June 19, 2019
Submission to the Alberta Public Interest Commission:
Public Interest Commissioner
9925 – 109 Street, Suite 700
Edmonton, Alberta T5K 2J8
Dear Commissioner,
1. What if a government-legislated regulator were to be financially captured by the industry they regulate?
2. What if this allowed persons with less education and experience than it takes to become a licensed hairdresser, to falsely claim professional “advisor” status on your life savings?
3. Could this regulator be aiding private financial interests to take advantage of the public?
4. Could they do this when the public money involved could be $3/4 Trillion, and the public harm may be 2%-3% of that ($15 to $23 Billion)?
5. What if this could cut in half, the future life savings of many people who invest under this conflicted-style of regulation?This is a formal request for The Alberta Public Interest Commission to
investigate alleged
violations of the public interest by the Alberta Securities Commission (ASC).
One of the ways that stockbrokers and commission selling agents for investment dealers can easily make billions of dollars, is simply by having millions of investors who give absolute trust and confidence to those sales agents.
The industry learned shortly after the crash of 1987, that the easy way to gain the absolute trust of investment customers is to lie to them (by title inflation), or mislead them into a false belief that the commission sales agent is actually a professionally registered “Advisor”. I know this because I was there and watched it happen.
Investors are deceived by this “title inflation” and assume that they are dealing with trusted professionals, much like a Doctor, Lawyer or Engineer. This is most often not the case, but investors are easily assured that the regulator in Alberta would never allow fraudulent misrepresentation into the management of their life savings.
The problem with earning trust using a false pretense is the risk of being caught in a fraud. This complaint to the Public Interest Commissioner is about that fraud and the false pretenses that are allowed or ignored by the Alberta Securities Commission, a body which is empowered by public legislation.
This industry has learned that the easy way to prevent their fraud from being exposed is to pay millions of dollars to influence and control the regulatory bodies that “police” the industry, and who purportedly protect the public interest.
This is a formal request for The Alberta Public Interest Commission to investigate these alleged violations of the public interest by the Alberta Securities Commission (ASC).
On pages 2-4 are twelve points which summarize the issue, (in bold below) followed by 23 pages of report which takes each one of those twelve points, and provides facts, sources, and an explanation of their relevance to investors and to investor protection.
1. The ASC allows approximately 30,000 commission sales representatives (Dealing Representatives) to falsely represent themselves to Alberta investors as if they were registered as professional Investment Advisers (Advising Representatives). 97% of these self-labeled “Advisers” (or “Advisors”) do not hold the “Advising Representative” registration. This is a violation of Alberta Securities Act section 100, on “Representation”, as well as ASC rules, laws and regulations on misrepresentation, fraud, etc. “We strive to protect investors from improper, misleading or fraudulent practices while allowing our capital market to thrive.” (page 7, ASC Annual Report 2018)
Details on page 4
2. Misrepresented financial professionals can use false pretenses to influence and to harm Alberta Investors. Bruce Engel of Engel and Associates, criminal lawyers in Ottawa, defines and explains false pretenses thusly: “To commit fraud means to deprive somebody of something by deceit or a falsehood and to induce a state of mind through a specific course of action.”
Details on page 9
3. The difference in professional duty of care, between a Dealing Representative (Salesperson) and an Advising Representative (Adviser) is sufficient to cut the life savings of Alberta investors by 50% to 75%. The Dealing Rep (Salesperson) registration requires 90 days experience, while the Advising Representative takes multiple years of supervised investment management experience.
Details on page 13
4. Millions of Albertans who save and invest, assume that the ASC is a government regulator and that it must meet the following ASC public promise: “The ASC is responsible for maintaining the integrity of Canada's second-largest capital market. We ensure a fair and level playing field for investors and oversee the conduct of market participants.”
Details on page 16
5. The interests of ASC’s funding providers are often diametrically opposed to the interests of investors. Thus, the public is not informed that the ASC is funded by the industry they claim to regulate, and not by the Government as most investors assume. Private financial interests can thus make Billions of dollars by not fairly, fully informing the public.
Details on page 16
6. Albertans hold investments worth roughly $780 Billion. Public harms of 2%-3% annually on this $3/4 Trillion dollar pool of capital would produce $15.6 to 23.4 Billion in fees and/or commissions to the industry, and loss to the public. Ontario Securities Commission (OSC) Chair Maureen Jensen is on record as saying: “The impact of these fees on investor returns is significant,” she said. “Investors experiencing this kind of outcome on a consistent basis would never break even and would, in fact, be worse off.”
Details on page 17
7. With possible annual financial harm to Alberta society in the $15.6 to 23.4 Billion per year range, this exceeds not only the cost of the Fort Mac fire disaster at $3.6 Billion, but exceeds the financial harm done by all measured criminal acts in the province. (Source: Justice Canada and Stats Canada estimates of total measured crime).
