) is a #CRIME upon Canada by Canadian Securities Commissions)
Read what Dale Roberts mentions about the new “Client Relationship Model” here:



Clear disclosure cleans up water heater rental scams. Why can’t the mutual fund industry do the same?

BY DALE ROBERTS POSTED ON APRIL 18, 2019
posted to Dales great advice site: https://cutthecrapinvesting.com/2019/04/18/clear-disclosure-cleans-up-water-heater-rental-scams-why-cant-the-mutual-fund-industry-do-the-same/

Last week I turned the kitchen tap to HOT and all I received was lukewarm water. I’m certainly not the world’s greatest handyman (my wife would be laughing if she actually read this blog, she doesn’t), but I knew it was likely the hot water tank. Sure enough I went into the basement and discovered that the water heater pilot light was out. Off to Google I went. How to restart a pilot light? I also called my Brother, he knows his way around home repairs.

My bro said open up your basement windows for a while, make sure you don’t smell any gas, make a meaningful and heartfelt prayer before you strike that match. I’ll admit it was more than scary. But it would not start. After the fact I found out that I did everything right, but the gas line heading into the pan was shot. The tank was about 17 years old. Time for replacement.

Rent vs buy for your water heater?

As you may know, you can rent your water heater. You might even be lured into a lease-to-own furnace or air conditioner according to this article from Ellen Roseman of the Toronto Star. Be careful out there folks. And for more on Enercare complaints and issues please have a read of Enercare’s customer service did not go to plan.

Certainly, do the math. It’s almost always going to be cheaper to own your water heater vs renting. Please have a read of this post on Boomer and Echo Water Heater Rentals: Do Ontario Residents Get Hosed? where Robb Engen lays out the options and benefits and potential traps. In the end my wife and I decided to rent the water heater. Mostly because, if I have my way, we will be leaving our lovely home and neighbourhood in 4 years or so.

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It will actually be ‘cheaper’ for us to rent. We did not have to pay for the two repair and installation visits (well, we’ll see when we get the final bill), we have ongoing coverage for repairs and service and we will receive a $300 Visa gift card. Certainly that gift card might be a bit of a short-term hook for many unsuspecting water heater renters.

But this post is not about water heaters, it’s about the disclosure rules. I had to agree to the terms and conditions over the phone before they would install the new water heater. When I called, the Enercare representative was kind and clear and patient and she answered all of my questions. She gave me my monthly costs including taxes, she gave me the total purchase price if I wanted to go that route, she explained that I was responsible for that monthly payment even if we sold the house. If we move we have to disclose to the new homeowners that there is a rental agreement. The new homeowners will need to sign on. There were certainly more disclosures on the service agreement and on what was and wasn’t covered. etc. etc. I was told that the call was voice recorded and that I could agree to the terms and conditions if I wanted to proceed. I agreed. I knew what I was getting into.

Here’s a link to the larger suite of rules governing the industry. Thanks to Ellen Roseman for this.

Why can’t we tell mutual fund investors how much it will cost?

The mutual fund industry is uh, ethically challenged. For the compliance and regulatory picture have a read of Ken Kivenko’s Canadian Fund Watch. The number of cases and complaints would dwarf the little water heater arena. The dollar value of fees paid (unnecessarily in my opinion) by Canadians is in the tens of billions annually. It’s a societal issue. And yet, Canadians continue to not know of the fees that they pay on mutual funds. ‘Advisors’ at banks and mutual fund sales offices continue to not disclose those fees. When I was an advisor at Tangerine Investments I would conduct portfolio analysis for clients (on their outside investments) and they would send me their statements and reports. I would ask them to ask their bank or advisor how much they were paying in fees. Too often they were told that they were not paying any fees at all, to the advisor (a trick answer to a simple question). Clients most often could not get a clear answer on fees, in writing or by verbal description.

In an effort to add ‘clarity and transparency’ the regulators mandated that mutual fund dealers must now send annual statements outlining the fees paid. But guess what, those statements only have to disclose the fees paid to the dealership (advisor) and not the total cost of the fund. If a Canadian has a mutual fund with a total MER of 2.2%, they will likely get a statement showing the fees paid are 1% – the trailing commission paid to the dealership. The 1.2% is missing from the statement. The larger part of the fees is not disclosed.

Hence the Cut The Crap Investing blog

There is no honest effort to disclose the total fees paid on mutual funds in Canada. In fact, the regulation leads to confusion not clarity. This regulatory effort is called CRM – Client Relationship Management. It appears obvious that there will be no regulation that requires the mutual fund industry to disclose all fees in those annual statements. Sorry investors, the regulators do not have your back.

It’s up to you to help yourself. You can self-direct your own ETF portfolio, use a Canadian Robo Advisor, or contact a fee-for-service advisor.

Thanks for reading. Kindly hit those share buttons for Twitter, Facebook and LinkedIn. You can Follow Cut The Crap Investing at the very bottom of this page.

Contact me, Dale @ cutthecrapinvesting@gmail.com or better yet, leave a message.

https://cutthecrapinvesting.com/2019/04/18/clear-disclosure-cleans-up-water-heater-rental-scams-why-cant-the-mutual-fund-industry-do-the-same/
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Re: Securities Commissions actions in breach of trust?

Postby admin » Thu Apr 11, 2019 8:57 pm

Summer 2010

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Ed.: The principles of wilful blindness have recently surfaced in the context of copyright infringement and in manufacturer recalls and in allegations against banks in their wilful blindness to Ponzi schemes and with reference to monies impressed with a trust. In R. v. Briscoe , the Supreme Court of Canada recently reviewed the doctrine of wilful blindness in the context of parties to an offence under the Criminal Code . The case is reviewed here as it may offer clarifications of broader application.

The facts in R. v. Briscoe are brutal and graphic and unnecessary to delve into for the purpose of this article. Suffice to say that a teenage girl was murdered, and what happened to the victim was not the main question at trial. There was also no serious question that the homicide fell within the category of first degree murder, either because it was planned and deliberate, or because it was committed during the commission of a crime of domination.

In the Court of Appeal of Alberta the issue was whether the trial judge erred in law by failing to consider whether Mr. Briscoe was "wilfully blind to the harm his cohorts intended to cause the victim."

Canadian criminal law does not distinguish between the principal offenders and parties to an offence and makes perpetrators, aiders and abettors equally liable. Of course, doing or omitting to do something that results in assisting another in committing a crime is not sufficient to attract criminal liability. The aider or abettor must also have the requisite mental state, or mens rea . Specifically, in the words of s. 21(1)(b) of the Criminal Code , the person must have rendered the assistance for the purpose of aiding the principal offender to commit the crime.

