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Re: How many rules, laws, principles can we violate?

PostPosted: Thu Sep 01, 2011 7:33 pm
by admin
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By way of evidence to support violations 8-13, the misrepresentation of "advisors" as a marketing gimmick to fool customers, lets take it one step beyond just the "advisor" title. By way of example of sheer marketing bull(*&*&^ comes the misrepresentation of the title, "Vice President", and I will paste in a link, a document, and some Quebec Superior Court comments about the practice in the amazing case of Markarian V CIBC World Markets. Why so amazing you ask? Because typically legal cases against powerful corporations are settled with confidentiality agreements, and this is one of the rarest examples you might ever find of a public document outlining what actually goes on with some of them.




¶ 263 The defendant attributed to Migirdic fake titles, i.e. "vice-president" and "vice-president and director", in addition to letting him use the title "specialist in retirement investments". Those titles were false representations that misled the plaintiffs, hid reality from them, disinformed them, comforted them in their confidence in Migirdic, reduced their distrust, and contributed to Migirdic's fraud. The defendant committed a fault in terms of its obligation to inform and advise, in addition to misleading the plaintiffs.

¶ 266 In the defendant's operations, the titles are, in fact attributed to many people. In 1995, there were 206 vice-presidents and 44 vice-presidents and directors out of 556 representatives. In 1997, there were 217 vice-presidents and 109 vice-presidents and directors out of 612 representatives. In 1999, there were 197 vice-presidents and 101 vice-presidents and directors out of 725 representatives, the proportions were about the same in 2000. That year, about 300 of the 700 representatives had a title!

¶ 267 The problem is that clients do not know that these titles are simply marketing tools, i.e. a means to convince them that they have an excellent representative, and recognition for the volume of commissions. Clients therefore believe they have a "very special" and "eminently acknowledged" representative when the representative has the title of "vice-president" or "vice-president and director". That was what Mr. Markarian in fact believed, as he testified. Richard Papazian, another witness (and also a victim) thought the same thing. So the titles create a false feeling of trust, comfort and prestige, the role of which is not trivial in the commission of fraud.

¶ 268 The plaintiffs were the victims of these false representations by the defendant in their regard.

(advocate clarification: CIBC and the "advisor" both guilty of false representations and "fraud" as stated by Montreal Superior Court Judge Jean-Pierre Senècal) No criminal sanction whatsoever.

case can be read here: ... _index.htm

Media publication by investigative journalist can be seen here (Maisonneuve Magazine, Montreal) ... i&hl=en_US

(I will refer to this as violation #14 in the list of large financial firm fraudulent misrepresentations to hoodwink customers from their money and their trust.)

Re: How many rules, laws, principles can we violate?

PostPosted: Thu Sep 01, 2011 7:20 pm
by admin
Still further to violation #8, Fraudulent or negligent misrepresentation of the "advisor" title for marketing purposes:

MFDA requirement not to mislead, misinform or misrepresent oneself or ones role as an investment industry employee.
MFDA Rule 1.2.1(e) generally prohibits Approved Persons from using any business name (or title) or designation that deceives or misleads, or could reasonably be expected to deceive or mislead, a client or any other person as to the proficiency or qualifications of the Approved Person. In addition, business titles that deceive or mislead clients or the public as to the Approved Person's category of registration are also prohibited


....the use of business titles by Approved Persons is governed by MFDA Rule 1.2.1(e), which prohibits Approved Persons from holding themselves out to the public in any manner that deceives or misleads or could reasonably be expected to deceive or mislead a client or any other person as to the proficiency or qualifications of the Approved Person under MFDA Rules or any applicable legislation. MFDA staff assess compliance with the requirements of Rule 1.2.1(e) through compliance examinations.

Aamir Mirza
Senior Legal & Policy Counsel
The Mutual Fund Dealers Association of Canada


With respect to the registration category of "salesperson" within provincial/territorial securities legislation and the use of business titles as regulated under MFDA Rule 1.2.1(e), I note as follows.

