Broker/Advisor Disguise and Deception

[admin]

(This posting refers to Canadian self regulator IIROC, U.S. self broker regulator FINRA is covered on previous post)

Visit IIROC at http://www.iiroc.ca/Documents/WhyMatterBrochure_en.pdf to see why they feel they matter to investors.....

And yet.....they allow some 150,000 people in Canada to misrepresent themselves and their license or registration category from to investors. Deception? Fair? Honest? Good faith or fraud?

click to enlarge this image (or read the quote below for it's wording)

*Use of the word Advisor – what this means:
In this investor brochure, we have used the general term “advisor” to refer to a number of offcial regulatory approval categories such as Registered Representative and Investment Representative. Please note that “advisor” is not an of cial IIROC approval category for individuals working at IIROC-regulated rms. ”Advisor” is also not being used in this brochure to represent an offcial registration category.

Yes, IIROC, which evolved out of the old Investment Dealers Association (IDA) (which had a horrific record of industry conflicts on interest), may not be as evolved away from their industry crony habits as they would like us to think. Case in point, is that they blindly allow Canadians to be deceived, while promising that they will be protected. What is that about IIROC?

The following says

"Don’t forget to ask if your firm or advisor is regulated by IIROC."

click to enlarge this image

Perhaps it should state that IIROC does not even consider the word "advisor" to be legit.....Cant make this stuff up folks. (See the movie THE BIG SHORT to get a fair and honest glimpse of what regulation really looks like in the financial industry. They portrayed it more honestly than do the regulators. Seriously.

https://youtu.be/LWr8hbUkG9s

[admin]

 "investment advisers are not the same as financial advisors and should not be confused" FINRA quote

How Investment Dealers Fool ALL of Their Clients, ALL Of The Time...(with a little help from "regulators":)

Three tricks that the Investment “Advice” industry uses to deceive the retail investment customer

A lesson in self deception and cognitive dissonance for every customer of an investment broker/dealer.

1.   When the dealer says “trust us, we are “Advisors”, they are using that word as a “verb”  (verb meaning, : a word or phrase that describes an action, condition, or experience)

2.  When customers hear “Advisor”, their minds imagine a “profession”, like the profession of being a lawyer, an accountant or a Doctor.  

3.  The Securities Act of each province or territory carries rules or laws, specifying that they cannot mislead consumers in this fashion…..but captured regulation provides the perfect distraction from application of those laws, which interfere with profits.

There are three reasons for this congnitive dissonance:

1. The first reason the customer hears it incorrectly, is because the investment industry intentionally sells it in it's most misleading manner, with millions spent on advertising, promises of trust and integrity, on their web sites, etc.  Look at the advertising promises of your “advisor” and dealer, and see if they do not promise integrity and trust.  They were the top promises at RBC where I spent 17 years.


2.  The second reason the industry sells financial "advisors" to the public is to avoid a legally binding license and registration category found in each Securities Act.  This legal category is “Adviser.”  (spelled lawfully with an “e” at the end of the word, instead of “o”)  

3.  Third is the common belief that Securities Commissions would never allow such deceptive practices (violations to Competition Bureau laws) to be done to the public. This belief is yet another falsehood that enables the industry to profit greatly from each investor's own misguided assumptions.

This legal registration category (Adviser) does bring with it a duty of care similar to that owed by a Doctor or a lawyer.  It is called a “Fiduciary” duty and it is backed by a few hundred years of sound legal tradition.

When the typical investment customer sees or hears the word “advisor”, from someone representing a bank or a reputable corporation, they assume just what the Corporation hopes they will assume.  They are given no information and no way of differentiating it from the legal category of “Adviser” and they are given every opportunity to assume their non-fiduciary “advisor” is the same as the legal fiduciary “Adviser”.

This is an industry-wide lie by omission.

Such lies were prohibited at each bank that I worked at……while also being embraced at the banks where I worked.

Canadian Securities regulators have admitted, after 15 years of hiding from the public, that this spelling trick is not imagined. Several Commissions have stated that they consider “Adviser” to be a LEGAL term found in the Act, and that the title “Advisor” is out of their regulatory jurisdiction and not a matter for their consideration.  

(They have not yet "cottoned on" to the illegality of 150,000 Canadian reps lying to the public about their “advisor” status…..but I digress)    (some of their written replies on this question found here:  http://www.investoradvocates.ca/viewtopic.php?f=1&t=193

In the US, FINRA is the self regulatory body, and they say this:

 "investment advisers are not the same as financial advisors and should not be confused. The term financial advisor is a generic term that usually refers to a broker (or, to use the technical term, a registered representative).”

 

“By contrast, the term investment adviser is a legal term that refers to an individual or company that is registered as such with either the Securities and Exchange Commission or a state securities regulator. 

Common names for investment advisers include asset managers, investment counsellors, investment managers, portfolio managers, and wealth managers” http://www.finra.org/investors/investment-advisers#sthash.GDhp5cJ3.dpuf



FINRA also says;

“Although most people would use an "o," we purposely spell adviser with an "e" when we talk about investment advisers. That’s because the laws that govern this type of investment professional spell the title this way.”

http://www.finra.org/investors/investment-advisers#sthash.GDhp5cJ3.dpuf



Footnotes:  In the US, search BROKERCHECK here to see how your broker/adviser/adviser/whatever is registered:  http://brokercheck.finra.org

(Investor Caution: If your rep is registered in TWO categories, it is important that professional steps be taken to understand WHEN they are wearing each of their two very different hats....)

Dealing Representative means I represent the Dealer, not you...

In Canada, search CSA here to see how your “self titled “advisor” is registered.   (Remember that Dealing Representative means
"I represent the Dealer, not you”)   [url] http://www.securities-administrators.ca/nrs/nrsearchprep.aspx?ID=1325[/url]


“Advising Representative” is the legal category in Canada which is required in order for one to refer to themselves as “adviser” (or any variation of that word’s spelling according to some Securities Commissions).

#FINRA  "investment advisers are not the same as financial advisors and should not be confused"

A cautionary note about FINRA and Canadian regulators promise to protect the public:

The Canadian Securities Administrators (CSA) have gone to great lengths to hide, or conceal the exact category of the salesperson/advisor.

 As recent as 2016 changes were made to add additional layers of complexity to the search function at the CSA, leaving it fairly incomprehensible to the average person just what category their investment representative is registered in, and what it means.  

The result is that the Canadian search site appears to try and give easy access to search any “advisor” to see if they are indeed registered with the proper authority, while (cleverly again:) doing their utmost to hide from the public what exact category that person is registered in.  This is so apparent to users who are familiar with the CSA, that it calls into question their very ability to regulate this industry.  

$700,000 salaries, when paid by the industry, make even a government regulator pay attention to who is calling the tune...

The legal category of “Dealing Representative” was in the law as “Salesperson” until September, 2009, and many investment salespersons can be searched historically, to show this.  Again, this is something that the CSA is making difficult to see for an average web-site user, and it seems clear that revising history is the goal.  

Suggestion to protect your finances:

The industry and its captive regulators claim that investor education is important and suggest that the investors themselves are responsible for their investments while at the same time they claim that they (the regulators) offer investor protection which lulls the public into a false sense of security and leads them to place complete trust in their “Financial Advisor”.

The first and fundamental step in investor education should be to make people aware that the Regulators state that the titles “Financial Advisor” and even “Vice President” are unregulated business titles that can be used by anyone.

The second step is to make people aware that anyone using the title “Financial Advisor” is either:
1. An unregulated fraudster, or
2. A regulated “Dealing Representative – A sales person” whose only responsibility is to sell suitable products. He has no legal responsibility to look after his clients best interests or to have “Fiduciary Duty”.

If investors achieve this first level of awareness they will significantly reduce their risk of losing all of their savings as many people do every year when they place their complete trust in a commission motivated sales person.  

Finally if you were to find any of the professionals mentioned in this last line, you would be actually dealing with licensed, fiduciary-duty financial professional......just like you were led to believe when you bumped into your fake Corporate salesperson who said...."trust me, I am an advisor..."

Common names for investment advisers include asset managers, investment counsellors, investment managers, portfolio managers, and wealth managers”

http://www.finra.org/investors/investme ... p5cJ3.dpuf

[admin]

"Dealing Representative means "I represent the Dealer not you”

http://www.securities-administrators.ca/uploadedFiles/General/pdfs/UnderstandingRegistration_EN.pdf

……And the image found below is an expanded and highlighted peek at the same page, showing the two most important/common registration categories for investment people in Canada.

