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Competition Bureau ignores Competition Act?

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Competition Bureau ignores Competition Act?

Postby admin » Wed Jul 06, 2005 10:40 pm

sections of the securities act that describe what registrants can call themselves legally:

In Ontario, the law is Section 34(c) of the Securities Act. In B.C, the law is Section 44(2)(e) of the Securities Act.

They say, in effect, .........Exemptions of adviser
34. Registration as an adviser is not required to be obtained by………….
(registered dealers and everyone, etc., etc)

…………..“where the performance of the service as an adviser is solely incidental to their principal business or occupation”

This means that:

(Solely incidental…………… means something that is “entirely”, or “only”, “minor”, “secondary in importance” or “casual”, or “non essential”)
Source: Merriam-Webster's Dictionary of Law, © 1996 Merriam-Webster, Inc.

My thinking leads me to believe that firms and salespeople who advertise financial advice, financial planning advice, who claim things like, “local people, solid advice, and who title themselves on their business correspondence as “advisors”. (or advisers)………………….these people are misrepresenting the fact that they are commission salespeople in advisors clothing, and that the public has some potential recourse towards being misled in this manner…………….and (by my stretch of logic)……………not only that, but they are violating the spirit, if not the letter of the Securities Act by representing themselves as advisors instead of as what they are actually registered as under the act. (and with the IDA)
http://www.osc.gov.on.ca/Dealers/Regist ... 160_1.html

this OSC website for one example provides a list of every employee in Canada as well as what their registration category is……….often different than what they represent themselves as…………

How is this illegal you ask? See the law in Canada's competition act below.

Consolidated Statutes and Regulations
Competition Act

Source: http://laws.justice.gc.ca/en/C-34/36302.html
Updated to August 31, 2004


Reviewable Matters

Misrepresentations to public
74.01 (1) A person engages in reviewable conduct who, for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever,

(a) makes a representation to the public that is false or misleading in a material respect;
Last edited by admin on Wed Dec 12, 2007 10:02 am, edited 1 time in total.
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Competition Bureau ignores Competition Act?

Postby guest » Mon Jun 20, 2005 9:58 pm

Official complaints under the competition act against the investment industry RBC in particular, and regulators of the investment industry.

Summary of some of the information sent to the competition bureau:

I recently had opportunity to ask the OSC chair, David Brown, one of the questions relating to misleading investors about investment persons titles.

Here is the question I posed and the answer received from the OSC. It is on the OSC web site inder town hall question and answers.

18. Why are investment salespeople who are officially registered as either "registered representatives", or as "salespeople", at the Securities Commission, allowed to represent themselves to the public as "investment advisors", indicating a different level of fiduciary duty to the public, when the Securities Act is clear on which titles are allowed and which are not?
· OSC answer
· The OSC registers individuals in the categories of salesperson, officer, director or partner. These categories are then further designated as trading or advising. The firm can be registered as either a mutual fund dealer, an investment dealer, or as investment counsel or portfolio manager (ICPM). The latter ICPM category is what we refer to as an adviser (spelled “er”). While advisor (spelled “or”) is widely used in the industry to represent a salesperson or representative, it is not a registration category. The OSC does not register job titles.
I feel that this answer confirmed both my suspicions: (a) that the title is not being used as it is specified in the Securities Act of Canada, and (b) that the OSC is sidestepping the issue for convenience. The public deserve better than a securities regulator that cannot simply enforce the Securities Act.

I would like to add this to my initial list of complaint of misleading and misrepresenting aspects of the investment industry which I feel your organization may be charged with protecting Canadians from.

Thanks and I look forward to full due dilligence into these charges

----- Original Message -----

To: Daoust, Carey: CAL
Cc: compbureau@cb-bc.gc.ca
Sent: Wednesday, May 25, 2005 11:31 PM
Subject: official complaints of securities practices that appear to violate portions of the competition act

Criminal Provisions of Competition Act and Misleading Advertising May Apply
1. In order to proceed on a criminal track both of the following criteria must be satisfied:
(a) there must be clear and compelling evidence suggesting that the accused knowingly or recklessly made a false or misleading representation to the public. An example of such evidence is the continuation of a practice by the accused after complaints have been made by consumers directly to the accused; and