Details on page 19
8. The ASC has turned a blind eye to this widespread public deception for many years, despite being made aware of the negligent and false misrepresentations and despite increased media coverage of same. Due to years of ASC willful blindness, the harms to Albertans could add to Hundreds of Billions of dollars in financial damage to the public, and Hundreds of Billions of unjust enrichment for private financial interests who fund the ASC.
Details on page 20
9. Perhaps in response to disclosures such as this as well as increased media coverage, the ASC has recently begun advertising campaigns which include mis-information, and omissions of the most essential information of importance to investors. This serves to further confuse and deceive the public.
Details on page 21
10. Canada’s most respected investigative journalist, Bruce Livesey, revealed in 2019, “You have to understand that white collar crime is legal in Canada”.
Details on page 22
11. In this complaint I suggest to the Public Interest Commissioner, “Please understand that white collar collusion or cooperation allows wealthy private financial interests to ignore our laws”. In a second planned letter to the Alberta Public Interest Commission I will shine a light into the practice of this regulator (ASC) also allowing private financial interests to purchase exemptions, something which allows them to quietly skirt laws and flaunt public protections.
Details on page 24
12. Purchase of exemptions to Securities Act law is like having the ability to purchase a “deferred prosecution agreement” in advance of committing a violation of the law. The granting of exemptions to public protective laws, to private financial interests seeking to skirt those laws for higher profits, is a separate issue of public interest concern which involves the ASC and will be dealt with separately as further evidence of bias against the public interest by this Alberta Securities Commission.Details on page 25
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1. The ASC allows approximately 30,000 commission sales representatives (Dealing Representatives) to falsely represent themselves to Alberta investors as if they were registered as professional investment advisers (Advising Representatives). 97% of these so-called “Advisers” (or “Advisors”) do not hold the “Advising Representative” registration.This is a violation by the ASC of Alberta Securities Act section 100 titled “Representation”, as well as any ASC rules, laws and regulations on misrepresentation, fraud, etc. “We strive to protect investors from improper, misleading or fraudulent practices while allowing our capital market to thrive.” (page 7, ASC Annual Report 2018)
FACT:
In this Act,
“Adviser” means a person or company engaging in or holding itself out as engaging in the business of advising in securities or derivatives;
SOURCE:
http://www.qp.alberta.ca/documents/Acts/s04.pdfRELEVANCE:
The first section of the Alberta Securities Act states clearly the definition of an Adviser, lest there be any doubt.
FACT:
The ASC turns a blind eye to infractions whereby individuals who are not registered as “Adviser”
SOURCE:
Representation or holding out of registration Alberta Securities Act Section 100(1)
A person or company shall not represent that the person or company is registered under this Act unless
(a) the representation is true, and
(b) in making the representation, the person or company specifies the person or company’s category of registration under this Act and the regulations.
(2) A person or company shall not make a statement about something that a reasonable investor would consider important in deciding whether to enter into or maintain a trading or advising relationship with the person or company if the statement is untrue or omits information necessary to prevent the statement from being
false or misleading in the circumstances in which it is made.
Section 100 is found on page 100 of the Alberta Securities Act, web link below:
http://www.qp.alberta.ca/documents/Acts/s04.pdfRELEVANCE:
False Representation of a person’s registration category at the Alberta Securities Commission or at the Canadian Securities Administrators (Canada-wide umbrella organization of all Canadian Provincial and Territorial Securities Commissions is not allowed under subsection (a) of Section 100 of the Act.
100(1) A person or company shall not represent that the person or company is registered under this Act unless
(a) the representation is true
By misrepresenting oneself as an Advisor or Adviser to the public, when not holding the registration category implied by either of these titles (or spelling variations), subsection (b) of Section 100 of the Act is not met.
(b) in making the representation, the person or company specifies the person or company’s category of registration under this Act and the regulations.
By concealing a Dealing Representative registration category, and falsely proclaiming oneself to be an “Advisor”, an “Adviser”, or an “Advising Representative”, the representative has made a statement about something that any reasonable person would definitely want to know.
(2) A person or company shall not make a statement about something that a reasonable investor would consider important in deciding whether to enter into or maintain a trading or advising relationship with the person or company if the statement is untrue or omits information necessary to prevent the statement from being false or misleading in the circumstances in which it is made.
FACT:
The Alberta Securities Act prohibits false representation
SOURCE:
Section 100 of The Alberta Securities Act
FACT:
The ASC ignores the “representation” provisions of the Alberta Securities Act whether on a “one registrant at a time” basis or in a systemic manner involving tens of thousands of violations at once.
SOURCE #1:
A search of the first three registrants in the category of “Dealing Representative” (Salesperson) turns up three persons who are not registered as “Advisors” and yet purport to the public that they are so registered
SOURCE #2:
A search of ALL registrants in the category of “Dealing Representative” (Salesperson) reveals over 28,000 persons and other than a few exempt market dealers, only a handful out of the 28,000 registrants have been found to public represent themselves as a “Dealing Representative” as the Securities Act requires.