In the Court of Appeal, Mr. Briscoe argued that wilful blindness was only a heightened form of recklessness, and recklessness is inconsistent with the very high mens rea standard for murder under the Criminal Code . The Court of Appeal rejected that argument.

The Supreme Court of Canada agreed and indicated that wilful blindness, correctly delineated, is distinct from recklessness and involves no departure from the subjective inquiry into the accused's state of mind that must be undertaken to establish an aider or abettor's knowledge.

Wilful blindness does not define the mens rea required for particular offences. Rather, it can substitute for actual knowledge whenever knowledge is a component of the mens rea .
The doctrine of wilful blindness imputes knowledge to an accused whose suspicion is aroused to the point where he or she sees the need for further inquiries, but deliberately chooses not to make those inquiries. This was similarly stated in the U.S. case of State v. McCallum : "[T]he rule is that if a party has his suspicion aroused but then deliberately omits to make further [i]nquiries, because he wishes to remain in ignorance, he is deemed to have knowledge…. The rule that wilful blindness is equivalent to knowledge is essential…."

In Jorgensen (Supreme Court of Canada, 1995), Mr. Justice Sopinka explained: "A finding of wilful blindness involves an affirmative answer to the question: Did the accused shut his eyes because he knew or strongly suspected that looking would fix him with knowledge?"
Courts and commentators have consistently emphasized that wilful blindness is distinct from recklessness. In Sansregret , the Supreme Court (in 1985) said:

The culpability in recklessness is justified by consciousness of the risk and by proceeding in the face of it, while in wilful blindness it is justified by the accused's fault in deliberately failing to inquire when he knows there is reason for inquiry. [Italics added.]

While a failure to inquire may be evidence of recklessness or criminal negligence, as for example, where a failure to inquire is a marked departure from the conduct expected of a reasonable person, wilful blindness is not simply a failure to inquire but "deliberate ignorance."

Glanville Williams, cited in the Sansregret case, explains the key restriction on the doctrine:

The rule that wilful blindness is equivalent to knowledge is essential….

A court can properly find wilful blindness only where it can almost be said that the defendant actually knew. He suspected the fact; he realized its probability; but he refrained from obtaining the final confirmation because he wanted in the event to be able to deny knowledge. This, and this alone, is wilful blindness. It requires in effect a finding that the defendant intended to cheat the administration of justice. Any wider definition would make the doctrine of wilful blindness indistinguishable from the civil doctrine of negligence in not obtaining knowledge. [Italics added.]

In this case, the Supreme Court found that the evidence cried out for an analysis on wilful blindness. Indeed, Briscoe's own statements to the police suggested that he had a strong, well‑founded suspicion that someone would be killed, and that he may have been wilfully blind to the kidnapping and prospect of sexual assault. His statements also show that he deliberately chose not to inquire about what the members of the group intended to do because he did not want to know. The trial judge's failure to consider Briscoe's knowledge from that perspective constituted a legal error that necessitated a new trial on all charges.

This article appeared in the Lang Michener LLP InBrief Summer 2010.

https://mcmillan.ca/mobile/showpublicat ... 2rKDHHyuAU

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Re: Securities Commissions actions in breach of trust?

Postby admin » Thu Dec 20, 2018 10:57 pm

If there is ever any doubt about who the various securities regulatory bodies serve, and whether they truly protect the public, as claimed, here is a short list of hints and examples which should help to clarify the serious Breach of Trust occurring in most investment regulatory bodies today, 2018:

1. Securities Commissions routinely ignore rules, laws and principles of professional license misrepresentation. Misrepresentation which does billions in harm to the public while unjustly enriching the industry.

2. Securities Commissions have gone to considerable effort to re-write the rules and laws to hide the salesperson title, license and role, from public view. These revisions have prevented the public from learning the true relationship they are in with financial persons, and this has further harmed the public.


3. A Know Your Client (KYC) form is a required document in the industry and is used to protect the industry. The Know Your Advisor (KYA) is unimaginable, and never found, not even in new Client relationship disclosure models.

4. The new CRM and CRM2 (Client relationship models actually help to hide the license, and role of commission sales agents, so that the public is deceived, and also help to hide certain investment fees, despite the claim of transparent fee disclosure.

5. Quietly granted exemptions to securities laws, by securities regulators is yet another example of the capture and/or purchase of the loyalties of the securities commissions, much to the detriment of the investing public and to society overall.

This list could be expanded a great deal, but this will serve as a beginning...
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Re: Securities Commissions actions in breach of trust?

Postby admin » Mon Dec 10, 2018 2:10 am

Memo To Members - CBC Does It Again!

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On March 29th, 2017, CBC Go Public was featured on the National with Peter Mansbridge. That program featured Larry Elford, a SIPA Advisory Committee Member, explaining the investment industry deception of the public by calling their commission sales representatives Advisors rather than Advisers as defined in Securities Acts.

it is available on Youtube here: https://www.youtube.com/watch?v=UAYHrCOgTLU&t=3s

That program also announced SIPA’s “Web of Deception” report, which is featured on the front page of SIPA’s website at http://www.sipa.ca. We consider that program the opening of Pandora’s Box. Since then, there has been more awareness by the media.

This simple deception, by a one letter change in spelling, facilitates the industry gaining trust and enabling them to harvest Canadians’ savings. How many people have been sold mutual funds or segregated funds by someone masquerading as a professional Advisor when in reality they were dealing with a commission driven salesperson with no legal liability to look after their best interests?

Now CBC has done it again.
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CBC’s “This Hour Has 22 Minutes” ran a program on December 4, 2018. Part way through at the 11:50 mark, Mark Critch does a skit on the registration deception of the investment industry calling their commission sales persons ADVISORS to evade the responsibilities imposed on ASVISERS by Securities Acts.
Here is the 1min and 48 second excerpt that all investors should see: https://www.youtube.com/watch?v=qH0UGSG2wX0


This December 4, 2018 program may be watched in its entirety at: https://watch.cbc.ca/share/episode/38e815a-00ffb841e19


For the convenience of members, the segment on this deceptive practice has been extracted. Here is the 1min:48 second version. Feel free to add your comments. https://www.youtube.com/watch?v=qH0UGSG2wX0 In this segment Mark Critch explains clearly and concisely how the public is deceived by false titles and provides absurd comparisons to drive the message home.

Investors be aware that you are most probably dealing with a commission sales person. Check your statement for your representative’s title. If it is indicated as “Financial Advisor” you are dealing with a commission sales person even if he has better qualifications.

This is just another deceptive practice used by the industry and allowed by regulators.

Be Aware and Beware!


Small Investor Protection Association
Seeking Truth and Justice
website: http://www.sipa.ca
e-mail: sipa.toronto@gmail.com
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Re: Securities Commissions actions in breach of trust?