The “fraud” if you will allow me to use that word, is when persons who are legally registered in the category of a “Dealing Representative” (of which there are approx 150,000 in Canada) DECEIVE their clients by referring to themselves as an “advisor”, without holding the registration (or legal duty) of an Advising Representative.

An Advising rep is required to provide a fiduciary duty to clients, and as the name implies, to give advice. A “dealing rep” is a mere salesperson, without a fiduciary duty, and only “borrowing” (illegally if you read sec 34 of BC Sec Act) the title to give a false impression to the customer…….

To search for your "advisor" registration (in Canada) visit the Canadian Securities Administrators (CSA) web site. The CSA is the national "umbrella" organization for 13 provincial and territorial securities commissions and they maintain the registration database. I must point out however that the CSA, as an entity fully funded by fees from the securities industry, has demonstrated a good deal of regulatory "capture". They have forgotten in some cases that a good part of their mandate and their marketing is that the "Protect Investors". As you will see when you get to this search page, they make it "easy" for investors to determine IF their representative is registered.....and most will stop there.....and be duped. They do NOT make it at all easy to determine WHAT category their rep is registered in. They in fact have made it about three or four clicks harder to find, in January 2016, in what some feel might be a reaction to bloggers like this pointing the public in the direction of how to search for their "advisor".

http://www.securities-administrators.ca/nrs/nrsearchprep.aspx?ID=1325 (CSA advisor search page)


So, worth repeating for clarity: The typical (99%) bank or investment dealer (even life insurance and mutual fund sellers) CALL themselves an Advisor, to lure the public into a false sense of security, trust and vulnerablity with their money……..and once the salesperson HAS their money, they do NOT have to provide them with the protection implied by the term “advisor” (or adviser, or advisoir’….:). They can then legally treat them to the lower standard of care, that of a salesperson, and even profit at “expense or harm” to the client…….

"Dealing Representative means "I represent the Dealer not you”

Advising Rep means I must fall under legal fiduciary guidelines with a duty of care and “sole loyalty” to the client….

[admin]

The simplest deception......and how it works to cut your retirement security......by half or more…a "bait and switch" story about true life.

Step One:

Use every advertising means available to convince investors that large brokerage firms and investment dealers have licensed and regulated Investment "Advisors", and that they are there to protect and guide the customer.

Step Two: After using the above "bait" to lure trusting and vulnerable investors and their money, cleverly "switch" the "advice givers" over to commission brokers or salespeople, instead of the fiduciary professionals that step one promised.

Step Three: Use "self" regulators fully paid by the industry, to help conceal this deception.

Step Four: Sell higher revenue generating products, lower quality products and less suitable, less beneficial investment products to the trusting customers. This step may add an additional 2% to the overall cost of the customer's investments.

Step Five: 2% in higher cost (or lesser performance) will cut the average persons retirement by HALF over a lifetime of investing. Google it.

Step Six: The other half of your life's work will be in the pockets of the faked "advisor" and his company.

Solution:

Search your "advisor's" exact license and registration category here for US investors:
http://brokercheck.finra.org

If they turn out to be registered as a "broker" and not an "adviser/advisor" you are being baited with a mere title for which no license exists. You are now at about step 3..... in the chain of deception. This is fraud.

In Canada, search your "advisor's" registration here: http://www.securities-administrators.ca ... px?ID=1325

If their registration says "adviser" or "advising representative"spelled with an "ER" at the end then you have a truly licensed fiduciary professional.

If it says "dealing representative" you have a commission or fee based salesperson who is not bound by any legal fiduciary duty to protect you, or be solely loyal to your interests. You are then at step 3......in the chain of deception. Again, fraud.

See a class action lawyer and let them fight on your behalf to get your money back from this everyday, every-dealer scam.

[admin]

If your Investment "Advisor" also calls himself a "Vice President" of the firm, you should probably run……or sue for TWO intentional deceptions, and get your money back. Here is a bit of interesting reading about the "vice president" deception at your local brokerage sales company.

"To Deceive is to Defraud….."

(C) MISLEADING TITLES

¶ 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.

¶ 264 In principle, a vice-president is a person in a management position in a firm. The vice-president is immediately below the president and reports to the president. The vice-president acts in the absence of the president. It is a prestigious title in a firm, a title held by few individuals. The English word "director", the incorrect origin of the word used here in French, designates either the member of a board of directors of a firm or the head of a department or office. That is also a prestigious title, at least when it is attributed in a prestigious firm.

¶ 265

In the defendant's operations, these titles also have that meaning, but not that meaning alone! They are given as well to any representative (also called an "investment advisor" or previously a "financial consultant") who reaches a certain level of commissions in a given year, in short, who "sells" a lot and brings in a lot of commissions.

A person is awarded the title essentially in "recognition" of work and as a marketing tool, as the president of CIBC Wood Gundy, Tom Monahan, acknowledged. However, to have the title of "vice-president" or "vice-president and director" adds no new responsibility or any management role. What is more, it testifies to neither greater competence nor more reliability.

¶ 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.

¶ 269 Migirdic received the title of vice-president in 1986, then vice-president and director in the early 1990s. He retained the titles until he left, because of the enormous volume of commissions he generated. In fact, the titles increased Mr. Markarian's trust in Migirdic and prompted him to guard against him and his actions even less. The defendant committed a fault in acting to ensure that.

¶ 270 The Court wholly subscribes to the comments of Mr. Justice Donald Gordon in Blackburn v. Midland Walwyn Capital inc. [See Note 19 below], a decision of the Ontario Superior Court of Justice:

Note 19: [2003] O.J. 621 (O.S.C.J.).

[121] Promoting George Georgiou to

the position of vice-president was purely a marketing gimmick, an intentional misrepresentation to the public

by Midland. The public would consider a vice-president to have special status, be more knowledgeable and influential.

[123] What is more problematic is the process. The promotion resulted from the influence of the National Sales Manager. This clearly demonstrates the high position sales had in the corporate structure and, conversely, the lack of importance allocated to compliance.

[124] Clients of the firm, including the Blackburns, would be impressed with this announcement. Any misgivings they may have had about George Georgiou's ethics on trading practices evaporated with the recognition by head office of a superior strockbroker.

[126] Midland's conduct in this escapade is further evidence of their negligence, of the importance of revenue over client objectives and satisfaction and their willful blindness to the protection of their clients. Such a practice is contrary to the regulatory standards of integrity, dignity an ethical conduct.

[Emphasis added.] [sic]

¶ 271 That decision was upheld by the Court of Appeal for Ontario [See Note 20 below], and the Supreme Court refused leave to appeal.

Note 20: [2005] O.J. 768 (O.C.A.).

¶ 272 In the Court's opinion, the titles "vice-president" and "vice-president and director" have no place in the brokerage field when they apply to simple representatives. They then constitute a mere "marketing gimmick", to use Gordon J.'s words, just a misrepresentation contrary to the duty of a brokerage firm to seek to protect its clients and to inform them well. By continuing to use those titles, brokerage firms expose themselves to criticism, as in this case.

¶ 273 As for the title "specialist in retirement investments" or "retirement specialist", it was not a title given Migirdic by the defendant, but the defendant authorized him to use it (among others on his business cards). Once again, it was a way to instill trust in retirees and prompt them to rely on their representative in all confidence. In actuality, the title meant nothing more than that Migirdic had many retired clients, which did not make him more competent in that area and also did not make him a better representative for those people (much to the contrary, Migirdic exploited their greater vulnerability).

the entire Judgement can be read here:

http://investorvoice.ca/Cases/Investor/ ... etsInc.htm

[admin]

I just love how easy (and criminally free) investment dealers and self-regulators can get away with the financial rape of investors, BY faked financial professionals…….see below quote from IIROC, investment industry "self" regulators in Canada:

"*Use of the word Advisor – what this means:In this investor brochure, we have used the general term “advisor” to refer to a number of official regulatory approval categories such as Registered Representative and Investment Representative. Please note that “advisor” is not an official IIROC approval category for individuals working at IIROC-regulated firms. ”Advisor” is also not being used in this brochure to represent an official registration category."

(This comment is found on page one of this brochure from IIROC….I expect it to be deleted from use as soon as this information is noticed…..oops!) http://www.iiroc.ca/Documents/WhyMatterBrochure_en.pdf (fake "advisors" cost you double and cut your retirement in half…..but "they are richer than you think"…:)

The document that this quote comes from is found online here at IIROC http://www.iiroc.ca/Documents/WhyMatterBrochure_en.pdf

and when it is removed shortly (too candid, too revealing……too honest:) by IIROC it can also be found at the link below

https://drive.google.com/file/d/0BzE_LM ... sp=sharing

Take information such as this to any reputable classaction law firm if you wish to begin the process of getting your money back from professional fraud.

click to enlarge this window

From a standpoint of trust, integrity, fiduciary duty, actual license and/or registration YOUR INVESTMENT "ADVISOR" is a FAKED TITLE….

