Securities Commissions actions in breach of trust?

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Securities Commissions actions in breach of trust?

Postby admin » Tue Feb 16, 2010 5:26 pm

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Feb 15, 2010

A.P. (Anthony) FOZARD, Staff Sergeant
RCMP Integrated Market Enforcement Team  (Vancouver) 
2200-401 West Georgia Street, Vancouver
British Columbia, Canada  V6B 5A1
Telephone: (604) 602-4455
Facsimile: (604) 331-1222
EMail: anthony.fozard@rcmp-grc.gc.ca

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

Re: Vancouver IMET file 2010-771

Dear Mr. Fozard,

I write to you with supplemental information regarding the complaint made by Canadians into the sale of Non Bank Asset Backed Commercial Paper (ABCP).  I appreciate that the RCMP have confirmed the opening of a criminal investigative file into the sale of ABCP, as have law enforcement agencies in other countries.  

Public documents are available which indicate that our provincial securities regulatory agencies provided essential help to sellers of this ABCP, to the financial benefit of the securities commissions as well as the investment sellers, and to the detriment of the public interest.   I feel that the RCMP should also be made aware of these documents and of the propensity of securities commissions to act in a complicit manner with investment firms who are abusing the public.  If these allegations are found to have merit, then we are talking about breach of the public trust by our provincial securities commissions.

None of the public securities commissions have been willing to answer questions on what process was followed and what public interest is served by letting substandard investments (those which did not met our laws) be sold without notice to Canadians.  Of the approximately 5000 instances where securities commissions have let investment firms skirt our securities laws, I find no examples of public input or public notice of these deals.  This may put them in a category of secrecy which further reflects poorly on the process and of those who allow our laws to be skirted.

It appears indicitive of a captured regulatory system and one with incestuous relationships with the investment industry which appear to preclude proper duties of care being delivered to the public. 

I write with slight reservation, knowing that not only have the securities industry claimed the right to self-police on matters such as this, but that the RCMP IMET has allowed securities regulators and self regualtory members to work on its force and advise from the position of an RCMP “insider”.  These regulators, which are all paid a salary by the investment industry simply should not be on your joint management committees when investigating the investment industry. This could be construed as a conflict of interest were it neccessary to investigate the industry or regulators who are paid by this industry.
I urge you to take public steps to show that your force is willing and capable of separating from the investigation, regulators or self regulators who are in fact paid and supported by the very industry you are investigating.

I further ask that the regulators themselves be investigated for breaches of the public trust.

Specific example include, but are not limited to:

The granting  (to investment dealers) of permissions to violate Securities laws in order to help facilitate the sale of known defective investment products, and the simultaneous failure to ensure that the public were notified of this “exemptive relief” process before they invested in the products.

Failure to disclose market risks that were known to the regulators (as evidenced by the need for legal relief application) and intentionally veiled from public view by the industry.

Self-Preservation of regulatory agencies positions through moral disengagement and motivated forgetting towards a securities industry that funds the salaries of all investment regulators in Canada.  Dishonest deed by agents of the crown.  Failure to provide the duty of care promised to the public by a crown agent.

Regulatory and self regulatory board governance failure. Using boards composed of industry members and very little to none who represent the public interest. 

Regulators knew or ought to have known that legal exemptions were detrimental to the protections intended by laws, and that by skirting them, the public was and is being placed at risk. 

Granting of legal exemptions to the financial industry without notice or due process with the public is indicitive of an “abuse of discretion” by an agent of the crown.  Hiding the process from the public adds fuel to the argument of an abusive act.

Consistant record of favoritism toward the investment industry, with literally thousands of such behaviors (permissions granted to violate securities laws) that favor the industry and damange the public.  Never a public notice was given.  No public input was allowed.

Criminal allegations may include but not limited to the following against the provincial securities regulators and self regulatory agencies:


-Failure to provide the public with honest services
-Breach of duty to protect the public

-Regulators knew or should have known enough about their stated protective role in matters that affect the public interest to avoid allowing thousands of exemptions to be granted to those who sell investment products and advice.
-Breach of the public trust.
-Negligence.
-Negligently and intentionally failing to protect the public interest through a conflicted securities regulatory system.
-Breaching securities laws and practices that were intended to protect the investing public. Professional complicities with the investment industry that constitute a conflict of interest.


These matters have caused billions of dollars to be siphoned out of our economy, into the hands of investment sellers.  Some of the matters may involve civil recourse from the agencies involved, and some may be criminal in nature.  I trust that the RCMP will take these matters as seriously as the damage to our Canadian economy.  I also trust that the RCMP IMET will take professional steps to separate all aspects of this investigation, from the regulators and self regulatory persons who are on IMET joint management committee’s, and whose regulatory agencies may be suspected of criminal code offenses against Canadians.

Yours,

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