Postby admin » Thu Dec 06, 2018 2:59 pm

Below is the latest reply to my concerns about systemic investment industry and regulatory ‘complicity’. About acts which, when they occur in concert, orchestrated between the self regulators (IIROC), government regulators (Provincial Securities Commissions such as OSC and 12 others) and the industry itself, serve to financially skirt rules and laws designed to protect the public. It carries the stigma or an organized system of abuse of the public when one looks closely enough, and asks questions.

THANK you for reading along and for any suggested solutions to such a well organized harvest of the Canadian investing public.


(received vial email from the OSC, Dec 5th, 2:44 pm)
Dear Mr. Elford:

Thank you for your follow-up inquiry to the Ontario Securities Commission (OSC) concerning registration titles.

You have asked the OSC to investigate your concern about the titles used by two individuals registered with CIBC World Markets Inc. (CIBC WM).

The correct body to look at your concerns, in the instance you describe, is the Investment Industry Regulatory Organization of Canada (IIROC), since they directly regulate both CIBC WM and the individuals you have mentioned.

You should also contact IIROC for clarification about what titles can be used by an individual registered as a "dealing representative", and regulated directly by IIROC. Their contact information is available at this link: http://www.iiroc.ca/Pages/Contact-Us.aspx.

ASC
Since you are in Alberta, and the two individuals you reference are in Alberta, you may also wish to contact the Alberta Securities Commission to see if they have any further information to provide to you. Their contact information is available at this link: http://www.albertasecurities.com/about/ ... ation.aspx

Previous Correspondence
As requested, I have attached copies of your previous correspondence with the OSC.

Sincerely,

Nicole Plotkin
Senior Inquiries Officer
Ontario Securities Commission
inquiries@osc.gov.on.ca
416-593-8314
1-877-785-1555

======================

Here, below was my latest email inquiry to this Senior Inquiries Officer at the Ontario Securities Commission, which prompted her reply:


From: lelford@shaw.ca
To: INQUIRIES@osc.gov.on.ca
Subject: Re: OSC File #20140324-16957 - Registered Individual Titles 2018 Attention Nicole Plotkin Senior Inquiries Officer Ontario Securities Commission
Date: November 29, 2018 05:50 PM

Dear Nicole,

Thank you very much for your reply to my concern.

If I understand you correctly, it is not appropriate for persons who are registered as “dealing representatives” to advertise themselves to the public as “Advisors”, or “Advisers”, do I have that correct.

Further, if they market themselves as “Portfolio Manager”, they must be registered in the category of “Advising Representative”. Am I correct on that understanding as well.

Further, who would be responsible for oversight or regulation of marketing titles such as “vice president” or “First Vice President”, and are such titles allowed, appropriate or regulated in any way?

There is at least one public court case where it has been shown that sales brokers who used the “Vice President” title in their marketing were not actually in any executive Vice President position with the firm, but rather it was a title granted as a marketing reward to sales agents, and the judge correctly identified the title as a marketing ploy. I wonder if you or the OSC have any comments or direction on that title and its permitted useage?

Finally I wish to ask if the OSC is willing and/or able to investigate, act or do any thing with regard to this matter? I feel that the OSC is the proper body to bring forth this issue to, and I do hope that your agency has an interest and an ability to protect the public from marketing ploy’s which may be designed to deceive the public.

I thank for any help you can be, and if it is not too much to ask at this point, could you forward to me copies of my previous correspondence that you mention, forth and back, with the OSC. I would like to add/retain copies for my file.

Thank again for any help you can be.

Larry Elford



On Nov 29, 2018, at 2:02 PM, inquiries@osc.gov.on.ca <mailto:inquiries@osc.gov.on.ca> wrote:


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Dear Mr. Elford:

Thank you for your email to the Ontario Securities Commission (OSC). You are concerned about individuals in the investment industry who you believe are misrepresenting their registration categories to give investors a false sense of trust.

You wrote that you recently noticed a financial team at CIBC promoting themselves on TV, radio, and web sites as if they were advisors, Senior Vice Presidents, and also Portfolio Managers.

You specifically refer to two individuals who are registered with CIBC Wood Gundy, which is a business name used by CIBC World Markets Inc. (CIBC WM). CIBC WM is registered in the category of Investment Dealer. As I believe you are aware, Investment Dealers are directly regulated by the Investment Industry Regulatory Organization of Canada (IIROC), a recognised self-regulatory organisation (SRO).

All individuals who are trading, and who are sponsored by firms registered as Investment Dealer, are registered in the category of "Dealing Representative". This is what you see when you look at the CSA website for categories of registration.

Advisers/Advisors
As mentioned in previous correspondence to you on this topic, the term Adviser is used in Ontario securities law to describe companies or individuals registered only to give advice about securities. The term “advisor” is not defined in Ontario securities law. The most common Adviser registration category is Portfolio Manager. Portfolio managers typically handle all the investment decisions for an individual’s portfolio, but they cannot carry out trades. All related trading activity based on the PM’s decisions would typically be carried out by an investment dealer.

Portfolio Manager
Apart from the adviser registration category described above, portfolio manager is also an IIROC registration category and refers to registered representatives who have been approved for managing investment portfolios through discretionary authority provided by their clients.

For your reference, IIROC provides a list of IIROC approval categories on their website at this link: http://www.iiroc.ca/industry/registrati ... egories%22 <http://www.iiroc.ca/industry/registrationmembership/Documents/ApprovalCategories_en.pdf#search=%22iiroc%20approval%20categories%22> .

Senior Vice President
This title is not a registration category. Many companies provide corporate titles that are separate from their registration categories.

What Investors Need to Know
We have also mentioned to you in the past that business titles, designations for courses completed, and professional memberships may be informative, but for investors the important thing to know is the person's registration category. Regardless of a person’s business title or job description, their registration category will tell you what products they are permitted to trade or advise about, and the services they are allowed to provide. It is important to check registration with the appropriate securities regulator or SRO, or on the CSA website. For the individuals you’ve listed the appropriate SRO is IIROC.

You may wish to refer to a response I sent to you on this subject in an email dated May 11, 2015. My former colleague, Jeffrey Fennell, also corresponded with you on this topic, on several occasions. His most recent response was dated June 3, 2011.

IIROC
You may wish to contact IIROC, if you have further queries about the titles given to registered individuals that it directly regulates. Their contact information is available at this link: http://www.iiroc.ca/Pages/default.aspx <http://www.iiroc.ca/Pages/default.aspx> .