Keep reading this post and you will soon run across the license/registration search engines for Canada and the US to confirm that your "advisor" is not licensed as an "advisor". #classaction #fraudulentmisrepresentation

[admin]

Class action potential against Investment Dealers and grossly negligent/complicit regulators:

“It's easier to fool people than to convince them that they have been fooled.”

Mark Twain

I suggest that for 99% of investors, your investment dealer and "advisor" are utilizing a fake title…..without holding or meeting the particular license they imply?

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

Most investors have no idea that there are TWO vastly DIFFERENT standards for those who recommend investments.  (as different as the standard for a "Doctor" and a "Docter") (One standard requires them to seek and sell only the "best" investments for the client, and the more commonly applied standard is to seek and sell investments which THEY deem to be "suitable") Would you eat at a restaurant where the highest standards met were that they deem the food "suitable"?

#1  Today, your  investment "advisor" can be a "faked title" and nothing more, while they pretend to you that they have got your back covered. (Canadian Securities Administrators data)

#2  This is THE most common practice among the 150,000 persons in Canada who refer to themselves as "advisors",  about one million in the US, and among our most trusted banks and investment firms. (Canadian Securities Administrators data and FINRA in US)

#3  This deception, allows financial sales-agents to hide the best products and advice, while making billions selling second or third-rate products and tainted-advice. (sub-prime mortgage investments, Deferred Sales Charge funds, house-brand funds, law-exempt, and other defective or substandard products) 

#4  This gives banks and broker/dealers the opportunity to pickpocket billions, out of the retirement security of everyday investors, into the pockets of bankers and fake financial advisors.

#5  This is against the law, against fair and honest practices, and against the Securities Acts of every Province I have studied. Sadly the regulators allow it for money and other "future considerations".

#6 This happens in the same manner that other abuses happen by the most powerful. Whether a Bernie Madoff, or a Bill Cosby…..some people or institutions are simply "too highly revered" to prosecute.  They stand above the reach of our laws, even while they fall within the jurisdiction of our laws.

In Canada, the Prime Minister Stephen Harper allows this, aids this, and in fact gave banks and investment sellers a FREE EXEMPTION from his "tough on white collar crime bill" (they deleted the portion of the bill that included jail time for "public markets" fraud)
1 min video at YouTube titled "
Harper Free-Crime Bank Ride   https://youtu.be/Toem8yC0Fx4

In the US, the #SEC also fails to protect Americans financial health, and fails to warn them of the two standards. (one of which is most dangerous to investors) https://youtu.be/aX52f3Jjbm8

I feel that this must change, or all Canadians (and Americans) suffer. Our economies fail, retirements fail, society loses.
Larry Elford lelford@shaw.ca

[admin]

Aug 20th, 2015

Attention News Editor,

For Immediate release:

Investment industry whistleblower reveals how professional deception is harming North American investors. Alleges industry-regulator connections that allow client abuse.

Lethbridge, Alberta, Aug 20th, 2015

Larry Elford, former investment broker and 20 year industry insider, is on a mission to protect investors from industry-insider tricks designed to harm their retirement investments.

Up to half of investor’s future retirement savings can be diverted by one’s “advisor”, to the advisor and their sponsoring dealer, with just 2% shortchanged from investment returns each year, over a lifetime of investing.

Research provided freely to the public at InvestorAdvocates.ca shows how this is done without the knowledge or informed consent of many investors. Beginning with a simple (yet cleverly hidden) fact that approximately 150,000 “advisors” in Canada, and 600,000 in the USA, do not carry the license or the duty of care to the client that they advertise and imply.

“Advisors”, dealers and regulators can thus often be found to be working too-closely together, whilst public interest protections are sometimes forgotten.

“Deception of the consumer goes contrary to rules, codes and policies of the investment industry, yet the industry seems able to get away with completely policing itself. The criminal code is rarely, if ever applied, even when it is violated. We are talking about an industry which has elevated itself to be above the law”. Larry Elford


This news release contains 8 pages:

Page 1 News Release


Page 2-3 Supporting article about testimony to US Congress last week, describing the issue well.


Pages 4-6 “To Deceive is to Defraud”
7 Steps "Advisors" Take To Abuse Unsuspecting Investors
A free-use article, with links to government registration sites in Canada and the USA to check your broker/”advisor’s” license or registration.


Page 7 A 585 word article, written by industry-expert Larry Elford which you have permission from InvestorAdvocates.ca to print without cost, if you feel that this information is newsworthy and in the interest of your readers.


Page 8 Contact info
http://www.benefitspro.com/2015/08/14/w ... page_all=1

HEADLINE “Witness says brokers try to pass themselves off as fiduciaries”
Testimony details retiree horror stories during hearings on DOL fiduciary rule
AUG 14, 2015 | BY NICK THORNTON



At the heart of the Department of Labor’s effort to finalize a new rule requiring advisors to act as fiduciaries to most 401(k) plans and IRAs is the need to clarify which entities in the financial services world are actual fiduciaries, and which merely imply that they are.
That line has been blurred, argued Labor Secretary Thomas Perez, in testimony to Congress defending the Department’s effort to post a rule by the end of the Obama Administration, in spite of wide-ranging criticism from stakeholders, and a growing number of lawmakers, that the rule, as proposed, would have massive unintentional consequences for small workplace retirement accounts and IRAs.
One witness at this week’s public open meeting over the DOL’s proposal testified to the extent of how blurry the line between fiduciary and broker has become.


In his capacity as head of the Public Investors Arbitration Bar Association, a nonprofit association of attorneys that represents plaintiffs in securities arbitration hearings, Joseph Peiffer testified that brokerage firms routinely advertise themselves as fiduciaries when they clearly are not.

“One thing is clear,” Peiffer told a panel of DOL representatives. “Right now, the very same brokerage firms that advertise like fiduciaries routinely contest that they owe a fiduciary duty to their clients.”
In some of the most personal testimony offered in the four days of hearings at the DOL, Peiffer detailed several horror stories in his time representing more than 500 clients that he says were victims of conflicted advice.
“Almost every week, we see a retiree come into our office who has lost a substantial amount of his life savings,” said Peiffer.
“These retirees often break down in my office when I explain to them how their investment was lost to conflicted advice.  I have had clients that ran out of money and had to rent a room from his ex-wife. I have had clients live with me because they couldn't afford the gas and lodging to stay at a protracted arbitration hearing.  I have, unfortunately, even had clients attempt suicide,” he added.
Along with his testimony, Peiffer submitted a report he coauthored this year that compares the advertising claims with the arbitration stances made by nine of the country’s largest broker-dealer brands.
“Brokerage firms now engage in advertising that is clearly calculated to leave the false impression with investors that stockbrokers take the same fiduciary care as a doctor or a lawyer,” claims the report, which was co-authored by Christine Lazaro, director of the St. John’s School of Law securities arbitration clinic.
“But, while brokerage firms advertise as though they are trusted guardians of their clients’ best interests, they arbitrate any resulting disputes as though they are used car salesmen,” wrote the attorneys.
Their report claimed that Merrill Lynch, Fidelity Investments, Ameriprise, Wells Fargo, Morgan Stanley, Allstate Financial, UBS, Berthel Fisher, and Charles Schwab all advertise “in a fashion that is designed to lull investors into the belief that they are being offered the services of a fiduciary.”
Language in one piece of Fidelity marketing material actually claims the firm puts clients’ interests before their own, according to the study.

Allstate, a brand known for its “you’re in good hands” slogan, which the paper suggests is enough to dupe investors into thinking the firm has a legal obligation to put investors’ interests first, is currently fighting an arbitration claim brought by a couple who lost $400,000 because the broker put all of their savings in a non-diversified stock portfolio in 2007.
Allstate’s defense? It owed no fiduciary duty to the couple. The case is pending, according to the report.

One UBS ad features a voice presenting for a hypothetical broker saying she will not rest until her client “knows she comes first,” alleges the paper.
But when it is forced to defend its action in arbitration hearings, the firm routinely deploys the defense that brokers don’t owe fiduciary duties to their customers, says the report.
Merrill Lynch’s website claims to offer investors a financial strategy that “puts your needs and priorities front and center,” the report says.