SOURCE #3:
When discussing this with an ASC official at an ASC trade show booth, the official expressed dismay and disbelief that none of the registrants were representing their registration categories properly. When shown the business cards of investment representative booths at that very trade show, and shown that each Salesperson (Dealing Representative) was misrepresenting themselves as if they met the “Advising Representative” standards of registration, the response was surprise.
When follow up communication with the ASC official ensued to see if there would be any enforcement of the Alberta Securities Act, there was complete silence.
Below is a copy of one email correspondence with the ASC on this matter: No action was taken by the ASC.
Sent: April-17-16 3:07 PM
To: larry elford; Don Rodgers
Subject: Re: Complaint to Don Rogers and ASC Complaints, regarding deception and license misrepresentation contrary to Alberta Securities Act and harmful to the public interest
Dear ASC.
As nearly one month has passed since initiating a complaint with the ASC about “Dealing Representative” misrepresentation (license misrepresentation), I was hoping to obtain a reply indicating receipt of the complaint, and perhaps some indication if anything is to be done.
I thank you in advance for your reply to this consumer protection issue.
Larry Elford
RELEVANCE:
The ASC track record is to ignore, rather than to enforce, violations of license and/or registration category representation laws, and this appears to be a breach of duty by ASC officials to enforce the Securities Act in a manner that protects the Alberta public, as well as a possible Breach of the Public Trust. It essentially allows thousands of investment sales representatives to commit a false pretense offense in order to influence the public to act upon falsified information. The ASC has not to my knowledge ever enforced this misrepresentation of the Alberta public.
To prevent this Alberta Public Interest complaint from being outside of the mandate of the Public Interest Commission to investigate systemic violations of the Alberta Securities Act, I also include a registration search below of three (3) specific registrants who represent themselves to the public as being registered in the category of an Advising Representative (Advisor):
AASEN, Gregory (John) is listed on the CSA registration search page as a “Dealing Representative” representing a (Mutual Fund Dealer).
http://aretheyregistered.caJAYESH, Acharya of Sun Life in Calgary is also represented as an “Advisor” despite not holding an Advisor registration.
AGLUGUB, Maria Ana (Aguilar) of Sun Life in Edmonton is also represented as a Sun Life “Advisor” while not holding an Advisor or Adviser or Advising Representative registration category in Alberta
However the dealer searched in this example, Sun Life, advertises all of these Sun Life Representatives as “Advisors” at this page
https://www.sunlife.ca/ca/Find+an+advis ... cale=en_CAThese three examples shown above are provided to in relation to Alberta Securities Act section 100 titled “Representation”, as well as ASC rules, laws and regulations on misrepresentation, fraud, etc.
Further search results for Sun Life in Alberta contained 505 registration records of their employees. 21 of those 505 records held an Advising Representative registration and the remaining 484 did not.
The Alberta Securities Commission ignores the 484 examples at Sun Life who do not hold this registration, while Sun Life profits from misrepresenting its “Dealing Reps” (Salespersons) as if they were “Advising Reps” or Professional Advisers.
2. Misrepresented financial professionals can use this false pretense to unduly influence and to harm Alberta Investors. Bruce Engel of Engel and Associates, criminal lawyers in Ottawa, defines and explains false pretenses thusly: “To commit fraud means to deprive somebody of something by deceit or a falsehood and to induce a state of mind through a specific course of action.”
The ASC ignores the title inflation, it ignores the potential for financial disaster for the public, and it ignores the prohibitions in Alberta Securities Act (section 100) which they are required to enforce. They do this if one were to examine each registrant, one by one, or if one wishes to examine nearly all of the 28483 Dealing Representative records found. (Search done June 11, 2019 at http://aretheyregistered.ca)FACT:
The ASC has taken five unusual yet highly revealing steps which help demonstrate ASC complicity in ensuring that Alberta investors are misinformed of whether they are dealing with a commission sales agent, with the 90 day experience requirement, or a true professional Adviser, with years of experience and a professional duty to protect investors.
Step #1: Is the alteration of registration categories in September of 2009, which erased the clear and understandable registration category of “saleperson” and replaced it with the less clear and less understandable registration category of “Dealing Representative”.
SOURCE:
The link below is a document which all Canadian Securities Commissions adhered to which provides the source of the above statement.
http://www.osc.gov.on.ca/documents/en/S ... lement.pdfRELEVANCE:
If the ASC is acting to aid in the deception of Alberta investors, and to aid in the unjust enrichment of private financial interests, this evidence would support the complaint that the ASC, or certain key employees may be in breach of the public trust.
Step #2: The ASC then sometime around January of 2018 took further steps and deleted the word “Salesperson” from its description of what a “Dealing Representative” truly is.
SOURCE:
Above is how the ASC (and the Canadian Securities Administrators whom the ASC is a member of) used to publicly describe the “Dealing Representative” category BEFORE it was removed entirely, to the sole benefit of the financial sales industry and to the detriment of the public’s ability to understand exactly with what type of financial person they were dealing with.