Sincerely,

Nicole Plotkin
Senior Inquiries Officer
Ontario Securities Commission
inquiries@osc.gov.on.ca <mailto:inquiries@osc.gov.on.ca>
416-593-8314
1-877-785-1555

The information in this e-mail should be taken as a guide. The content is not intended to provide investment, financial accounting, legal, tax or other professional advice and should not be relied upon or regarded as a substitute for such advice. We recommend that you seek advice from a qualified professional adviser before acting on the information or content appearing in this e-mail or any information or content on a web site to which a link has been provided.


From: lelford@shaw.ca <mailto:lelford@shaw.ca>
To: INQUIRIES@osc.gov.on.ca <mailto:INQUIRIES@osc.gov.on.ca>
Subject: An inquiry to the OSC regarding title and registration representation rules and/or what constitutes misrepresentation of titles, job functions and registration categories (Vice President etc)
Date: November 28, 2018 05:10 PM

Dear OSC. I am concerned about persons in the investment industry who misrepresent their registration categories to give investors a false sense of trust.

I have recently noticed a financial team at CIBC heavily promoting themselves on TV, radio and web sites as if they were “advisors”, “Senior Vice Presidents” and also “Portfolio Managers”.

The CSA registration search shows them registered as “Dealing Representatives”, and I am confused as to how these other titles are allowed to be used. I am familiar with the representation rules (Ontario Securities Act sec 44) which seem quite clear about what constitutes representation or misrepresentation.

I am also inquiring about whether or not there are any “exemptive relief” decisions at the OSC on use of the title “Portfolio Manager”? I seem to recall seeing such exemptions in the past and I wonder if that might be the reason that a few persons are beginning to refer to themselves by this title.

Perhaps you could help me to better understand what, if any requirements there are in order to call oneself an “Advisor”, an “Adviser”, a “Portfolio Manager”, or a “Vice President, First Vice President” etc?

Here are the screen images for the specific team that brought this issue to my attention, however I have noticed groups at Richardson also using the “Portfolio Manager” terminology. Thank you for shining a light into any of my questions so that I can become more informed and understand what is being allowed to happen to investors.

Larry Elford
Alberta

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Re: Securities Commissions actions in breach of trust?

Postby admin » Fri Nov 30, 2018 11:04 am

You can purchase an exemption to any securities law in Canada, simply by paying a few thousand dollars in fees to the Securities Commission.

Screen Shot 2018-11-03 at 10.28.12 PM.png


(the cynic in me would have to point out here, that a fore-runner to the above line is that the investment industry is already set up to get away with this by paying over $1/4 Billion to 13 Canadian provincial and territorial Securities Commissions, in what some people call an “off-book" government regulatory game.

Some examples from my memory:

#1
Bombardier executives needing to dump millions of shares into a soft-declining market and not wanting their sales to alert the public. They apply to the Quebec Securities Commission for exemptive relief from the law on insider trading disclosure. Rubber stamp approval and secrecy and POOF! It is done
$8 billion is wiped from the market value of Bombardier shares in about 30 days (with the help of these shares being dumped)
$8 billion is the financial equivalent to over one million street crimes or property crimes in Canada…..done without a single eyebrow ever raised in Canada

#2
Any bank, who is underwriting (selling a new investment issue) and who is worried that they may be “stuck” with unsold holdings in a soft market. What do they do to minimize this risk to the bank? They apply for an exemption to the laws of cross trading (my terminology). Those laws were written/intended partially to prevent banks from benefitting themselves and trading hot stocks into their own mutual funds or other account holdings. What those laws can also be used for is the reverse…..to allow the banks to DUMP crappy or poor selling investment underwritings INTO the mutual funds or other accounts of their customers. POOF! Any unsold or unwanted investments are no longer the bank’s problem, and who will ever know.

#3
When Valeant Pharmaceutical (VRX) learned that it could buy something called “exemptive relief” to securities laws in Canada, they probably loved the potential. The one exemption I found was an exemption which gave them permission to NOT HAVE TO FOLLOW FINANCIAL disclosure laws when making acquisitions. They could hide the financials and just tell people what they wanted to tell them….what could go wrong?
A number of years later, VRX (name now changed) found cooking the numbers, execs charges with fraud (in the US) and a company which was at one time equal in value to THE ROYAL BANK OF CANADA….loses $90 Billion in market value…or shareholders and investors lose that much. That is the financial equivalent of hitting Canada with EIGHTEEN MILLION street crimes at an average of $5000 damage per. North America does not even count that many street or property crimes in a year….and yet off-book, government empowered regulators can assist companies to do this much…over and over.

#4
Hidden in the bowels of the securities commissions are approximately 500 such exemptions granted (sold?) each year. No public input. No public notice. not even a notice if YOU and your family purchased investments which were exempted from law. Nada

#5

Here, (in quotes) from memory is the entire sum of paperwork, disclosure or reported procedure on each ‘exemption’ I have seen since the 1990’s,
“Each of the decision makers is satisfied that the test contained in the legislation, to make the decision, has been met.”


#6
When $30 Billion of Sub Prime Mortgage investments (ABCP Asset Backed Commercial Paper in 2008) needed to be “dumped” and dumped fast, by people like National Bank and many others…but they were not highly enough rated to meet our laws……what to do? Apply for an exemption to our laws…and poof, dump them in retail investors accounts, dump them into the PPSP (pension plan for judges and RCMP) dump them into the Alberta Treasury Branch, in Nav Canada, and on and on. Lives ruined, a suicide or two, people taken down by alcohol to never recover….this was a financial hit equal to that done by SIX MILLION average property crimes. And the lady at the OSC who granted the exemption went from a $400k job at the OSC, to a reputed $600k job deeper within the industry….



Here is a 2 minute glimpse of highlights into a presentation on this topic in the last month: https://www.youtube.com/watch?v=_Q9zHF9Yb2g&t=7s

Here is the 30 minute version which gets into the exemptions topic a bit: https://www.youtube.com/watch?v=-MzQhVt_fc0&t=1338s


And here is six minutes by Dr Gabor Mate, which surprisingly touches upon my topic (Financial Murder of Society by professional financial systems) from the perspective of one of the world’s most highly regarded experts on addiction: https://www.youtube.com/watch?v=NFPKpX9Rxqs
Title, The Hungry Ghost Within

Screen Shot 2018-11-29 at 11.58.13 PM.png
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Re: Securities Commissions actions in breach of trust?