Yet the firm, one of the first brokers to go on the public record in favor of a uniform fiduciary standard, “has refused to acknowledge it owes a fiduciary duty in arbitration when it breaches that duty to investors,” write Peiffer and Lazaro.
“Billions each year slip through the fingers of American investors because of the conflicted investment advice they receive,” they conclude.
“The SEC and DOL must take action to force brokerage firms to live up to the standard that they market to investors rather than the one brokerage firms argue when they have wronged those same investors.”









Re: Advisor Disguise/Deception
by admin » Tue Jul 28, 2015 7:46 pm
This article comes from a forum posing in http://www.investorAdvocates.ca under the date and topic shown directly above.


click to enlarge this image of the US broker registration search page (web link found at bottom of this page)

The most important class action potential on the horizon today.
Commonly repeated forms of deception and intentional-misdirection, leads investment clients into situations of being financial abused BY so-called financial "advisors" and their sponsoring dealers

It is my belief that the commonality of the methods used to deceive/trick the public, combined with the well documented methods to unjustly enrich the broker/dealer, makes a case for class actions an easier obstacle to overcome than were the tobacco lawsuits of recent history….

Why?

Because billions of dollars are being cheated, shortchanged and siphoned away from trusting North American investors, into the hands of slick investment dealers and their "faked advisor" sales-force. videos at https://www.youtube.com/user/investorad ... ature=mhee


How?

7 Steps "Advisors" Take To Abuse Unsuspecting Investors

1. Conceal true license from firm customers… (use non-regulated "titles" to imply something to clients other than what license/registration says)

2. To help conceal the legal duty (or lack of) from customers…(hide from them the difference between fiduciary (professional) duty and "suitability" (salesperson) duty

3. Misdirect customers into a false assumption that they have a professional with a valued duty of care to the client (the industry thus actually "helps" the trusting customer to be fooled by industry misdirection)

4. Hide the best advice, and best products from customers…profit from the greater rewards of selling substandard or higher-fee investments. (house brand funds, higher fee products)

5. Conceal conflicts of interest from client. (fees, commissions, deferred sales charges, dealer financial relationships/incentives)

6. Conceal the lack of agency duty/sole loyalty to client. (strongly imply professional levels of integrity and trust while delivering “self-regulating” salespersons. Misdirection and deception, to shortchange clients.)

7. Conceal from clients the difference between a SEC or Canadian registered "adviser" (fiduciary professional) and a self-titled, non-regulated "advisor" (salesperson/broker).

Who?

Virtually anyone referring to themselves as an "advisor". The correct legal license under US and Canadian Securities Acts is spelled "adviser", and Canadian regulators have confirmed that "advisor" spelled using "OR" is not of concern or oversight to them….(those who use it are thus free to use it in any way they choose, to deceive, and to misdirect consumers with it).



click to enlarge this image of the Canadian broker registration search page, (web link found at bottom of this page)

Keep reading the posts that follow in this forum topic if you would like to see more of the problem, and some solutions to protect your financial health from professional predation. Contact the author at visualinvestigations@shaw.ca if you are a victim of this type of deceptive practices by a financial professional. Class actions are being contemplated to bring accountability to an industry which promises "integrity and trust in every transaction they are involved in…."

The most important links which lend credibility to these arguments above is to simply go to either the BrokerCheck site with FINRA in the USA, or if in Canada, to the Canadian Securities Administrators registration search page:

http://brokercheck.finra.org Type in the name of your "advisor" here and find out that they are 9 times out of 10 registered as a "broker". (with a vastly different legal obligation to their client than is implied)

http://www.securities-administrators.ca ... px?ID=1325 Nine out of ten "advisors" in Canada are hiding their true "dealing representative" registration.

Above article and images found at this link viewtopic.php?f=1&t=193&sid=4815c9cc9e0caaedccd4b376cfabdd36#p3847


To Deceive is to Defraud, 590 word article, free to use, edit as needed.

Larry Elford, of Lethbridge Alberta recently visited this paper with a story of financial trickery, and surprisingly, the trickery is not caused by scam artists or ponzi schemers. He describes a story of financial abuse by financial professionals.

Elford worked twenty years inside Canada’s largest brokerage firms, and left after suffering pressure to remain silent about industry misdirection and deception, that he stated was endemic within the industry.

He is not the only person speaking out. President Obama recently spoke to the AARP (American Association For Retired Persons) about the cost of such abuses to the American public, saying that White House studies put the harm to Americans at $17 billion per year. 3 min video here https://youtu.be/suNJh2uO18g

Elford describes it as being worse in Canada, where University of Toronto pension studies suggest the harm to Canadians could be one billion dollars each week, simply from mutual fund products alone. He cites and refers to the sources of this information at InvestorAdvocates.ca.

“I have been treated with the utmost respect and trust by my investment clients, and I owe no less to them in return. As a result of my opinion being opposed by some in the investment industry, I have decided to dedicate myself to informing the public of the ways they can be fooled by investment “advisors”. Elford

Elford also points to testimony in US Congress, where witnesses said that investment firms often promised trusted financial professionals, (fiduciaries, to use a centuries-old legal term) someone who has a “sole loyalty” to serve the client’s best interests...and then who all too often avoid delivering this highest level of duty, making huge gains for themselves by taking this shortcut,...the shortcut of deceiving clients with a promised professional, while delivering a commission hungry salesperson.

Elford claims it is equivalent to going to a Doctor for professional advice and treatment, only to find that there is now a new class of “doctor” who have dropped the “do no harm” oath...and done so while hiding this important fact from patients. His comments appear to be supported by those made to Congress. The article he refers to is also found at InvestorAdvocates.ca under the topic of “Advisor Disguise/Deception”.

A link is provided to allow investors to search the registration category of their broker/”advisor”. Elford says that there are nearly 3/4 million salespersons, or brokers in North America, who do not carry the fiduciary duty (the professional “do no harm” type of duty). This group typically calls themselves “advisors”, (note spelling of “advisor”) and advertises and markets themselves with the strong implication that they have duties of loyalty of a doctor or a lawyer. “Do not be fooled by nine out of ten advisors, who are hiding their most important secrets from the customer”. Elford provides a link to the 7 things a typical (non-fiduciary advisor) will hide from a customer. “In my opinion, these are definitive warning signs of a financial relationship based on deception and misdirection”

Elford is a former CFP, CIM, FCSI, Associate Portfolio Manager, and dedicates his time to “fighting for fairness” in an industry where the clients are told that fairness comes with the package,...if only that were so”.

This article, the articles etc, are posted at http://www.investoradvocates.ca on Aug 17th, 2015 under the forum topic titled Advisor Disguise/Deception

Elford Contact info

Phone 403 393-4742 for media questions

Email: VisualInvestigations@shaw.ca



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

Current  http://www.investment-bodyguard.com

Twitter:    @RecoveredBroker

lelford@shaw.ca

Facebook group for Fraud victims 

https://www.facebook.com/groups/albertafraud/

Facebook group for Fraud victims across Canada (Small Investors Protection Association of Canada, 1998)

https://www.facebook.com/groups/240100382792373/

Video site for victims of investment malpractice    

http://www.youtube.com/user/investoradv ... ature=mhee

http://www.albertainvestorsprotection.com

http://www.investoradvocates.ca

[admin]

"TO DECEIVE IS TO DEFRAUD"

Witness says brokers try to pass themselves off as fiduciaries
AUG 14, 2015 | BY NICK THORNTON

At the heart of the Department of Labor’s effort to finalize a new rule requiring advisors to act as fiduciaries to most 401(k) plans and IRAs is the need to clarify which entities in the financial services world are actual fiduciaries, and which merely imply that they are.

That line has been blurred, argued Labor Secretary Thomas Perez, in testimony to Congress defending the Department’s effort to post a rule by the end of the Obama Administration, in spite of wide-ranging criticism from stakeholders, and a growing number of lawmakers, that the rule, as proposed, would have massive unintentional consequences for small workplace retirement accounts and IRAs.

One witness at this week’s public open meeting over the DOL’s proposal testified to the extent of how blurry the line between fiduciary and broker has become.

In his capacity as head of the Public Investors Arbitration Bar Association, a nonprofit association of attorneys that represents plaintiffs in securities arbitration hearings, Joseph Peiffer testified that brokerage firms routinely advertise themselves as fiduciaries when they clearly are not.

RELATED


DOL fiduciary rule puts broker-dealers in Catch-22

Brokers are not now advisors, nor can they legally put themselves out as advisors, so how can the DOL’s fiduciary...

“One thing is clear,” Peiffer told a panel of DOL representatives. “Right now, the very same brokerage firms that advertise like fiduciaries routinely contest that they owe a fiduciary duty to their clients.”