RELEVANCE:
The removal of, or concealment of the “Salesperson” descriptor from the view of millions of Alberta investors, is an essential required element in convincing millions of investors that they are dealing with a trusted Advisor, when in fact, they should legally be informed that they are dealing with a “Salesperson”. The ASC, in my experience, acts complicit in aiding and abetting the false pretense being perpetrated upon the Alberta public.
If the ASC’s role is truly to “…strive to protect investors from improper, misleading or fraudulent practices while allowing our capital market to thrive.” (page 7, ASC Annual Report 2018), then the ASC should not be aiding misinformation and misleading Albertans in this manner.
Step #3: The ASC has removed all historical data of Salespersons registration history prior to the Sept 18, 2009 time when the “Salesperson” registration category was renamed the “Dealing Representative” category. This is an unnecessary and costly “cleansing” of the public record with one sole benefactor and that is to protect those who have benefitted from fraudulent misrepresentation.
SOURCE:
http://www.osc.gov.on.ca/documents/en/S ... lement.pdf (Same requirements as Alberta)
RELEVANCE:
If the ASC were truly interested in informing and protecting Alberta investors, then there could be no reason for them to go back a decade in time, to redact, and to eliminate old registration categories from the public record.
This has the effect of preventing justice in legal cases, and preventing research, understanding and disclosure in other instances. The removal of the “Salesperson” wording required tremendous effort involving many, many people and man hours of time, and there can only be one beneficiary of such a “cleansing” of the record. The only beneficiary is in the person or persons who sought to no longer make this information visible to the public.
The public has many reasons to know and understand what the current, as well as the historical registration category was for a representative, and this was why the information was originally included in registration search functions. The only beneficiary of the extraordinary removal or concealment of this license or registration data are the people who could be harmed by this data being made available, which brings us back to the private interests who wish to profit from a false pretense, and to accomplish a clever financial “bait and switch”. The “bait and switch” is in convince the public that they are being offered professional and objective financial advice by professional Advisors…and then dupe them with delivery of commission sales agents, while pocketing the difference. The difference between what a Salesperson can sell you and what a professional Advisor is duty bound to do to serve your interests is typically anywhere from about 2% to 5%. That is the difference (harm to client, profit to Salesperson) that a fraudulent Salesperson can obtain out of a client, IF the client’s unflinching trust can be obtained…by false pretenses.
Step #4: Their work and support in the creation of something called a “Client Relationship Management Disclosure document (CRM2) which hides the most crucial elements of a relationship with an investment service provider.
SOURCE:
https://www.albertasecurities.com/-/med ... 18FE5A4D08RELEVANCE:
In ASC promotional material for improved “Client Relationship Disclosures” they claim to:
Disclose the relationship (while failing to reveal the true category of registration of the financial service provider?) (False Pretense and negligent misrepresentation)
Disclose conflicts of interest (while concealing the true meaning of what the registration category means?) (failure to reveal WHAT the category of registration means to the investor) (ie, does “Dealing representative” indicate a sales agent?)
Disclose costs (while concealing some of the crucial embedded (hidden) costs paid on an investment)
The hidden elements of CRM2 are greater than what is revealed. Some in the industry call CRM2 a “crime” by regulatory agencies.
Step #5: Unusual practice of resorting to extensive marketing and advertising, TV, Print and Social media (Facebook ads) designed to convey an impression to the public that the ASC is protecting them from fraud, when it might be understood by now that the ASC is a supporter and a participant in the fraud upon the investing public.
SOURCE:
Print, TV and social media advertising by the ASC attempts to further influence the public into a false sense of security, has been ongoing and constant on all media. One or two examples are found on page 23 of this report, of the ASC now forced to advertise in order to market themselves to the public as public protection agents.
The ASC itself is now spreading misinformation, much like the marketing misinformation campaigns that dealers, salespersons and brokers use, to fool investors.
3. The hidden difference in duties of care, between a Dealing Representative (salesperson) and an Advising Representative (Adviser) is sufficient to cut the life savings of investors by 50% to 75%. The Dealing Rep (Salesperson) registration requires 90 days experience to obtain, while the true Advising Rep takes multiple years of supervised professional investment management experience.
To put the investment Dealing Representative into perspective, it takes only 3 months work experience to become an investment sales agent (Dealing Representative) whereby a licensed Hairdresser in Alberta requires 9 months of schooling plus another 9 months of supervised apprentice work.
FACT:
A good indicator of ASC complicity in harming the Alberta public interest is found in their support of commission sales agents with 90 days of investment industry experience being presented to Albertans as if these people were trained professionals with multiple years of experience and training, like what one expects when going to a Doctor, Lawyer, Engineer or other meaningful type of professional.
SOURCE:
#1 ADVISING REP QUALIFICATIONS
The requirements to become registered as an Investment Adviser as provided by the regulator includes:
6.1 The proficiency requirements for a Registered Representative providing discretionary portfolio management for managed accounts that do not trade in futures contracts are:
(a) Successful completion of
(i) The Conduct and Practices Handbook Course, and
(ii) either
A. The courses necessary to attain the Canadian Investment Manager (CIM) Designation, or
B. The three levels of the Chartered Financial Analyst program administered by the CFA Institute;
AND
(b) Experience
(i) Of at least three years as a Registered Representative or a research analyst for a Dealer Member,
(ii) Of at least two years ending not more than three years prior to the date of application as a Registered Advisor under Canadian securities legislation managing on a discretionary basis at least $5,000,000 in aggregate assets; or
(iii) Of at least five years ending not more than three years prior to the date of application, managing a portfolio of $5,000,000 or more, on a discretionary basis, while employed by a government-regulated institution.