Postby admin » Fri Nov 30, 2018 9:39 am

Via email

The Secretary
Ontario Securities Commission
20 Queen Street West
22nd Floor
Toronto, Ontario M5H 3S8
Fax: (416) 593-2318
E-mail: comments@osc.gov.on.ca

Me Anne-Marie Beaudoin
Corporate Secretary
Autorité des marchés financiers
800, rue du Square-Victoria, 22e étage C.P. 246, tour de la Bourse
Montréal (Québec) H4Z 1G3
Fax: 514-864-6381
E-mail: consultation-en-cours@lautorite.qc.ca
November 28, 2018

British Columbia Securities Commission
Alberta Securities Commission
Financial and Consumer Affairs Authority of Saskatchewan
The Manitoba Securities Commission
Ontario Securities Commission
Autorité des marchés financiers
Financial and Consumer Services Commission of New Brunswick Superintendent of Securities, Prince Edward Island
Nova Scotia Securities Commission
Superintendent of Securities, Newfoundland and Labrador Superintendent of Securities, Yukon Territory
Superintendent of Securities, Northwest Territories Superintendent of Securities, Nunavut
CSA Notice and Request for Comment

Proposed Amendments to National Instrument 81-105 Mutual Fund Sales Practices and Related Consequential Amendments http://www.osc.gov.on.ca/documents/en/S ... 180913_81- 105_mutual-fund-sales.pdf


As a former “salesperson” employed in the securities industry, required by my employer to use the unapproved term “Investment Advisor”, I feel qualified to comment on the two issues raised in the Consultation paper.

The first involves the case of OEO’s (aka Discount brokers) selling a security that has a built in Legal obligation to provide unique services and personalized advice.
Clearly, an OEO (aka Discount brokers) cannot provide personalized advice under its registration so it should not offer A series mutual fund for sale. If it does, it should be sanctioned by the applicable regulator, IIROC.
IIROC has in fact determined that such sales are in breach of its conflict of interest rules and has guided that dealers make rebates to clients. IFIIC, the fund industry trade Association has publicly stated that the discount broker channel is wholly inappropriate for selling A series mutual funds. And investor advocates have urged regulators for years to stop this investor harm.

There is more than enough evidence therefore for regulators to order OEO’s (aka Discount brokers) cease trading in A series mutual funds There is no need for the CSA to use a convoluted approach as proposed to protect DIY investors to contain this mis-selling.
The real issue here is some ugly combination of deceit, overcharging, mal-disclosure, misrepresentation and conflict-of-interest.
This should not be viewed as merely a NI81-105 sales practice issue. It is a complete ethical breakdown that harms investors, the reputation of the marketplace and the financial services industry.

Of course, there are other harms caused by this financial assault on the retail investor. For example, certain fund companies have been denied access to the discounter platform because they have refused to pay the trailer commission to appear on the shelf.

There is also the question of deception. Fund Facts is very clear- the trailer commission is for personalized advice and, albeit unspecified, some services not provided as integral to the client account Agreement. This is a legal document as it forms part of the Simplified Prospectus for the mutual fund. OEO's (aka Discount brokers) cannot comply with this obligation yet they process trades and they do so without even warning that no advice or unique services can or will be provided. Is this not plain and simple misrepresentation? If so, why spin wheels talking about it; simply enforce the policy and penalize any firm that charges for services that it cannot provide.

The CSA has stated that there is approximately $25 billion of A series mutual funds with OEO’s. What is 1% of $25 Billion? Ans. About $250 million per year for ZERO advice for as long as OEO clients own the A series funds! Who pays this $250 million? Of course it’s the investor! Who benefits? Of course, the securities industry. And what is the OSC/MFDA/IIROC doing to correct this? Nothing? You mean this supposedly tightly controlled industry has done nothing to correct this?

CBC's Erica Johnson reports on an ex fund industry employee and his experience with OEO’s. Steve Pozgaj and his wife paid almost $5,000 in trailer fees last year, for advice he says he never got and that discount brokers aren't legally allowed to give. You have to see this video : https://www.cbc.ca/news/thenational/diy- investors-fight-back-against-trailer-fees-cbc-go-public-1.4826351

If regulators cannot protect investors given this arsenal of facts, there is something very wrong with our regulators.
It is absolutely shameful that the CSA is asking investors to comment on the blatantly obvious and not even issuing an Investor ALERT Bulletin warning investors of their inaction and failure to protect.

The second issue involves the controversial Deferred Sales Charge option in the sale of Prospectus qualified mutual funds. The vast majority of mutual fund clients aren't forthrightly told about the DSC/5% upfront commission and only find out about DSC's when they need to access some of their money or see the poor performance of the fund that was recommended to them and want out.
DSC sold mutual funds are an effective way for a fund salesperson and his/her employer to make a quick buck and handcuff their clients to them for 6 or 7 years. The loser, as usual, is the trusting investor.
The CSA has, sadly, decided to retain embedded commissions but is now attempting to deal only with the most harmful strain, the DSC option.

Professor Douglas Cumming’s empirical research report on embedded commissions
https://www.osc.gov.on.ca/documents/en/ ... 151022_81- 407_dissection-mutual-fund-fees.pdf demonstrates that investments under the DSC option have the least sensitivity to past performance out of all purchase options but nonetheless $241 billion dollars of assets under management were held in DSC funds (back-end and low load funds) at the end of 2015.This suggests massive mis-selling, locking clients into a fund for 7 years for no good reason instead of recommending no-load funds , the prevailing 0% FEL option, Index funds or low cost ETF’s.

Per MFDA Conflicts-of-Interest Rule 2.1.4”.. b. In the event that such a conflict or potential conflict-of- interest arises, the Member and the Approved Person shall ensure that it is addressed by the exercise of responsible business judgment influenced only by the best interests of the client and in compliance with Rules 2.1.4(c) and (d). c. Any conflict or potential conflict-of-interest that arises as referred to in Rule 2.1.4(a) shall be immediately disclosed in writing to the client by the Member, or by the Approved Person as the Member directs, prior to the Member or Approved Person proceeding with the proposed transaction giving rise to the conflict or potential conflict of interest”. If this rule was really being adhered to, it is inconceivable that proper business conduct would involve the sale of a DSC fund, especially to a family struggling to put away their modest savings for retirement or a senior/retiree. The sale of a DSC fund is not a shining example of proper business, it is pure deceptive, monkey business. As an aside, it was 19 years AFTER its 1998 adoption, that regulators finally took the first NI81-105 enforcement action!

Supporters of the DSC option state that it provides access to advice [albeit conflicted sales advice, not fiduciary advice] for small accounts. But consider this BCSC finding: “While respondents with smaller portfolios saw improvements to their general and specific fee knowledge in greater numbers than those with larger portfolios, they were by far the least likely to have taken any action – 65% of those with portfolios smaller than $50k have done nothing since the first CRM2 report, compared to just one-in-five of those with portfolios over $250k... Just 53% of respondents were satisfied with the value received for the fees paid. https://investright.org/wp-content/uplo ... iness-For- Better-Investing-Part-4.pdf This suggests that smaller investors are not taking action even when they understand the nature and size of the fees. Why would that be? The CSA should try to find out why and the associated investor protection implications. To not investigate this immediately raises important questions about the neutrality and professional integrity of the CSA.