The category of registration contained within the various provincial Acts for an individual licensed to trade on behalf of a dealer is "salesperson"

Aamir Mirza, LL.B.
Senior Legal & Policy Counsel
The Mutual Fund Dealers Association of Canada

False or misleading representations

52. (1) No person shall, for the purpose of promoting, directly or indirectly, the supply or use of a product or ... any business interest, by any means whatever, knowingly or recklessly make a representation to the public that is false or misleading in a material respect.
(this from the Competition Act)


Misrepresentations to public

74.01 (1) A person ... who, for the purpose of promoting, ... the supply or use of a product or ... any business interest, by any means whatever, (a) makes a representation to the public that is false or misleading in a material respect.

False Pretences

361. (1) A false pretense 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.

362 (1) Every one commits an offense who (a) by a false pretense ... obtains anything in respect of which the offense of theft may be committed or causes it to be delivered to another person; (b) obtains credit by a false pretense or by fraud; (c) knowingly makes ... a false statement in writing ... with respect to the financial condition or means or ability to pay ... (i) the delivery of personal property, (ii) the payment of money, (iii) the making of a loan, ... or credit ... (vi) the making, accepting, discounting or endorsing of a bill of exchange, cheque, draft or promissory note; or (d) knowing that a false statement in writing has been made ..
criminal code

44.(1) No person or company shall represent that he, she or it is registered under this Act unless the representation is true and, when making the representation, the person or company specifies his, her or its category of registration.

Jeffrey Fennell
Senior Inquiries Officer
Ontario Securities Commission

With regards to your question, under the new National Instrument 31-103 as of September 28, 2009, mutual fund representatives are now called mutual fund dealing representatives and individuals who were an advisor under a portfolio manager are now called an advising representative. Please see this attached link for additional details: ... mptions%20[NI].pdf
Thank you,
Kent Waterfield
Senior Registration Administrator
Registration & Compliance Branch
Capital Markets Regulation

British Columbia Securities Commission

As one commentator to the SEC staff's study noted, "If the product sold is that of advice, then that advice should be in the best interest of the client. Anything else is fraud, because the seller is delivering a service different from what the consumer thinks he or she is buying."
Edward Waitzer, Financial Post · Tuesday, Feb. 15, 2011

I will jot these down as violations #'s 9 to 13 of various codes, rules, laws and acts, all in the name of misleading and misrepresenting the public about investment "advisors"

Re: How many rules, laws, principles can we violate?

PostPosted: Thu Sep 01, 2011 5:35 pm
by admin
Further to violation #8, where your commission salesperson, or "dealing representative" claims a higher calling of an "advisor", while not holding the proper license nor qualifications:

Dear Mr Elford,

Thank you for your message.

With regards to your questions and comments, you are quite right in that the term "advisor" on its own and used loosely, would be inappropriate for a dealing representative to use without having the educational requirements and experience to be registered as an advising representative.

If you are certain that an individual is holding themselves out inappropriately, please feel free to contact the appropriate securities commission or self regulatory body (Mutual fund Dealers Association or Investment Industry Regulatory Organization of Canada ) through our related links available on our website at: our email is We also have a helpful link on our website called Invest-right , which members of the public can use to assist themselves with their investing.

Thank you,

Kent Waterfield
Senior Registration Administrator
Registration & Compliance Branch
Capital Markets Regulation

British Columbia Securities Commission

Phone: 604 899 6694
Fax: 888 242 9341
800 373 6393 (toll free across Canada)

Advocate comments, I have posted at length under another topic in this flogg (Advisor fraud...) with some rather funny responses from a lawyer at the OSC. He cannot seem to come to an honest discussion about the topic above. I am grateful for the greater honesty shown by the person at the BCSC. Further to violation #8 fraudulent or negligent misrepresentation by an investment firm and investment seller.

Re: How many rules, laws, principles can we violate?

PostPosted: Thu Sep 01, 2011 5:26 pm
by admin
OSC 3.png
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Here is an example of the old registration and license category of a commission investment seller followed by the web site for a securities commission to go and look up the registration for your investment "advisor".