SOURCE:
IIROC Proficiency Requirements:
http://www.iiroc.ca/Rulebook/MemberRule ... 900_en.pdfASC Proficiency requirements:
https://www.albertasecurities.com/-/med ... -2018.ashxSee page 16 for requirements of an “Advising Representative” (Adviser)
Image below shows registration categories
SOURCE #2:
DEALING REP QUALIFICATIONS
Today the requirements are to complete the (A) The Canadian Securities Course prior to commencing the training programme described in subsection (C),
(B) The Conduct and Practices Handbook Course, and
(C) Either
For a Registered Representative dealing with retail customers a 90- day training program during which time he or she has been employed with a Dealer Member firm on a full-time basis
http://www.iiroc.ca/Rulebook/MemberRule ... 900_en.pdf RELEVANCE:
The only possible reason for a regulatory body to aid in the misrepresentation of professional qualifications and protective duties of care by financial professional is if the regulatory body is serving the interests of the private financial parties that pay their salaries, and not serving the protective interest mandate of the public. This is a reasonably clear indicator of the regulatory intentions behind the actions used by the ASC.
RELEVANCE:
Passing off 90 day commission sales agents as if they were CFA, (Chartered Financial Analyst) or CIM (Certified Investment Manager) trained persons with years of money management experience is tantamount to fraud.
As stated by one source in an article in the Financial post titled “Make Advisors work for investors” by Securities Lawyer and former OSC Chair Ed Waitzer
"Anything else is fraud, because the seller is delivering a service different from what the consumer thinks he or she is buying."
SOURCE:
Edward Waitzer article, Financial Post · Tuesday, Feb. 15, 2011) (Mr. Waitzer is a Bay Street Lawyer and former Securities Commission chair, and this quote (by another person) appeared in his article.
http://opinion.financialpost.com/2011/0 ... investors/It (the fraud) is also well said by a 70 year old victim of this type of false-representation realized, after struggling for nearly a decade to understand what had happened to him and why it was so difficult to understand. Here is how he put it in his own words after ten years and literally thousands of hours spent writing letters and trying to understand what had happened to him and his money:
Peter Whitehouse quote:
"Another way of expressing the repugnancy of the deception is as follows.
We were lead to believe that we were opening up a relationship with a person representing an investment dealer who was going to be sitting on our side of the table, giving us the best “advice” to protect our capital, as we were already in our retirement years.
Instead we were suckered into opening up a relationship with an investment dealer and the Representative who were actually sitting on the other side of the table, whose job was to relieve us of the maximum amount of commissions regardless of the ensuing financial damage to our assets.
Especially, in our case, they used fraudulent misrepresentation that regulators are not interested in pursuing.”
4. Millions of Albertans who save and invest, assume that the ASC is a government regulator and that it must meet the following ASC public promise: “The ASC is responsible for maintaining the integrity of Canada's second-largest capital market. We ensure a fair and level playing field for investors and oversee the conduct of market participants.”5. However, the interests of ASC’s paymasters are often diametrically opposed to the interests of investors. Thus the public is never informed of the fact that the ASC is fully funded by the industry they claim to regulate, and not by the Government as most investors assume. Private financial interests can make Billions of dollars by putting the public in a position where they are not fairly nor fully informed. While the cost of doing this is mere millions (“tenths” of pennies on the dollar) paid to fund this so-called public interest regulator.This is not a matter of lying to the public, but like a falsified “Advisor” it is more a matter of “allowing” the public to believe whatever they wish to believe, after letting them have every opportunity for them believe what one would like them to believe. In other words, by first giving the public sufficient direction for them to assume something incorrectly, without actually lying to them, most investors assume this regulator is a government funded, independent and impartial agency.
Relevance to the public of this regulatory “deception”:
The important pubic interest issue of having a “sham” regulator, or one with hidden incentives, ($700,000 salaries) and conflicts of interest, (job security, future appointments, future career considerations, directorship and board invitations) is the following:
A regulator who is highly incentivized to be in a “sinecure” (without care) or a “sycophant” (servile self-seeking) position is a regulator who is willfully blind to the violations of his or her paymasters. This it true throughout history so I am not inventing any new human traits with which to view the Alberta Securities Commission. It is simply that it is worth billions of dollars for private financial players to skirt laws, and to do this they only need pay millions of dollars to these types of regulators.
I make no judgement about human nature. My complaint is that the Alberta Securities Commission is funded by a few tens of millions of dollars from private financial interests, and is doing known harm to the Alberta public. Then acting in manners to ignore the harms to the public, then cover up, remove and even alter historical evidence of those harm to the public.