The MFDA’s 2017 Client Research Report http://mfda.ca/wp- content/uploads/2017_MFDA_ClientResearchReport.pdf indicates it has identified seniors as a particular concern with respect to the mis-selling of DSC funds and that dealers may be using DSC commissions to finance the cost of their operations to mass market clients. In other words, DSC sold funds appear to be targeted at the most vulnerable investors. The MFDA Client research study continues: “Advisors with a book size of less than $2 million are most reliant on DSC commissions to finance their operations with 53% of their book in DSC funds. As advisor book size increases, the amount of DSC within the book decreases and mutual fund assets shift to FE and NE funds”. Elimination of the DSC option would therefore accelerate the switch to fee-based, direct pay arrangements, 0% FEL or no -load funds. It would also cause dealers to change their business models. That’s a good thing. To be sure, that would increase investor protection and decrease misalignment of interests.

Except for Fidelity and perhaps another firm, the MER of a DSC sold fund is identical to a FE load fund. If the true cost of the DSC series fund were calculated, it would be higher than the FE series. We see this in the Fidelity funds. As a result, the DSC cost structure is being subsidized by other unitholders. How is this fair?

It is ironic that industry participants are decrying a ban because it will limit access to advice for small investors while the Small Investor Protection Association, the voice of small investors, supports a ban of the DSC sold mutual fund. Perhaps self- interests are at play?

Given all the evidence of actual and potential harm to retail investors I recommend the DSC option be prohibited immediately. You have known for far too long about the dangers to investors of this option which benefits only the salesperson and the securities firm.
If anything, one could argue that your reluctance to take any action serves to demonstrate that regulatory capture occurred long ago.


To make the point with yet another example, why does the governing legislation state that the approved title was “salesperson” until 2009 at which point it was changed to “dealing representative”? I challenge you to send me one business card for each securities firm that uses the correct title.

Instead of using the legally mandated title, the employer provides business cards that state “investment advisor” or “financial advisor”. Why would this supposedly tightly regulated securities industry with the OSC and its SROs, the MFDA and IIROC, not have caught and corrected this misrepresentation of the title?

Why must the approved title be utilized at all times in every profession except for the securities industry? Why would the Real Estate Council of Ontario (RECO) punish not just the real estate salesperson but also the employing real estate firm, if any title not approved by RECO is used?

Can a lawyer say he/she is an attorney? No? Why not?
Can anyone say they are a lawyer? Can anyone say they are a doctor or an architect or an engineer or...


Is it not a joke that the OSC/MFDA/IIROC allow titles to be used that mislead, misrepresent and which are not approved by the legislation? Whose interests are being served by this misrepresentation?


Think about it. It is certainly not the consumer that is being protected by this misrepresentation. Follow the money as they say and the money goes straight from the consumer/customer/investor to the industry! And where are all the lawyers and professional accountants who are well employed in the OSC/MFDA/IIROC who know first hand that you use the approved title or else major sanctions will be immediately imposed on your creativity?

Shameful conduct by the regulators of this “tightly regulated industry". Is the relationship not a bit too cozy, too tight? I mean when was the last OSC consultation with consumers? If memory serves me well, it was hosted at the CBC Toronto building years ago. What kind of balance and accountability is that?

Please feel free to contact me if there are any questions on my submission. Permission to publicly post is granted.
Sincerely.
James Richard MacDonald MBA
former Sales Person/Dealing Representative Toronto, Ontario.
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Re: Securities Commissions actions in breach of trust?

Postby admin » Tue Nov 27, 2018 10:08 pm

Investment industry experts have begun to use the phrase “Off-Book Government”, to describe clandestine securities regulatory regimes in Canada, most of which are touted as being government supervised, legislated and operated, but in fact are intentionally separate and distinct from government oversights. They are even said by some to be kept beyond arms length as another layer of separation from government to protect the provincial ministers involved with each provincial and territorial securities commission.

Below are a few examples (from memory only) of Securities Commissions acting contrary to the public interest to unjustly enrich the financial industry who funds them, and influences their employment security. If true, they may form examples of Breach of Trust by public officials, Sec 122, Criminal Code of Canada.

If found to NOT be acting in good faith in carrying out their duties, the various provincial and territorial governments may not be able to claim immunity from civil suit against the commissions and governments. What if abused and/or victimized investors could not only seek criminal charges against regulatory officials, but could sue provincial governments to recover their financial damages.


Screen Shot 2018-06-13 at 9.02.51 AM.png


The following quote from a case against the Law Society of Ontario sparked this contemplation of the wrongful abuse of the powers given to 13 Provincial and Territorial Securities Commissions. Acts which may demonstrate that the securities commissions are acting as industry funded “handmaids”, rather than as protectors of the public or of the public interest.

“The facts pled, if true, support the inference of an improper purpose. If true, they may point to a deliberate and dishonest wrongful abuse of the powers given to a public officer.”

https://www.canadianlawyermag.com/legal ... ard-16545/

Breach of Trust Sec 122

1. Allowing fraudulent license-misrepresentation of over 100,000 Dealing Representatives (sales brokers/sales agents) who purport to Canadian investors to be registered as Advising Representatives (advisory agents). This is a false and intentionally misleading representation upon the public which lures the public into lowering their trust and natural suspicion about commission sales agents.

Screen Shot 2018-04-23 at 6.53.29 PM.png


2. This is an example of willful blindness to Securities Act law, for the express benefit of the investment industry, and to the detriment of the public, who is kept unfairly mis-informed about their true financial services relationship.

3. Securities Commissions compound this unfair intent when they release (in 2017) new and supposedly improved Client Relationship Models (CRM2) which also avoid disclosure of the true, legal, license category of over 100,000 Canadian sales agents (Dealing Representatives).

Could any legitimate organization, acting in good faith, design a “Client Relationship” document which cleverly omits the clear, precise and specific details of what that actual relationship is?


CRM2 CRIME.jpg


4. Securities Commissions compound the complicity in the deception of the public when they alter documents and redraft procedures, rules, and materials to delete all reference to the word “Salesperson”. Including deletion of the word itself, by changing the name of the “Salesperson” category of investment registration to a name which is far less transparent and meaningful to the public, namely “Dealing Representative”. This removal of the clear and understandable description of “Salesperson” with the less clear and understandable term “Dealing Representative has the effect of further obfuscation of the truth and deeper confusion of the public.