In some of the most personal testimony offered in the four days of hearings at the DOL, Peiffer detailed several horror stories in his time representing more than 500 clients that he says were victims of conflicted advice.

“Almost every week, we see a retiree come into our office who has lost a substantial amount of his life savings,”

said Peiffer.

“These retirees often break down in my office when I explain to them how their investment was lost to conflicted advice. I have had clients that ran out of money and had to rent a room from his ex-wife. I have had clients live with me because they couldn't afford the gas and lodging to stay at a protracted arbitration hearing. I have, unfortunately, even had clients attempt suicide,” he added.

Along with his testimony, Peiffer submitted a report he coauthored this year that compares the advertising claims with the arbitration stances made by nine of the country’s largest broker-dealer brands.

“Brokerage firms now engage in advertising that is clearly calculated to leave the false impression with investors that stockbrokers take the same fiduciary care as a doctor or a lawyer,”

claims the report, which was co-authored by Christine Lazaro, director of the St. John’s School of Law securities arbitration clinic.

“But, while brokerage firms advertise as though they are trusted guardians of their clients’ best interests, they arbitrate any resulting disputes as though they are used car salesmen,”

wrote the attorneys.

Their report claimed that

Merrill Lynch, Fidelity Investments, Ameriprise, Wells Fargo, Morgan Stanley, Allstate Financial, UBS, Berthel Fisher, and Charles Schwab all advertise “in a fashion that is designed to lull investors into the belief that they are being offered the services of a fiduciary.”

Language in one piece of Fidelity marketing material actually claims the firm puts clients’ interests before their own,

according to the study.

Allstate, a brand known for its “you’re in good hands” slogan, which the paper suggests is enough to dupe investors into thinking the firm has a legal obligation to put investors’ interests first, is currently fighting an arbitration claim brought by a couple who lost $400,000 because the broker put all of their savings in a non-diversified stock portfolio in 2007.

Allstate’s defense? It owed no fiduciary duty to the couple. The case is pending, according to the report.

One UBS ad features a voice presenting for a hypothetical broker saying she will not rest until her client “knows she comes first,”

alleges the paper.

But when it is forced to defend its action in arbitration hearings, the firm routinely deploys the defense that brokers don’t owe fiduciary duties to their customers, says the report.

Merrill Lynch’s website claims to offer investors a financial strategy that “puts your needs and priorities front and center,”

the report says.

Yet

the firm, one of the first brokers to go on the public record in favor of a uniform fiduciary standard, “has refused to acknowledge it owes a fiduciary duty in arbitration when it breaches that duty to investors,”

write Peiffer and Lazaro.

“Billions each year slip through the fingers of American investors because of the conflicted investment advice they receive,”

they conclude.

“The SEC and DOL must take action to force brokerage firms to live up to the standard that they market to investors rather than the one brokerage firms argue when they have wronged those same investors.”

Read more on the proposed DOL fiduciary rule HERE.
http://www.benefitspro.com/2015/08/14/witness-says-brokers-try-to-pass-themselves-off-as?page_all=1

larry elford
visualinvestigations@shaw.ca



Getting affordable, professional help with financial protection from predators http://www.investment-bodyguard.com

Twitter page using social media for social good: @RecoveredBroker

Facebook group for Fraud victims across Canada and the US. JOIN ME HERE if you wish to share and find common solutions: https://www.facebook.com/groups/albertafraud/

Facebook group for Small Investor Protection Association (Canada) also of value to US investors. Again, using social media for social good.
https://www.facebook.com/groups/240100382792373/

web site about the risk of your Securities Commission selling out your public protective laws, acting in breach of the public trust http://www.albertafraud.com

Video site for victims information http://www.youtube.com/user/investoradv ... ature=mhee

Web site for exempt markets products victims http://www.albertainvestorsprotection.com

GET YOUR MONEY BACK FLOGG (forum/blog) Original site since 2004 http://www.investoradvocates.ca
Tricks of the trade, solutions, self defence and self help research. Free and free of any advertising.

Historical data site for investment industry and self regulation research and behaviours back to the 1990's http://www.investorvoice.ca

[admin]

click to enlarge this image of the US broker registration search page (web link found at bottom of this page)

The most important class action potential on the horizon today.
Commonly repeated forms of deception and intentional-misdirection, leads investment clients into situations of being financial abused BY so-called financial "advisors" and their sponsoring dealers

It is my belief that the commonality of the methods used to deceive/trick the public, combined with the well documented methods to unjustly enrich the broker/dealer, makes showing a case for very large class actions an easier obstacle to overcome than were the tobacco lawsuits of recent history….

Why?

Because billions of dollars are being cheated, shortchanged and siphoned away from trusting North American investors, into the hands of slick investment dealers and their "faked advisor" sales-force. videos at https://www.youtube.com/user/investoradvocate?feature=mhee

How?

7 Steps "Advisors" Take To Abuse Unsuspecting Investors

1. Conceal true license from firm customers… (use non-regulated "titles" to imply something to clients other than what license/registration says)

2. To help conceal legal duty from customers…(hide from them the difference between fiduciary (professional) duty and "suitability" (salesperson) duty)

3. Misdirect customers into a false assumption that they have a professional with a valued duty of care to them (the industry thus actually "helps" the trusting customer to "fool themselves" with industry misdirection)

4. Hide best-advice, and best-products from customers…profit from the greater rewards of selling substandard or higher-fee investments. (house brand funds, high fee products)

5. Conceal conflicts of interest from client. (fees, commissions, deferred sales charges, dealer financial relationships/incentives)

6. Conceal the lack of agency duty/sole loyalty to client. (strongly imply integrity and trust while delivery of salespersons. Misdirection, deception, shortchange clients.)

7. Conceal from clients the difference between a SEC or Canadian registered "adviser" (fiduciary professional) and a self-titled, non-regulated "advisor". (salesperson/broker)

Who?

Virtually anyone referring to themselves as an "advisor" (the correct legal license under US and Canadian Securities Acts is spelled "adviser", and Canadian regulators have confirmed that "advisor" spelled "OR" is not of concern or oversight to them at all….those who use it are free to deceive, or use it to misdirect consumers with it)

Four out of five employed by larger investment dealers are found to be taking advantage of the public in some or all of the manners numbered above.

click to enlarge this image of the Canadian broker registration search page, (web link found at bottom of this page)

Keep reading the posts that follow in this topic if you would like to see more of the problem, and some solutions/things you can do to protect your financial health from professional predation. Contact the author at visualinvestigations@shaw.ca if you are a victim of this type of deceptive/fraudulent practices by a financial professional. Class actions are being contemplated to bring accountability to an industry which promises "integrity and trust in every transaction they are involved in…."

The most important link or two which lends credibility to these arguments above is to simply go to either the BrokerCheck site with FINRA in the USA, or if in Canada, to the Canadian Securities Administrators registration search page:

http://brokercheck.finra.org Type in the name of your "advisor" here and find out that they are 9 times out of 10 truly registered as a "broker". (with a vastly different legal obligation to their client than they imply)

http://www.securities-administrators.ca%20...%20px?ID=1325 Nine out of ten "advisors" in Canada are hiding their true "dealing representative" registration. ("Dealing Representative" is described as a mere "salesperson" by the CSA)

7 minute tour of SEC Regulations of Investment Advisers, the bad news, the disguises and deceptions that it allows for most investors to suffer from, and the economic harm to Americans. There are two sets of rules, one protects you from financial predators, and sadly, this one allows financial predators to abuse more than 90% of Americans. Lives harmed, retirement dreams shattered. Some of the special tricks hidden from the public. Tell me @RecoveredBroker if I miss anything or need to correct, and tell your rep in Washington that the SEC owes you your retirement back.
https://youtu.be/aX52f3Jjbm8

[admin]

The Act contains criminal and civil prohibitions against promoting a product or business interest by making a representation to the public that is false or misleading in a material respect. Provisions in both the criminal and civil sections require that the general impression conveyed by a representation as well as its literal meaning be taken into account when determining whether or not a representation is materially false or misleading.

http://www.competitionbureau.gc.ca/eic/ ... ting-e.pdf


Keywords: Competition Act, deception, Deceptive Marketing Practices Digest

[admin]

A very well written article about the misconceptions and deceptions that succeed in fooling nearly every investor into a false sense of trust and belief……a marketing coup if you will…


Yes, Investment Advisers Should be Fiduciaries

Anita Anand
Wednesday, September 25, 2013

Co-authored with John Chapman, JD student, University of Toronto Faculty of Law.

Did you know that your investment adviser is not bound by an explicit legal duty to act in your best interests?