If you find he or she is not licensed as an "advisor", and may be simply using (or misusing? that title for marketing purposes) I believe you have a case for misrepresentation even if they claim "the lawyers let me do it". That is their problem to be professionally ashamed of, not yours to know exactly how you were misrepresented for money. (If they claim to be some kind of pro, they have a duty to act like it........)
Further to violation #8 towards pulling the wool over clients eyes for more commissions

Re: How many rules, laws, principles can we violate?

PostPosted: Thu Sep 01, 2011 5:20 pm
by admin
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In Sept 2009, the CSA (Canadian Securities Administrators) in their ultimate wisdom, DELETED the word "salesperson" from 13 securities acts in Canada and replaced it with the much clearer license category "dealing representative". You can ask them who benefitted from this obfuscation, but you will notice that most sellers of financial products, still cling to the misrepresentation calling themselves "advisor", despite now being licensed as a "dealing representative"

Violation #8 of principles of clarity, transparency and fair play to the investment customer

Re: How many rules, laws, principles can we violate?

PostPosted: Thu Sep 01, 2011 5:14 pm
by admin
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For the twenty years from 1984 to 2004 I was never in receipt of a copy of my actual license. You should look around the office of the person calling themselves your financial "advisor" and see if you can spot a license. I doubt you will ever see an actual license, even if you ask to see it. You should consider that suspicious.

Note that "advisor" is a registration category that virtually no retail commission salespeople in Canada qualify for (no, your local "advisor" does NOT meet the qualifications but may get there by an exemption to the law, more on that violation later), but nearly 100% of the use to mislead consumers.

Violation #7 of ASC rules of misrepresentation of ones professional license and job qualifications, also violates the criminal provisions of the Competition Act of Canada (misrepresentations)

Re: How many rules, laws, principles can we violate?

PostPosted: Thu Sep 01, 2011 4:57 pm
by admin
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The Mutual Fund Dealers Association and Investment Dealers Regulatory Org also showed this suitability obligation in their literature. Perhaps their lawyers have already edited it out due to it's investor "protective" element, but regardless, the principle still stands in my mind: (they would argue that we did not say whose perspective we measure "suitability" from the customer or the seller......)

Violation #6 is ignoring the principles of "suitability" for the customer

Re: How many rules, laws, principles can we violate?

PostPosted: Thu Sep 01, 2011 4:52 pm
by admin
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Violation #5 that investment "advisors" and their firms violate daily is the BEST EXECUTION OBLIGATION. 80% to 90% of commission salespeople (who misrepresent themselves as "advisors") violate this rule and charge customers the worst possible price they can charge in order to maximize the commission or trailing commission.

If your "advisor" has sold you the most expensive fund, the DSC fund etc, he or she has violated this obligation in pursuit of more commission for themselves:

Re: How many rules, laws, principles can we violate?

PostPosted: Thu Sep 01, 2011 4:41 pm
by admin
B Managers.jpg
If you purchased a mutual fund in the past, and if your "advisor" charged you the DSC option, (deferred sales charge) you may not know it but your advisor just took financial advantage of you. Here are some principles involved:

I will call this violation #4, principle of living up to the promise of being an "advisor" to the customer, although I will post "best interest" requirements to follow, which seem contradictory based on the slippery slope (should I say greasy?) of financial "advisors" ignoring the best interest standards into extinction.

The image is from page 181 of the Canadian Securities Institute BRANCH MANAGERS TRAINING COURSE
Screen shot 2011-04-20 at 10.42.23 AM.png
click to enlarge (and ask yourself why 80% of most sales are in the DSC load option)

Re: How many rules, laws, principles can we violate?

PostPosted: Thu Sep 01, 2011 9:16 am
by admin
Following on the heels of "we do not have to place the customer's interest first", even when fooling them into belief that we are trusted "advisors".......comes this beauty:

Picture 4.png

click to enlarge

It shows that over 90% of trusted "advisors" placed their clients into "wrap" accounts in the year covered.