(b) if there is clear and compelling evidence that the accused knowingly or recklessly made a false or misleading representation to the public, and this evidence is available, the Bureau must also be satisfied that criminal prosecution would be in the public interest.
2. The factors to be taken into account in making this public interest determination will vary from case to case, and may include the seriousness of the alleged offence and mitigating factors.
3. The seriousness of the alleged offence will include a consideration of:
(a) whether there was substantial harm to consumers or competitors which could not be adequately dealt with by available civil remedies;
(b) whether the deceptive practices targeted or took unfair advantage of vulnerable groups (e.g., children and seniors);
(c) whether the persons involved failed to make timely and effective attempts to remedy the adverse effects of the conduct, or whether the conduct continued after corporate officials became aware of it;
(d) whether the conduct involved a failure to comply with a previous undertaking, a promised voluntary corrective action, or a prohibition order; and
(e) whether the persons had engaged in similar conduct in the past.
4. Mitigating factors will include a consideration of:
(a) whether the consequences of a prosecution or conviction would be disproportionately harsh or oppressive; and
(b) whether the company or entity has in place an effective compliance program.
5. If, on balance, the Bureau is satisfied that the circumstances of the case warrant criminal prosecution, a recommendation may be made to the Attorney General of Canada who will make the ultimate determination of whether to proceed.

One issue I can think of that the investment industry should start to worry about is the issue of claiming no duty of care, nor fiduciary duty to clients when the relevant Securities Acts of Canada expressly state that a fiduciary duty is owed to clients of investment firms. (made a false or misleading representation to the public?)

Another misrepresentation is that of calling those persons legally registered under the Securities Act by a name that the securities act does not permit without further extensive qualifications. By way of example, although salespersons are only allowed to call themselves “salespersons” or, “registered representative”, they have since the market crash of 1987 begun changing the title of their business role in both advertising and business promotion materials to that of “investment advisor”. This forced the general public to fall into the misunderstanding that the large bank owned investment firms were in fact acting in the client best interest, when in fact, numerous industry statistics would indicate otherwise.

A third misrepresentation is to refuse to allow competitive pricing to be discussed publicly at the major firms. By way of example, although mutual fund commissions were deregulated and fully negotiable in about 1987, none of the advertising from any bank owned investment firm is found to have discussed or disclosed this fact. Further that there was in fact policy decisions made at firms to restrict or to disallow public advertising by any of it’s staff on the topic of deregulated mutual fund choices and methods of lowering investment costs to the public. This despite an industry promise to place the interests of the client “first”. This item should be of greater interest to those responsible for the "spirit and intent" of the competition act, lest they fall under the guise of passing the buck to avoid action......to avoid controversy.

A fourth misrepresentation would be the act of placing the vast majority of mutual fund client investments into the highest compensating commission paying choice of funds according to industry statistics. With fully 80% of all mutual fund sales having been placed into the fund class that compensated investment advisors at the highest possible amount, it would appear again that the industry promise to place, “you first”, is not being met.

I would suggest that the criminal provisions of the competition act be looked into closely to determine where they apply to these practices. They can be found at http://cb-bc.gc.ca/epic/internet/incb-b ... #partVII.1
There seems to be a move afoot to uncover these issues and to force full true and plain disclosure into all things. I look forward to the increased benefit to the public interest when public inquiry is truly public, and large powerful vested interests are no longer able to silence thier stories of greed and corruption.

I will try for another time to have some serious investigation into these complaints by those responsible. If this effort is met with deferral as is often the case with controversial issues, it will be referred to the current Senate Committee on Banking Trade and Commerce, which has as one of it's mandates to judge the effectiveness of Canadian regulatory enforcement.

best regards, and looking forward to helping to assist in this important work
These are my specific complaints as you requested.

----- Original Message -----
From: Daoust, Carey: CAL

In If you have a specific complain please send it to the Bureau complaint centre at compbureau@cb-bc.gc.ca and it will be handled accordingly. Thank you.

Carey L. Daoust

Carey Daoust
Telephone / Tél (403) 292-6177
Fax / Télécopieur (403) 292-6165
Competition Bureau
400 639 5th Avenue Calgary, Alberta T2P 0M9
Bureau de la concurrence 400 639 5th Avenue Calgary, Alberta T2P 0M9
Government of Canada | Gouvernement du Canada


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