More than three hundred employees at the Ontario Securities Commission earn in excess of $100,000.
(sunshine list of government salaries)

Screen Shot 2018-01-28 at 9.28.37 AM.png

(click to enlarge this image. Salesperson deletions are found on pages 378, 384, 385 and in 21 additional examples in the Securities Commission documents linked below)
http://www.osc.gov.on.ca/documents/en/Securities-Category3/rule_20090918_31-103_3238-supplement.pdf

or here

https://drive.google.com/file/d/1tAKBiH ... sp=sharing

More than 100 people at the Ontario Securities Commission earn in excess of what the Premier earns.


Screen Shot 2018-11-27 at 10.16.45 PM.png

(Click to enlarge. This is the front page of the document where “Salesperson” terminology was cleansed from all use in 2009)


5. This (license misrepresentation) is also specifically forbidden in the Securities Acts of most, if not all Provincial and Territorial Securities Commissions. This means that Securities Commissions selectively ignore the very laws under which they are established by, and responsible for.

5. Providing, for a fee, exemptions to Securities law which allow Securities Act law to be skirted without public hearing, without public input and without a warning to investors who may be negatively affected, and whose public financial protection may have been removed from them, behind closed doors by the exemptions to laws.

Three exemptions (out of ten thousand) from memory are, Valeant Pharma, $90 Billion removed from market cap, Bombardier, $8 Bil removed from market cap in 30 days in 2018, Sub Prime mortgages exemption removed $32 Billion from Canada so banks could dump their non-lawful, poorly rated ABCP mortgage paper upon an unsuspecting public.


6. Securities Commissions deliberately require “Know Your Client” (KYC) disclosure documents which can be easily ‘warped’ to protect the industry by having those documents completed with the “assistance” of false-advisors. At the same time, there is no such thing as a “Know Your Advisor” (KYA) disclosure other than the intentionally vague and misleading Client Relationship Model (CRM and CRM2) which completely avoids the disclosure that would warn and protect the public from commission sales agents who falsely represent their roles and registration categories to unjustly enrich themselves and their dealers.

I have found exemptions for nearly every bank in Canada, who when offering new issue underwritings for sale to the public, if ever these new issues do not sell well and if the bank if fearful of being “stuck” with a lead balloon investment holding...what do they do? Simply apply for exemption from the cross trading restrictions in the law between bank underwriting divisions, and bank mutual fund divisions, and dump the crap product off of the bank’s hands, into the hands of the investors in a bank mutual fund...problem solved.
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Re: Securities Commissions actions in breach of trust?

Postby admin » Thu Oct 11, 2018 7:33 am

-1x-1.jpg


for the CSA to turn a blind eye to 116,000 registered dealing representatives, who falsely portray themselves to the public in a manner intended to lead (deceive) Canadians into a false belief that they are dealing with “advising representatives”, and not dealing representatives (salespersons) is tantamount to an epidemic of systemic fraud upon Canadians.


http://www.osc.gov.on.ca/documents/en/S ... lfordl.pdf

October 6, 2018
To: Ontario Securities Commission
Re: Public comments on Trailer fees paid to discount brokers, DSC mutual funds, and misrepresented Dealing Representatives contrary to Securities Act “representation” requirements.

Making payments to discount brokers for advice and undefined services is just plain wrong.
Mutual fund boards should be held accountable for abuse of fund assets. Buying shelf space with fund assets is a breach of fiduciary duty. The Independent Review Committees should be asked if they were asked ABOUT this use of funds and if so, why did they agree for this money to leave the fund.?
If they were not asked, the trustees are non compliant with NI81/-107. No matter how you look at it the root cause of this issue lies with the fund manager and that is who the CSA should be sanctioning.

As for the DSC issue, it has been known since 1998 when the Stromberg report was issued that the DSC sales option is hard-wired to be corrupted. As it is mainly middle income families exposed to the toxic DSC, the CSA should ban it as an abuse of the public and an unjust enrichment of dealing representatives.
It is not a matter of investor choice since only financial illiterates would seek out an investment that locks them in for up to 7 years. Of course, a 5% upfront payment to the salesperson is irresistible but definitely not in the client's best interests. Once the DSC is prohibited, all fund MER's will drop and that's a good thing. Sales of the DSC should cease during the consultation period or at least any ban should be effective as of the date of the consultation.

Finally, for the CSA to turn a blind eye to 116,000 registered dealing representatives, who falsely portray themselves to the public in a manner intended to lead (deceive) Canadians into a false belief that they are dealing with “advising representatives”, and not dealing representatives (salespersons) is tantamount to an epidemic of systemic fraud upon Canadians.

The CSA appears willfully blind to this deception at best, and complicit to it at worst.
It must be noted that Provincial regulators may be liable for breaches of the public trust if it can be shown they are/were not acting in good faith in their public protection capacity as government regulators. Letting Canadians be deceived, and financially abused, does not appear to meet the standard of acting in good faith.

Thank you for the opportunity to make comments. This letter may be publicly posted.
Larry Elford

Dealing Representative ( retired)
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Re: Securities Commissions actions in breach of trust?

Postby admin » Thu Oct 11, 2018 7:29 am

Screen Shot 2018-10-11 at 8.25.16 AM.png


The Honourable Vic Fedeli, MPP Minister of Finance
Frost Building South
7 Queen’s Park Crescent, 7th floor Toronto, Ontario M7A 1Y7

Dear Minister Fedeli,

For the last two decades SIPA has heard from thousands of victims of financial industry wrongdoing and listened to their tragic stories of how this has negatively impacted their lives. From our many years of experience, we believe you have been given incorrect information that DSC's have been serving Canadians well.

Unlike the UK and Australia, Canada has retained embedded commissions. The CSA is only trying to prohibit the DSC sold mutual fund option with its outsized upfront commission locking investors in for 7years.

According to Stephen S. Poloz, Governor of the Bank of Canada the amount of debt held by Canadian households has been rising now for about 30 years. Canadian households owe over $2 trillion. The average Canadian owes about $1.68 for every dollar of income he or she earns per year, after taxes.

Advisors dependent on these quick and larger commissions that DSC’s provide are put into a terrible conflict of interest with their clients. Seniors as we know can have rapidly changing needs due to changes in their health and care needs. Yet we find seniors are particularly vulnerable to being taken advantage of in this manner since they are often the ones with savings. The penalties to access their own hard-earned savings when needed are heart- breaking.

Instead of locking any Canadian, young or old, into investments with DSC’s maybe we need to be encouraging more of them to pay down debt with any extra cash, or to put together a rainy- day fund. Many households do not have enough liquid savings to cover any emergency or unexpected expenses like a new furnace, roof, car repairs, or even if an appliance breaks down. To have their savings locked away is both unwise and unfair.