This is not the mandate of the ASC, nor of the Alberta Legislature which grants power to the ASC, and it is this violation of the public interest which I hope is made clear by this information.
6. Albertans hold investments worth between Seven Hundred and Fifty Billion dollars to One Trillion dollars, according to investment oversight bodies as well as the Bank of Canada. Public harm of 2%-3% annually on this $780 Billion dollar pool of capital would produce $15.6 to 23.4 Billion in added fees and/or commissions to the financial industry. Ontario Securities Commission (OSC) Chair Maureen Jensen is the source of the 2% to 3% annual harm estimates that apply to a deceived public. “The impact of these fees on investor returns is significant,” she said. “Investors experiencing this kind of outcome on a consistent basis would never break even and would, in fact, be worse off.” A second highly credible source (University of Toronto Rotman Pension Study 2007) put the harm to retail mutual fund investors in Canada at 4.8% each year.FACT:
Albertans hold investments worth roughly 750 Billion dollars to 1 Trillion dollars, according to information from the following investment oversight bodies and the Bank of Canada.
SOURCE:
(re size of investment pools) Statistics obtained from:
Investment Industry Regulatory Agency of Canada (IIROC)
Toronto Stock Exchange, 9th largest exchange in the world by market capitalization
Bank of Canada Bond market statistics
Investment Funds Institute of Canada (IFIC)
Exempt Markets Association, The Private Capital Markets Association of Canada (PCMA)
Ontario Securities Commission
CIBC Mellon
RELEVANCE:
Without knowing all figures and without a number which accurately includes the value of derivatives that may be packaged and sold as an “alternate class” investment, it might be fair to use the One Trillion Dollar figure to calculate what potential investment sums that may be held by Albertans. Readers are welcome to cut those estimates by 25% if they prefer to err on the conservative side.
SOURCE:
(re investor harms) Maureen Jensen quote: In a speech, Maureen cited research from the National Bureau of Economic Research that she said suggests a combination of embedded fees and unsuitable portfolio construction has caused the investment returns of advised clients to lag passive market benchmarks by two to three per cent a year.
Maureen Jensen is the Chair and Chief Executive Officer of the Ontario Securities Commission (OSC), which administers and enforces securities law in the capital markets of the province of Ontario. Chair and CEO term ends: February 2021
“The impact of these fees on investor returns is significant,” she said. “Investors experiencing this kind of outcome on a consistent basis would never break even and would, in fact, be worse off.”
Maureen Jensen
In her speech, she cited research from the National Bureau of Economic Research that she said suggests a combination of embedded fees and unsuitable portfolio construction has caused the investment returns of advised clients to lag passive market benchmarks by two to three per cent a year.
“The impact of these fees on investor returns is significant,” she said. “Investors experiencing this kind of outcome on a consistent basis would never break even and would, in fact, be worse off.”
http://business.financialpost.com/news/ ... ment-fundsSOURCE:
THE $25 BILLION ‘HAIRCUT’: HOW MUTUAL FUNDS SHRINK PENSIONS by Dr. Keith Ambachtsheer
https://docs.google.com/file/d/0BzE_LMP ... yOTkw/editKeith Ambachtsheer is Director Emeritus of the Rotman International Centre for Pension Management (ICPM). He was founding Director of ICPM 2005-2014, and Editor of the Rotman International Journal of Pension Management 2008-2014. He became founding Academic Director of the international Rotman-ICPM Board Effectiveness Program for board members of pension organizations in 2011. He is a member of the Scholars Council of Georgetown University’s Center for Retirement Initiatives. Through his firm KPA Advisory Services, he has advised pension and investment organizations, as well as governments and its agencies, on the design, governance, and investment policies of retirement income systems since 1985. He co-founded CEM Benchmarking in 1991. CEM benchmarks the organizational performance of over 400 pension organizations worldwide. Keith has authored four books on pension management. He has been the recipient of awards around the world for his work in the pensions, governance, and investments field.
RELEVANCE:
Using estimates of financial harm estimates from the current chairperson of the Ontario Securities Commission and the most esteemed pension expert in Canada lends credibility to the measured magnitude of this problem.
7. With possible annual financial harm to Alberta society in the $15.6 to 23.4 Billion per year range, this exceeds not only the cost of the Fort Mac fire disaster at $3.6 Billion, but exceeds the financial harm done by all measured crimes in the province. (Source: Justice Canada and Stats Canada estimates of total measured crime).Estimate: $20 to 30 Billion of annual harm using OSC Chairperson Maureen Jensen’s “2-3% estimates” and $38 billion of annual harm to the public using Dr Keith Ambachtsheer’s mutual fund harm study numbers.
SOURCE:
see point #7 above re size of investment capital held
RELEVANCE:
Whether you believe either of these expert’s numbers, or wish to cut them by half, or disbelieve entirely, I am well experienced from working two decades inside the industry that I write about, in misrepresented, conflicted commission sales agents being able to take advantage of trusting and vulnerable clients by anywhere from 2% per year at the low-harm end of the scale, and 6% per year at the medium-harm end of the scale.