Wrap accounts are shown by the OSC Fair Dealing Model to earn up to 26 times more money for the seller of the fund, than competitive and independent mutual funds. The reason is that wrap funds consist largely of "house brand" or proprietary funds, owned and mixed up in the back rooms of the investment seller and all subsequent fees then go to the investment sellers (management, operation fees) rather than just earning a commission.

In addition, some wrap funds or accounts consist of a fund of "other funds", which results in fee on top of "other fees", again enriching your salesman's wallet and lightening the customers. (which would be fine if he or she were not fraudulently misrepresenting themselves as your trusted "advisor")
So the next time you ask your "advisor" to recommend to you the very best investment they can, do not be surprised if you end up owning the "house brand".

see appendix F at end of document, page ten, "Compensation Case Study 1: Converting Assets Under Administration to Assets Under Management" ... t?hl=en_US

Assante prospectus admission of gains by selling customers the "house brand":
Evidence in Assante’s own May 19, 1999, IPO Prospectus,

"By earning the privilege of managing client assets, there is the potential for
a nine to sixteen fold increase in operating margins when assets under
administration also become assets under management. This potential
margin expansion is based on assumed industry average margins for
assets under management (90 to 120 basis points) and assets under
administration (7.5 to 10 basis points)."

I am going to label this violation #3. The violation of the principle of only completing a transaction for a client if it is in the best interest of the client to do so. I will next find the "best interest" references, despite just previously pointing out how cleverly the industry has apparently forgotten these principles in the pursuit of money.

Re: How many rules or laws can we break to get at your money

PostPosted: Thu Sep 01, 2011 8:36 am
by admin
From this document: ... t?hl=en_US
comes this image.

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click to enlarge image

I found it fascinating to read this in 2011. It was from the "hopefully" on the side of the public interest organization, FAIR Canada, which is funded totally by the Investment Dealers of Canada. Time will tell whether this organization meets their stated goals of protecting the public, or whether they were set up to provide a "facade" of protecting the public, to further protect the industry's hold on self regulation.

It says that the person claiming to be your trusted "advisor", despite the misrepresentation involved in use of that title:
(1) does not have a fiduciary duty to care for your interests as a trustee or other professional fiduciary would
(2) does not have to even place your interests ahead of their own selling interests
(3) does not have to even sell you investments which are in your best interests
(4) does not have to disclose to you conflicts of interest such as earning ten times more money from selling product A over product B
(5) only has to meet an obligation to sell you something "suitable", and by suitable this can include selling you the most expensive, highest commission paying version of the product, even when a more beneficial version is available which is otherwise identical.

In fact, it has somehow become standard industry practice to make it acceptable to financially violate trusting and vulnerable investment customers while at the same time misrepresenting the salesman's license and registration category to them.

(check out the further legal "weasel words" used in section 4 to ensure the public interest can be bypassed in favour of financiers)

I will call this violation #2, whether it be of rules, laws or honest principles. Now I know why the OSC needs 60 to 100 lawyers.


Update Sept 4, 2011, after discovering the funniest thing..........
from page 11 of this book:

Comes this Industry standard:
click to enlarge image
" PRIORITY OF CLIENT's Interest: The client's interest must be the foremost consideration in all business dealings. In situations where the registrant may have an interest that competes with that of the client, the client's interest must be given priority" (page 11, CSI Conduct and Practices Text for investment industry registrants)

If we compare the CSI textbook, with the industry practices of today (FAIR CANADA ROUNTABLE), it becomes clear that regulators have been selling off the public interest for personal loyalties, money or career moves. This is a criminal code violation called Breach of Trust.

Every official who, in connection with the duties of his office, commits fraud or a breach of trust is guilty of an indictable offence and liable to imprisonment for a term not exceeding five years, whether or not the fraud or breach of trust would be an offence if it were committed in relation to a private person.