The DSC is being used by the industry to finance new fund salespersons. It is NOT about investor choice. Real choice for investors would be between retail advisors who are accountable to a fiduciary duty and accept no conflict-based remuneration and the current situation of working with a salesman! The DSC option is advisor choice and industry choice. You are presently siding with the financial institutional elite when the little guy needs those in power to demand accountability for this elite. The DSC is an aggressive remuneration option designed to get sales reps quickly established and the more they are willing to take advantage, the more important the DSC becomes. A new salesperson is not going to come into the business unless they can earn immediate money. Rather than through a DSC it would be better if a dealer paid a salary. If a dealer takes the risk of paying some base salary, logic dictates they would be far more engaged in the quality of the advisor they license. This would a better route.

The DSC poses several problems to the investing public. The DSC significantly increases overall investment management fees. Paying a 5% upfront fee to a sales person plus 0.5% per year leaves mutual fund managers with a large expense to recover prior to making a profit for themselves, this inevitably translates into higher fees borne by the investor. DSCs give the incentive for an advisor to work hard to get their new clients into an investment but leaves little incentive to do any work thereafter. Once they’ve committed to the investment the advisor has received the lion’s share of their compensation and arguably has little direct motivation to continue fostering his or her relationship with the client.

The DSC locks small unsophisticated investors into a mutual fund for up to 7 years. If the investments do not perform as anticipated, or a client has a legitimate need for cash, redeeming out of these funds is a costly move. Small investors have access to a number of other economical choices that would not be impacted if the DSC option were banned.

The financial industry has generated an image of advice and service when in reality it is based upon selling product. We have interviewed many victims and found that most of them knew very little about investing. They simply trusted their Financial Advisor to look after their savings. They truly believed that their advisor would and many believed this person had a fiduciary duty to do so. Sadly, this is not the case here in Canada. SIPA's report “Advisor Title Trickery” indicated 121,932 total registrants in Canada in the investment industry yet only 3% of those are registered in a category where a true fiduciary professional responsibility is legally required. The current suitability regime, loaded with conflict-of-interest, can hardly be called “advice”. But now it is being used as a basis to provide what is purported to be ever more fulsome financial advice and its deficiencies are glaringly apparent. Additionally, with an aging client population, fewer defined pensions being offered by employers and more defined contribution plans being part of the future, there is an increasing need for Canadians to have access to impartial professional financial advice that can be trusted is in their best interests.

One small step forward for small investors would be the elimination of Deferred Sales Charges. A larger much more needed step, is for advice givers to be held to the highest standard when handling Canadians hard-earned savings and their trust. Please reconsider your position and stand up for the interests of the little guy, not big corporations.

Sincerely,
Stan I. Buell President

Investor Advocate Comment....
on the same day that I received the letter above from SIPA’s Stan Buell, I also received notice the Ontario Finance Minister Vic Fedeli was the guest speaker at the Advocis convention coming soon. Advocis is the epitome of self-serving financial services in my view, and for them to have obtained the ear of the Ontario Minister of Finance is saddening. Some history and track record of Advocis can be found on this site at this location:
http://www.investoradvocates.ca/viewtopic.php?f=1&t=194

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Re: Securities Commissions actions in breach of trust?

Postby admin » Sun Oct 07, 2018 9:27 am

Via email October 3, 2018
 
Understanding Registration Categories CSA.jpg

To:

The Secretary
Ontario Securities Commission
20 Queen Street West
22nd Floor
Toronto, Ontario M5H 3S8
Fax: (416) 593-2318
E-mail: comments@osc.gov.on.ca

Me Anne-Marie Beaudoin
Corporate Secretary
Autorité des marchés financiers
800, rue du Square-Victoria, 22e étage
C.P. 246, tour de la Bourse
Montréal (Québec) H4Z 1G3
Fax: 514-864-6381
E-mail: consultation-en-cours@lautorite.qc.ca

British Columbia Securities Commission
Alberta Securities Commission
Financial and Consumer Affairs Authority of Saskatchewan
The Manitoba Securities Commission
Ontario Securities Commission
Autorité des marchés financiers
Financial and Consumer Services Commission of New Brunswick
Superintendent of Securities, Prince Edward Island
Nova Scotia Securities Commission
Superintendent of Securities, Newfoundland and Labrador
Superintendent of Securities, Yukon Territory
Superintendent of Securities, Northwest Territories
Superintendent of Securities, Nunavut

CSA Notice and Request for Comment
Proposed Amendments to National Instrument 81-105 Mutual Fund Sales Practices and Related Consequential Amendments
http://www.osc.gov.on.ca/documents/en/S ... -sales.pdf


Re: Public comments on Trailer fees paid to discount brokers, DSC mutual funds, and misrepresented Dealing Representatives contrary to Securities Act “representation” requirements.

Thank you for the opportunity to provide the CSA comments on this very important Consultation.



Making payments to discount brokers for advice and undefined services is just plain wrong.

Mutual fund boards should be held accountable for abuse of fund assets. Buying shelf space with fund assets is a breach of fiduciary duty. The Independent Review Committees should be asked if they were asked ABOUT this use of funds and if so, why did they agree for this money to leave the fund.?

If they were not asked, the trustees are non compliant with NI81/- 107 . No matter how you look at it the root cause of this issue lies with the fund manager and that is who the CSA should be sanctioning.

As for the DSC issue, it has been known since 1998 when the Stromberg report was issued that the DSC sales option is hard-wired to be corrupted. As it is mainly middle income families exposed to the toxic DSC, the CSA should ban it as an abuse of the public and an unjust enrichment of dealing representatives.

It is not a matter of investor choice since only financial illiterates would seek out an investment that locks them in for up to 7 years. Of course, a 5% upfront payment to the salesperson is irresistible but definitely not in the client's best interests. Once the DSC is prohibited , all fund MER's will drop and that's a good thing. Sales of the DSC should cease during the consultation period or at least any ban should be effective as of the date of the consultation.

Finally, for the CSA to turn a blind eye to 116,000 registered dealing representatives, who falsely portray themselves to the public in a manner intended to lead (deceive) Canadians into a false belief that they are dealing with “advising representatives”, and not dealing representatives (salespersons) is tantamount to an epidemic of systemic fraud upon Canadians.
The CSA appears willfully blind to this deception at best, and complicit to it at worst.

It must be noted that Provincial regulators may be liable for breaches of the public trust if it can be shown they are/were not acting in good faith in their public protection capacity as government regulators.
Letting Canadians be deceived, and financially abused, does not appear to meet the standard of acting in good faith.

Thank you for the opportunity to make comments.

This letter may be publicly posted.

Larry Elford
Dealing Representative ( retired)
Alberta
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