For this complaint, I ignored the upper ends of harm observed, 10%, due to these individuals being extreme examples of Salesperson greed, and are thus not fair numbers to use for the harm to the average Albertan. I prefer to stay within a range that I can defend on behalf of average retail investors. However, it must be remembered that some investors (exempt markets products etc) have resulted in 100% loss of capital to some unfortunate individuals. A few years ago there were over 22,000 exempt market investment holders in Alberta with some $2 billion lost in those areas. All losses were 100%, and not just 2%, 3% or 10%.
I will say that in the “10% and over” of unjust enrichment scale: that some persons in this category were highly likely to be granted the “Vice President” designation”. To learn more about that falsified designation used to lure clients into a false sense of trust, read the fascinating case in Canada titled “Markarian vs CIBC World markets”
Quebec Justice Senecal used the word “fraud” around 226 times in his written judgement against CIBC, and it is perhaps the only case known to myself where the judgement is available for the public to see what went on. Most cases are settled and silenced, with confidentiality agreements so the public never gets to truly see what can and does happen.
One man's battle against CIBC exposes the billion-dollar scams behind our country’s “stable” financial sector. By Bruce Livesey, September 6, 2010
https://maisonneuve.org/article/2010/09 ... -makarian/Markarian v. CIBC World Markets Inc.
viewtopic.php?f=1&t=6&p=3993&hilit=Markarian#p39938. The ASC has turned a blind eye to this widespread public deception for many years, despite being made aware of the negligent and false misrepresentations and despite increased media coverage of same. Due to multiple years of ASC willful blindness, the harms to Albertans could add up to hundreds of Billions of dollars in financial damage to the public, and hundreds of Billions of unjust enrichment for the private financial interests who fund ASC’s salaries.FACT:
It was in the late 1980’s when “account executives”, “brokers”, “investment executives”, and a few other titles used for the sales representatives of the investment dealers were changed to investment “Advisor”. (without changing their true role and registration)
SOURCE:
I was in the industry when the great crash of 1987 took much of the shine off of investing for a period of time. It was then that business cards were recalled and newly issue cards created a new title called “Investment Advisor”.
RELEVANCE:
The importance is that investment dealers were not as much interested in following laws or rules and principles of honest disclosure, but rather finding a marketing title which might more easily convince the public to deal with their sales reps.
The sales role had not changed, and has not chanced a great deal today (2019), but what was intended was to paint a new, false veneer of professionalism over the old sales broker role. The role of a broker or investment Salesperson has not changed, however they have simply (fraudulently) been able to utilize a borrowed title from a completely separate professional role.
This bait and switch is pandemic in Canada, (and allowed by the Alberta Securities Commission) so much that investors are not even allowed to know the difference between the roles, and are never fairly informed that “selling investment products is NOT giving advice”, and “giving investment advice does not involve selling investment products”. The willful blindness of the regulator, the Alberta Securities Commission is the key thing which stands between investors, and fair, honest disclosure. They (the ASC) is a crucial component of being able to deceive millions of investors.
Once the public accepts the “bait”, and is never informed of the “switch”, they are never informed of the counterparty-relationship they are in, and they are able to be harmed by those 2% to nearly 4% figures that I accept from OSC Chairperson Maureen Jenson and U of T Professor Dr. Keith Ambactscheer.
9. Perhaps in response to disclosures such as this as well as increased media coverage, the ASC has recently begun advertising campaigns (industry-paid) which reinforce mis-information, and omission of the most essential information of importance to investors, which serves to further confuse and deceive the public. This seems highly unusual for a so-called regulator.There are many examples to list. TV, Print, social media abound with ASC self promotion, assuring the public that the ASC is protecting them from fraud, while the ASC is intentionally allowing fraud to harm to Albertans.
10. Canada’s most respected investigative journalist, Bruce Livesey, revealed the following uncomfortable truth in 2019, “You have to understand that white collar crime is legal in Canada”.FACT:
At the highest levels in Canada, police (RCMP) are working “within” the offices of Securities Commissions and I believe police are unaware that they are seeking assistance from persons who are paid and influenced by private financial interests who profit to a greater extent when laws can be ignored and laws can be exempted for those private financial interests.
SOURCE:
Joint Securities Intelligence Unit (JSIU)
The OSC and the RCMP are partners in the JSIU, which targets criminal syndicates involved in illegal market activity and fraud by organized crime groups operating in Canada. The JSIU also handles requests for information from its internal intelligence databases.
https://www.osc.gov.on.ca/en/About_our- ... _index.htmSOURCE:
Joint Serious Offences Team (JSOT)
JSOT is an enforcement partnership between the OSC, the RCMP Financial Crime program and the Ontario Provincial Police Anti-Rackets Branch. JSOT combines law enforcement policing skills with the OSC's expertise in forensic accounting and capital markets to investigate and prosecute serious violations of the law using provisions of the Securities Act (Ontario) and Criminal Code.
https://www.osc.gov.on.ca/en/About_our- ... _index.htmRELEVANCE:
When private financial interests gain unfair or unjust enrichment, they can at times count on these cooperative relationships with the RCMP IMET and other divisions, and can influence the direction of police investigations to the benefit of private financial interests. (ASC and OSC in same Canadian Securities Administrators organization across Canada)
FACT:
As high as the Financial Consumer Agency of Canada, (FCAC) persons are appointed, and funding is provided, by private financial interests whose interest is best served when there is little to no regulatory oversight.