Surprising? Yes, but more curious is the intense debate about whether this duty should be made explicit in the law. Those who represent investors should be bound by an express fiduciary duty. Alas, such is not the case.

First, let’s be clear that the relevant law is a mess. The standard of conduct is cobbled together from provincial securities regulations, common-law principles and industry requirements,

so it is difficult to say when a fiduciary duty applies without evaluating each relationship on a case-by-case basis, which often requires a full trial. Another reason that a national securities regulator is a good idea.

Second, the IEF found that while 70% of investors believe that they are protected by a best interest standard, only 1% of them actually are.

OSC Rule 31-505 requires dealers and advisers to deal “fairly, honestly and in good faith” with their clients. Some commentators believe that this is the same as a best interest standard. But no court has recognized this argument so far, and the CSA takes this to mean that the current standard falls short of a best interest standard. Even if the Rule establishes a best interest standard, there is no apparent drawback to acknowledging this fact explicitly. The law would be clearer and easier to understand.

Some argue that establishing a uniform fiduciary standard will increase the costs of providing advice, negatively impacting certain business models. It is true that more stringent regulations carry greater compliance costs and some of these costs may be passed on to investors.

But investors pay a price for investments that may not be in their best interests

, given that advisers are required only to recommend a suitable investment rather than the best one. We believe that most investors would be willing to pay a higher up front cost for the imposition of an explicit fiduciary standard that requires their advisers to place the client’s interest ahead of their own in all circumstances. Regardless, costs should be transparent, and shared amongst investors generally, rather than concentrated amongst the unlucky that have been steered into bad investments. And, while cost is an important consideration, it alone should not drive the discussion.

In implementing the standard, Canada can look to examples from other jurisdictions to minimize the cost to the investment industry. The EU, US, UK and Australia have all implemented a higher standard of conduct for investment professionals, and some of these countries had higher standards to begin with. International examples also show that a “uniform” standard can be carved to respond to industry concerns as in the UK.

Regardless of whether the standard changes, the law is due up for clarification. Statutory regulations should set forth the current standard, so investors and advisers can turn to one place to determine the relevant standard of conduct. Investors should not need to consult their lawyers before signing on with an investment adviser.

Provincial securities regulators have investor protection as a central mandate. A default fiduciary standard for investment advisers is the best way to protect investors and needs to be explicitly enacted - now.

Anita Anand is a Professor of Law and John Chapman is a JD Student at the Faculty of Law, University of Toronto.

http://www.law.utoronto.ca/blog/faculty ... iduciaries

[admin]

Four secrets your financial "advisor", dealer or regulator will not share with you……to the detriment of perhaps HALF of your long-term life saving/retirement investing success.

Secret #1:

The "advisor" (and investment dealer) will do anything, to prevent investors from learning the EXACT license or registration category they hold.

Secret #2:

The "advisor" (and investment dealer) will not disclose to you what specific "agency" relationship the investor is in, leaving you to find out the hard way if you are in a "buyer beware" relationship, rather than "sole-loyalty" to you, the investor.

Secret #3:

The "advisor" (and investment dealer) will not explain the "suitability vs fiduciary" obligation to you as it relates to your financial interests.

Secret #4:

The advisor, broker, dealer AND the regulator (SEC, ASC, OSC etc etc) will not inform consumers if there is a waiver of the rules, an exemption to securities law (in other words, some defect in product, broker, or service provider) for the investment product or advice being given to the investor, for the "advisor" selling it, or for the broker/dealer who may have "manufactured" it.

SOLUTIONS

Consumer links to solve Secret #1: License and registration check for US brokers/advisors FINRA Broker Check site: http://brokercheck.finra.org/Search/Search.aspx

Or use the SEC Adviser Search site: http://www.adviserinfo.sec.gov/IAPD/Content/Search/iapd_Search.aspx

Canadian investors search their broker here: http://www.securities-administrators.ca/nrs/nrsearch.aspx?ID=850

Buyer Caution…it is "standard industry practice" (and also illegal) to call oneself an "advisor" when licensed as a "broker, salesperson or dealing representative...

Consumer help for Secret #2: Law of Agency http://en.wikipedia.org/wiki/Law_of_agency (learn WHO they are looking out for)

Search out and learn how professionally the Real Estate industry discusses and discloses the topic of "Agency Disclosure", and ask yourself why your investment "advisor" and dealer hide this information from investors. (undisclosed Dual-Agency)

Someone licensed as "broker" or "dealing representative" has no legal duty to be on your side….and may actually (legally) act against your interests...

Consumer help for Secret #3: Search out and learn the difference between "Suitability and Fiduciary Standards" http://www.investopedia.com/articles/professionaleducation/11/suitability-fiduciary-standards.asp

https://youtu.be/aWulI3Kwi_A (2 minute video lesson on how suitability can and will be used against you)

Dealers and brokers use "suitability" is a license to steal from trusting investors...

Consumer links to Secret #4: http://www.reuters.com/article/2015/05/20/banks-forex-settlement-waivers-idUSL1N0YB1GA20150520 UPDATE 3-U.S. SEC grants waivers to banks after guilty pleas. REUTERS.com
viewtopic.php?f=1&t=143 (exemptions to the law, a license to cheat the investor and sell "factory seconds")

Getting your money back from #BrokerFraud a video: https://youtu.be/KH6XMXlfdBw

[admin]

Disguise…..To Deceive…..To Defraud
By a Recovering investment “advisor"…

373980_401553049910144_827053989_n.jpg (12.16 KiB) Viewed 22545 times

“The real business of money management is not managing money, it is getting money to manage.”

- Mark Hurley, Goldman Sachs
Story told by a recovering broker. @RecoveredBroker

What if every regulator in Canada (BCSC, ASC, OSC etc) were aware of a "bait and switch", where salespeople were allowed (by the regulators) to “disguise” their true license category and duty of care (or lack of duty:), hiding this information from the public, while pretending to be a licensed and regulated financial professional?

What if in the USA, the Securities Act of 1940 “exempted” for over 90% of American investors from the investment-protections within this Act. https://youtu.be/aX52f3Jjbm8

Meanwhile, in Canada, virtually every broker/salesperson plays a misleading spelling game with the legal word “adviser”, which is found in the Securities Act, cleverly skirting it by spelling their titles “advisor”, instead of the lawful “adviser”. (regulators quoted here:
viewtopic.php?f=1&t=193#p3835

Of all the clever tricks that I witnessed while I worked 20 years inside Canada’s largest bank owned brokerage firms, these clever methods for salespersons to pick the pockets of clients did not reveal themselves to me until about 2014, 10 years after I left the industry.

Here is how it works.,…….you can choose to believe it or not. I only caution you to NOT give away your trust just because someone claims to be an “advisor”.

I began my career in 1984, aged 24. My sponsoring investment firm completed my license application. I never saw my license until well after 2004.

After 2004, research showed me that my license/registration category during my years in the industry, was that of a “salesperson” despite my investment dealer putting the title “investment advisor” on my business cards in 1987. They did this very soon after the crash of 1987. It was a "better marketing" term they said. I had no idea that license laws would be violated, and back then I suspect, neither did they...

I now know that this (license misrepresentation) is contrary to the Securities Act, and also against industry rules of fair, honest and good faith dealings with clients. This was the use of a disguise, for marketing purposes, to deceive investors. We just assumed nothing like this would happen in a regulated industry.

It was not until 2014 that myself, and Canadian investment advocate Stan Buell, stumbled upon a far deeper systemic trick. We learned of the industry secret where virtually all sales persons use a non-regulated title, to make them appear as financial professionals to the public. We also began to learn that virtually every regulator who would open up to this, was fully aware of it.
Keep in mind that it only takes a skim of 2% from the clients investment returns in the form of fees, commissions or other hidden costs, to cut a person’s retirement by 50% over the long term. This is the holy grail of unethical investment salespersons/broker/dealers, because it means that the other half is in their pockets.

“The trick is to dress the salesperson in the disguise of a financial professional, ie. As if they the have a dedicated duty to care for your financial interests.....”

The cleverest of tricks is a spelling trick, and it involves using the title spelled “advisor” to create the impression that one is licensed under a Securities Commissions in Canada, or the Securities and Exchange Commission in the US.

The actual word used in each Securities Act is “adviser”. Can you imagine a more clever trick than to change one vowel and use that to skirt the law?

“The “deception” is the use of a clever spelling alteration (which avoids application of the law in Canada while the US has a slightly different method to accomplish this) to help disguise from the public, that the person is not what they hold themselves out to be.

If this does not meet the definition of fraud or intentional misrepresentation, then I am not sure what does?