Re: How many rules or laws can we break to get at your money

PostPosted: Thu Sep 01, 2011 8:26 am
by admin
images.jpeg (3.89 KiB) Viewed 12338 times

Chapter S‑4

"HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Alberta, enacts as follows:

1 In this Act,
(ii) “misrepresentation” means
(i) an untrue statement of a material fact, or
(ii) an omission to state a material fact that is required to be stated, or
(iii) an omission to state a material fact that is necessary to be stated in order for a statement not to be misleading;"

Advocate comments: The basic fundamental misrepresentation that fools most retail investment customers is the "bait and switch" that goes on around the license categories of "advisor" and "salesperson" (pre 2009) or "dealing representative" (post 2009.

The simple version is this: No self respecting investment salesperson wanted to be known as a "salesperson", so in the spirit of self regulation (we do anything we want), the name "advisor" is used by the majority of people who sell investments by commission. Despite the fact that their license category is NOT advisor, and that advisor is a separate, distinct and far advanced category of registration, and despite the fact that advisor lends the public to believe their is some professional duty or obligation to "care" for the interests or to place the interests of the customer ahead of their own personal interests. Not true.

The end result is that the industry is playing a "name game" in order to misrepresent and to fool the public into a state of greater trust and confidence. A "con" game if you will, to get easier and more compliant access to sell the public investment products.

Ask the next person who gives you a business card saying "advisor" on it to show you his or her license, or look it up yourself at the securities commission.

Misrepresentation is subject to a fine of up to $1 million dollars and prison term of up to five years. I am going to call this legal violation number one, and as mentioned earlier, it is part of the very foundation for financial violation of millions and millions of investment customers.

From this web page ... t?hl=en_US comes the document of a "Fiduciary Roundtable" put on by FAIR Canada (investor rights advocates group funded totally by investment dealers association......time will tell if they are real advocates or simply a diversionary tactic by the dealers)

Screen shot 2011-09-11 at 1.34.31 AM.png
click to enlarge

From the highlighted area in blue (click on it) you can see the industry "sleight of hand" which allows for the largest bait and switch in history. It is where they say "we are not distinguishing between different categories of licensing or registration". This is the part where they ignore the letter or the spirit of the law in favour of the spirit of selling out the public interest for greater commissions. The bait is to lure clients with the promise of "trusted", "professional", "advisors", or comfort words to that effect, and the switch is then to serve them the fraud of giving them a commission salesperson, selling product, not advice, and who may or may not have even the license nor the registration to call himself or herself an "advisor". Also may not feel they even have to put the client interests ahead of their own sales commission interests. They may even have gotten use of the term advisor by a legal "exemption" process whereby they are allowed to not meet the educational etc., requirements of the securities act. This is misrepresentation at its very best, condoned and endorsed by the regulators, and used to fool clients for their money.

Self Regulation is "decriminalization", lets count the ways

PostPosted: Thu Sep 01, 2011 12:48 am
by admin
It is now 2011, some thirty odd years beyond the days when I first took my Canadian Securities Course early 1980, and then the Conduct and Practices exam when I joined the industry in 1984.

I have learned now that self regulation is "decriminalization" and this flogg topic will try to list those rules, laws, codes or principles that routinely get ignored in the feeding frenzy to get more of the client's money, by those investment practitioners who practice malpractice.

I have collected bits and bites of them here and there, and never have compiled them into one spot. Some you will see inside the flogg topic GET YOUR MONEY BACK. Others you will find in ADVISOR FRAUD, and yet others in TRICKS OF THE TRADE etc. It will by my task to now compile each and every industry violation that I can identify, in the hopes that others will read, learn and scream for it to stop. (Give me a few weeks to work on this new project, and in the meantime, go looking for some in those flogg topics listed above, and found on this same site. If anyone, anywhere then wants to truly get their money back, I am ready, able and willing to help if I can. It would be a win for each and every financially abused Canadian to get this kind of financial predation into the open, talked about, and changed.)

Actually I hope they do more than scream. I hope they utilize this information to sue, embarrass, and criminally prosecute those who earn a living by such investment malpractice, and those who also assist others in doing this malpractice. This, (sue, embarrass, or prosecute) after thirty years is what I conclude to be among the only solutions to getting pathologically greedy folks to stop being financially violent towards those they purport to serve. Please send me corrections, edits or deletions to