SOURCE:
https://www.cbc.ca/news/politics/fcac-b ... -1.5091115 “Documents reveal 'cosy' relationship between the government, the banking industry and its watchdog” (CBC news)
RELEVANCE:
The private self-interests of the financial industry are powerful enough and widespread enough to infiltrate (and fund) even the FCAC (Financial Consumer Agency of Canada) sufficiently to allow private financial interests to alter and redact reports which found evidence of abuse of the public by those private financial interests.
11. In this complaint I state to the Public Interest Commissioner, “Please understand that white collar collusion allows private financial interests to ignore laws”. In a separate complaint to the Alberta Public Interest Commission I hope to shine a light into the practice of the ASC allowing private financial interests to purchase exemptions which allow then to quietly and without public notice, skirt laws and flaunt public protections.”FACT:
The mandate of the Alberta Public interest Commissioner appears well suited to this commission being the best possible arena to shine a light into them. When nothing is done by each agency, each ombudsman, each attorney general, by the Competition Bureau of Canada, and other public protective agencies, then our society declines. Some indication of the decline in society can be seen in the decline in the social and mental health of society.
12. Purchase of exemptions to Securities Act law is similar to the ability to purchase a “deferred prosecution agreement” in advance of committing a violation of the law.
Granting of exemptions to public protective laws, in nearly total public secrecy, to private financial interests, is a separate but equally revealing issue of a corrupt or captured regulator, which involves the ASC. This matter may be dealt with in a separate complaint, for simplicity and clarity.
It is simple unjust enrichment to a group of private wealthy interests, at a cost of direct harm to an entire society.===========
Appendix A:
Sep 10, 2018 - the secondary market. •. As of December 31, 2017, the amount of GoC securities outstanding was $690 billion
Plus:
Exempt markets value
Stock Market Value
Investment funds value
Corporate Bonds
Derivatives
Alternative investments
Canadian corporate debt growing and getting riskier - The Globe and ...
https://www.theglobeandmail.com/.../art ... -and-get...
Mar 29, 2019 - Canadian corporations have US$97-billion in debt, both investment grade and non-investment grade, maturing between now and 2023 – the most for any five-year span since 2009.
A $3-trillion credit market has corporate bond investors on edge ...
https://business.financialpost.com › Investing › Funds
Apr 26, 2018 - A huge swath of the corporate bond market is looking increasingly vulnerable. ... Bond bears seen losing bravado with Canada yields at 7-year high ... from Moody's Investors Service — total about $3 trillion, almost the size of …
https://www.osc.gov.on.ca/documents/en/ ... t-2014.pdfAlberta has 12% of the population of Canada and thus it may be reasonable to assume that Albertan’s might also hold 12% of the investment capital of the land. If so, Albertan’s may hold $780 Billion in investment assets.
A 2% factor of industry overcharge upon this $780 Billion dollar pool may produce $15.6 billion in additional fees and commissions to the industry which the ASC regulates.
A 3.8% financial disadvantage, as described by the U of T Pension Analysis of 2007, could thus amount to a $29.6 Billion dollar “haircut” to the Alberta public each year. It is easy to see why having ones own regulator might be a good “investment” for the financial industry when they only have to pay them about $40 million to “operate”.
Invest $40 Million to purchase the regulatory regime, obtain willful blindness and thousands of exemptions (a separate public interest abuse issue) to our laws, allowing nearly $30 Billion to be gained. Gained unjustly from the public according to the comments by OSC Chair Maureen Jensen who provided the 2% to 3% estimates, and U of T Pension studies by Prof Keith Ambachtscheer whose analysis provided the 3.8% figures.
In a speech, Maureen Jensen (OSC Chairperson) cited research from the National Bureau of Economic Research that she said suggests a combination of embedded fees and unsuitable portfolio construction has caused the investment returns of advised clients to lag passive market benchmarks by two to three per cent a year.
“The impact of these fees on investor returns is significant,” she said. “Investors experiencing this kind of outcome on a consistent basis would never break even and would, in fact, be worse off.” Maureen Jensen
In her speech, she cited research from the National Bureau of Economic Research that she said suggests a combination of embedded fees and unsuitable portfolio construction has caused the investment returns of advised clients to lag passive market benchmarks by two to three per cent a year.
“The impact of these fees on investor returns is significant,” she said. “Investors experiencing this kind of outcome on a consistent basis would never break even and would, in fact, be worse off.”
http://business.financialpost.com/news/ ... ment-fundsSeptember 27, 2016