For the investment broker/dealer/banker, it is a legal trick to deceive the customer for more money. Since virtually no lay-person can know the industry-intended difference between an “advisor” title, and a licensed “adviser”, the investment broker/dealer gets to lure clients with trust-assuring promises, and then deliver something entirely different.

"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 article, Financial Post · Tuesday, Feb. 15, 2011) (Mr. Waitzer is a Bay Street Lawyer, York University professor, and former Ontario Securities Commission chair, and this quote ( by another person) appeared in his article.
http://business.financialpost.com/fp-co ... -investors


This is also called a bait and switch, and investment clients known to this writer are slowly gaining this realization, and some are also gaining their money back when they take the right steps. The right steps include two things. One is to avoid any industry- sponsored complaint mechanisms, and two is to calmly show them where you understand that you have been deceived by a disguise. See your litigation expert and show them this video: https://youtu.be/KH6XMXlfdBw

The trick is in the “client-best-interest” requirement, which is the sticky legal detail that unethical dealers and salespersons avoid with the “advisor” disguise. (both Canada and the USA also "exempt" from this protective aspect of the law possibly most people who sell investments on commission) The billion dollar win to the industry is that they can legally avoid having to put the client best interest first, and sell products and services which may be of far greater benefit to the bank or the broker/dealer than to the client.

“The fraud is found, not only in the misrepresentations, but in the harm of fees, costs, self dealing, and house brand investment products that end up in your investment accounts, while you smile in the (false) knowledge that you have a trusted “advisor”.”

(you are the smiling, un-knowing, happy face on the left:)

Lets turn to some sources for verification:

In order to see how your “advisor” is legally licensed, in Canada visit the Canadian Securities Administrators, (CSA) Website.
http://www.securities-administrators.ca/nrs/nrsearchResult.aspx?ID=1325

(approximately 150,000 persons refer to themselves in Canada as “advisor”, and in the US it is closer to 500,000, according to industry figures)

For US investors, who wish to find out how their “advisor” is legally licensed, go to FINRA (the US broker/dealer self-regulating body) broker search, found below. Most often you will learn that their license says “broker” and not “advisor”.
http://brokercheck.finra.org/Search/Search.aspx

For the SEC site to search whether your advisor is registered with the SEC, see http://www.adviserinfo.sec.gov/IAPD/Content/Search/iapd_Search.aspx

They each have a Registration Search function where the public can find out the exact license or registration category or their investment seller. What is much more difficult and well hidden from consumers, is an explanation of what are the legal duties and client-protection obligations behind each name, title, license or registration category. Herein lies the billion dollar secret...herein lies the regulator complicity/capture, in not revealing this to the public.

I spent a bit of time with a very nice person at the SEC, and it seemed to me as if it "did not matter" at all, what the financial person might call themselves, and I was fairly confused that this might be the case. It turns out that the SEC actually does not care what you call yourself, but rather cares what your activity is. The good news is that they will regulate and supervise both names or titles. The bad news is that the Securities Act 0f 1940 also "exempts", 90% of the commission sellers in the country from having to meet the client-protective elements of this Act.

Now you will of course ask the CSA (in Canada) what does “dealing representative” mean, and in another page (linked below) on the CSA site, it tells you that it means “salesperson”. I can only assume that the industry (which pays 100% of the salaries of the CSA) convinced the CSA to make the title a little less “salesperson-ey” sounding. Remember we are talking about disguises here.......Disguise, deceive, defraud.
[url]http://www.securities-administrators.ca/uploadedFiles/General/pdfs/UnderstandingRegistration_EN.pdf
[/url]

The “dealing representative” does not have a legal obligation to place the interests of the client before those of the dealer, hence “dealing” representative. Confusing enough? Again,

this confusion leads one straight back to the regulator to ask, “why do you feel a need to confuse the public”?

In the USA, the authority is the SEC, and they are ahead of Canada in so many ways, but for some reason, the SEC is behind us on revealing the advisor disguise to consumers.

To see how close the SEC will come to revealing the Disguise and Deception, see their Investor Alert here: SEC Alert http://www.sec.gov/investor/alerts/ib_making_sense.pdf

This link only “hints” at something hidden, but it does not take the one extra step necessary to give the American public a fair and honest heads up. One wonders why.

Thankfully, the US media is a decade ahead of ours in Canada, and there are dozens of informed articles from top journalists in the US about the “disguise to deceive” subject. Find them listed in this blog post located on this same blog topic:
http://www.investoradvocates.ca/viewtopic.php?f=1&t=193#p3775


The true fiduciary-duty (sole loyalty to client and none else) professional is spelled “adviser” in both Canadian and American Securities Acts, and during my two decade career in Canada’s largest banks, I met a few of these folks. As in a handful. They manage money professionally for pension funds, institutions, mutual funds, and high net-worth investors. They do no advertising on bus shelters, nor telephone solicitation for clients, and they do not charge 2% to 5% commissions, like so many disguised “advisors”.

If you engage one of the truly licensed “advisers” you will find yourself dealing at a professional level,

Their fees are in the neighborhood of 1.25% of assets per year, or lower, depending upon the size of your account. This is what is called professional money management. With 80% of those persons who call themselves “advisor”, about the only thing that is being “managed” professionally is…..well, to be honest...you.

Inside the industry the broker/advisor is known as the “relationship manager”, and never the “money manager”.

“You...the retail client...are the product”

Or as Warren Buffet says:

If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.

To look for truly licensed professional “advisers” in Canada begin your search here: http://www.portfoliomanagement.org/nav-investor-info/selection-checklist/

Back to the “disguise and deception” problem. Since no business journalist in Canada has chosen to reveal that there is a difference between the words “advisor” and “adviser”, I give you the words directly from various Securities Commissions in Canada.

For the full copy of each correspondence see here http://www.investoradvocates.ca/viewtopic.php?f=1&t=6


May 12, 2015 10:16 AM

Thank you for contacting the Alberta Securities Commission (ASC)..

Any person who acts as an adviser and is not registered as an adviser under the Securities Act (Alberta) has violated Alberta securities laws (see. section 75 of the Securities Act (Alberta). The word "adviser" is a defined term in the Securities Act (Alberta) meaning "a person or company engaging or holding itself out as engaging in the business of advising in securities or derivatives."

This also from the ASC:

“Thank you for contacting the Alberta Securities Commission (ASC).”

I can tell you that “adviser” is a defined term in the Alberta Securities Act (ASA) meaning “a person or company engaging or holding itself out as engaging in the business of advising in securities or exchange contracts.” Pursuant to section 7.2 (1) of NI-103, there are two categories of registration for a firm that is required to be registered as an adviser: (1) portfolio manager; (2) restricted portfolio manager.

Individuals who conduct registerable activities for a firm registered as a “portfolio manager” or “restricted portfolio manager” must be registered as an “advising representative” or an “associate advising representative” pursuant to section 2.1(1) of NI 31-103.

“An “advisor” is a generic term with no specific meaning in Alberta securities law”.

From the Ontario Securities Commission:

"Adviser" is a legal term under securities law that describes a company or individual who is registered to give advice about securities. "Advisor" is not a legal term under securities law.”

From the BC Securities Commission:

“Under the BC Securities Act, if a person is engaging in, or is holding themselves out as engaging in, the business of advising another person with respect to the purchase or sale of securities then that person must be appropriately registered or exempt from registration. This is the case regardless of how that person spells ‘adviser/advisor’ in their title.”

(all italics shown above are my own, for emphasis)


Each Securities Act in Canada has multiple provisions requiring either that the registrant NOT mislead their license or qualifications, or that they MUST reveal their exact license and registration category when dealing with the public. No hiding behind fancy disguises or fake titles.

The ability to disguise oneself as a financial industry professional, whilst hiding behind the legal obligations of a used car salesperson.....(sorry, after viewing the license requirements of car salespersons at AMVIC (Alberta Motor Vehicle Industry Council) I find they are extremely more stringent than the financial services industry) My apologies to used car salespersons.....but I digress.

Disguise, deceive, defraud.

I have covered the disguise part of this equation, and the deceive part. To keep this article within word limits, I will direct you to go to http://www.investoradvocates.ca where you will find about 50 topics on systemic financial industry tricks of the trade. Or, in simple terms, I like to call it,

“how many ways can we cheat clients out of a billion dollars and get away with it?”

There you will find more than you ever wished to know about cleverly disguised “advisors” who are “helping” you with your money. I worked with and watched them since 1984, and I saw a thing or two...

The positive in this is that there are numerous ethical persons, whistleblowers and groups out there who are not participating in the “Disguise, Deceive, Defraud” game. People who actually care about professionalism, and their clients, about others, and about their own self respect.
“Best Practices” are sought out, promoted and shared by non-profit groups like
http://www.investoradvocates.ca and [url]@RecoveredBroker[/url]
the Small Investor Protection Association,http://sipa.ca
Institute for the Fiduciary Standard
http://www.thefiduciaryinstitute.org


Larry Elford @RecoveredBroker

PS. If you have read this far, I will commend you and send you to a youtube video, which was made after considerable help from some good folks at the SEC. They sent me the Advisor Regulations and I went through them in search of the loopholes that the good folks in the financial selling game could drive a fleet of Brinks trucks through. Found them in short order……see here: https://youtu.be/aX52f3Jjbm8

Keywords:
Disguise
Deception
Defraud
SecuritesAct
AdviserRegulations

[admin]

STAN GETS A DECENT REPLY FROM A DECENT MAN, CSA (Canadian Securities Administrators) LEAD COUNSEL CHRIS BESKO GIVE VERY FIRST INDICATION OF TWO CLEAR AND DISTINCT MEANINGS BETWEEN WORD "ADVISOR" AND "ADVISER" (as they relate to the investment industry)

Highlights in red below:

Click to enlarge this image

go to http://www.securities-administrators.ca ... px?ID=1325 to search your broker or "advisor"
(my money says your person is licensed as a "dealing representative" instead of whatever it may say on the business card…..Hmmmm)

---------- Forwarded message ----------
From: Besko, Chris (FINMSC) <Chris.Besko@gov.mb.ca>
Date: Fri, Aug 1, 2014 at 6:43 PM
Subject: Financial Advisor Registration
To: "sipa.toronto@gmail.com" <sipa.toronto@gmail.com>
Cc: CSA ACVM Secretariat <csa-acvm-secretariat@acvm-csa.ca>


Thank you for your letter of March 28, 2014. It was referred to the Registrant Regulation Committee of the Canadian Securities Administrators (which I chair) for a response. We have tried to answer all your questions as fully as possible, but if you have any follow up questions, please feel free to contact me directly.



For ease of reference, we have included your question before each response.



Limitation Periods –

These appear not to be standard but may be different in each province. Can you advise what the limitation period is in each province or territory.



There are differing limitation periods for securities related matters in each jurisdiction. As a starting point, we would note that some limitation periods are found in the Limitation of Actions Act or Limitations Act in each jurisdiction (the Civil Code in Québec), which will set out general limitation periods for civil actions such as breach of contract, negligence, or breach of fiduciary duties. These limitations would apply where a person is taking civil action against another person, such as an action against a registrant for negligence.



Securities legislation in each jurisdiction also contains limitation periods. There are limitation periods that relate to civil claims by a person for misrepresentations contained in a prospectus or other offering document, or for claims of secondary market liability. In addition to these limitation periods, securities legislation can also contain limitation periods that relate to administrative hearings of offences under the securities legislation taken by Commission staff before the Commission (in Québec, the Bureau de decision et de revision, an administrative tribunal) or for proceedings of offences under securities legislation prosecuted in provincial court.



The table below lists some of the typical limitation periods.

Before an investor turns to the Commission for help, it is important to confirm that the Commission has the jurisdiction to bring a proceeding against a registered firm or its representatives. The nature of the dispute and the type of the registered firm will determine the investor’s best course of action as well as which organization can help. In particular:

· It is advisable to address any problem directly with the firm first. Most complaints can be resolved in this way.
· As of August 1, 2014, all registered firms outside Québec must use the Ombudsman for Banking Services and Investments (OBSI) as the common dispute resolution service. OBSI is a free, independent dispute resolution or mediation service available to an investor that has an eligible complaint. In Québec, the Autorité des marchés financiers provides a mediation service for disputes.
· The Investment Industry Regulatory Organization of Canada (IIROC) investigates complaints and takes disciplinary actions against investment dealers. The Mutual Fund Dealers Association of Canada (MFDA) does the same against mutual fund dealers. Complaints about dealers and advisers who are not members of IIROC or MFDA should be made to the Commission. These include portfolio managers, scholarship plan dealers, exempt market dealers and restricted dealers.
· A complaint against someone selling or advising without being registered should be made to the Commission.


We encourage investors to call the Commission for further information and guidance. http://www.securities-administrators.ca ... aspx?id=90.



Registration Classifications

1. Advising Representative – Is this the current classification for Advisers?

2. Dealing Representative – Is this the current classification for previous Sales Representative?

3. Financial Advisor – This is a common title used but there appears to be no classification. Are

these persons registered as Dealing Representatives?

4. Vice President – Are all vice presidents deemed to be officers of their firms?



The registration categories under securities legislation are set out in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. They are: dealing representative, advising representative, associate advising representative, ultimate designated person and chief compliance officer. These are the descriptions that apply to individual registrants for the purposes of registration. An individual who is acting as an adviser on behalf of a portfolio manager will be registered as either an advising representative or an associate advising representative. An individual who is trading in securities on behalf of a dealer (such as an investment dealer, mutual fund dealer, exempt market dealer, restricted dealer or scholarship plan dealer) will be registered as a dealing representative.



We do not prescribe specific titles to be used by those persons who are either dealing or advising in securities. Most securities legislation requires that an individual who holds themselves out as being registered to in fact be registered and to indicate the actual category of registration.

Financial Advisor, as you noted, is a common title which many persons use, whether they are registered under securities legislation or not. The use of this title is not generally prohibited, and may be used by anyone, including persons who are only licensed to deal in insurance products, mortgage brokers, deposit agents, or employees of financial institutions.

Some jurisdictions regulate the use of some titles. For example, in Québec, no person may use the title Financial Planner without holding the appropriate certificate issued by the Autorité des marchés financiers. The title Financial Advisor may not be used by anyone as it is considered similar to the title Financial Planner. Having said that, most jurisdictions do not regulate the use of Financial Advisor, and as such it is widely used.



As with Financial Advisor, the title of Vice President is increasingly a common title used in the financial services industry. While an officer of a firm may be designated to be a vice president, the use of the title is not reserved to actual officers of a corporation. As such, it is not safe to assume a person described as a vice president is in fact an officer of that corporation.


Suitability –

Does suitability have a common definition for all provinces or territories, and what is the definition? To whom or which license categories does it apply.



CSA staff published on January 9, 2014 CSA Staff Notice 31-336 Guidance for Portfolio Managers, Exempt Market Dealers and Other Registrants on the Know-Your-Client, Know-Your-Product and Suitability Obligations. We believe this notice will assist in understanding the suitability requirement and our expectation of registrants.



Fiduciary –
Does Fiduciary Duty apply to Portfolio Managers and other registrants? To whom or which license categories does it apply?

A common law fiduciary duty may apply to portfolio managers or other registrants, depending on the circumstances. Typically, Canadian courts have identified five interrelated factors to be considered when determining whether “financial advisors” stand in a fiduciary relationship to their clients: vulnerability of the client in the relationship, the trust and reliance that clients place in their advisor, the extent to which the advisor has power or discretion over the client’s account or investments, and the professional rules and codes of conduct of the advisor. In Québec, where a civil law regime applies, the fiduciary duty does not exist since it is specific to the common law. For further information, see Parts 3 and 4 of CSA Consultation Paper 33-403, including specifically the table in Part 4.

Best Interest –
Is this standard in place in Canada? To whom or which license categories does it apply?

Four provinces (Alberta, Manitoba, Newfoundland and Labrador, and New Brunswick) have a statutory requirement that when advisers or dealers have discretionary authority over their clients’ investments, the adviser or dealers must act in the clients’ best interests. Investment fund managers are also subject to a statutory best interest standard all across Canada. In Québec, according to both the general civil law and the Securities Act (Québec), registered dealers and advisers are currently subject to a duty of loyalty and a duty of care and must act in the client’s best interest. The extent of these obligations under the Civil Code varies depending on the legal context and nature of the investment advisory relationship (e.g. discretionary account or non-discretionary account, executing broker only), taking into account the degree of trust, dependence and vulnerability of the client. For further information, see Part 4 of CSA Consultation Paper 33-403.



Hopefully this answers your questions. As mentioned above, please feel free to contact me directly with any follow up questions you might have.

Chris Besko
Acting General Counsel & Acting Director
tel. (204) 945-2561
fax (204) 945-0330

The Manitoba Securities Commission
500-400 St Mary Avenue
Winnipeg, Manitoba, R3C 4K5
Toll Free (Manitoba only) 1-800-655-5244
http://www.msc.gov.mb.ca

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