IDA spends it's credibility, changes its name to IIROC

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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Mon Mar 14, 2016 4:05 am

IIROC is the ultimate SPIN MACHINE, designed to spin abuse victims in such speeds and directions so as to protect the industry, which of course is the origins and the history of IIROC. This is a copy of a letter written by an abuse victim of at least one IIROC regulated entity. The writer of this letter has watched as his 90 year old father has been victimized by no less than three firms, without help in any case from the "regulators":

Screen Shot 2016-03-14 at 5.08.52 AM.png


March 14, 2016
To: IIROC
Re: FW: Attention Mr Garry Hickey re IIROC Complaint Statistics Requested
Thanks very much for this, -
cc Susan Greenglass

I am wondering if IIROC is planning to adopt any form of rule of law, from any of your observations? I am curious to know if you or any other participant on this thread has ever had dealings with a man by the name of Rankin who is with IIROC....I feel that a statement that he made to my dad about 7 years ago is an enigmatic comment that must be followed up.

My dad had made a fully documented complaint against Canaccord in 2007 that had a complete body of evidence that Canaccord was acting in bad faith - failing to supervise a broker who was churning and putting funds in questionable securities under false pretenses and against the instructions of the client. IIROC, inexplicably, said that they would not deal with the complaint.

My dad had to go on to court and he won two judgements against Canaccord for breach of contract. IIROC has expressed no interest whatsoever in cleaning up the mess inflicted against my dad - DESPITE the fact that they - IIROC - convicted Canaccord of failing to supervise their Montreal and Kelowna offices from 2005 to 2011. This conviction came in 2013. [Approximately the same month as the court awarded my dad $27,000 leaving him still about $78,000 short including what he had to put out in legal fees.]

Two years later, after the 2007 complaint against Canaccord, my dad entered a complaint against Investors Group. My dad, in 2009, reported the fact that he had contracted for GICs with Investors Group and had been instead given seg fund wrapped mutual funds. This Rankin on the phone said to my dad
"You needn't bother sending us any evidence - we'll just deal with it the way we dealt with Canaccord."


Since 2014 we now are in possession of the evidence that Investors Group was lying when they said that my dad's memory was faulty and they would never have signed him up for GICs. This position of Investors Group proved to be false when the file was disclosed after we commenced a court action - and the records were delivered through legal channels in the summer of 2014.

The copy of the contract was sent in September of 2014 to Warren Funt of IIROC. He did not appear to be in any way interested in dealing with the fact that he had been provided evidence that the complained against company was making false claims against the complainant - and in effect obstructing justice.

The evidence from the encounters of my dad - are that IIROC is divorced from having any shred of interest in being an industry SRO that enables the industry to police itself. What IIROC is doing is insulating the industry from having to face the law, and that is now a publicly accessible fact, as has been articulated broadly from the public consultation conducted by OBSI last month.

This litany of events demonstrates corruption and incompetence of major proportions - and it means that the time has come, none too soon, that we need to consider establishing a genuine governance process that will acquaint deceptive dealers with both their obligations under common law of contract, and the criminal code.

This needs to be achievable WITHOUT having to witness the atrocities of secondary abuse and blatant impunity that has been visited upon clients like my 95 year old dad. He has had his retirement years derailed by having to put this fight as his main characteristic of his life. The regulators as they exist in this de-regulated, self-regulating environment have no interest of any kind in dealing with such matters.

Accordingly, we need to look at the broader implications of industry controlled governance tribunals that "regulate" investment. For clients of retail brokerages, these tribunals - from all the evidence I have seen in the past nine years are a failure. We do not need and we must avoid this kind of industry/investment tribunal encroaching into international trade under the Investor State Dispute Settlement process. Instead, I would suggest that the time has come to look at how a continent-wide foundation could be established that would be based on Indigenous cultural practices that are categorically against deception against the elderly. I am sending this to the Hupacasath First Nation, which has been valiantly defending rule of law with regard to trade practices between Canada and China.

A comprehensive mechanism is needed that polices the industry - not set up disingenuous mechanisms for impunity for predatory practices.

Cordially,

Alan Blanes
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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Wed Nov 05, 2014 1:28 pm

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From an elderly victim of professional, systemic and endemic financial abuse:
(after learning the hard way that regulators and self regulatory organizations (SRO's) care generally chosen and paid for by industry dealers)

you may want to put the following views of our experiences into your own descriptions.

Defective complaint investigations can be attributed to -

• The discretionary freedom enjoyed by SROs to pick and choose which complaints to NOT thoroughly investigate even when there is solid evidence of wrong doing by a Financial Advisor. (We have a response from IIROC where they say they have to choose to investigate those complaints that make the best use of their resources. This even when there is an alleged case of fraudulent misrepresentation. Also, it took 10-months for the OBSI to respond to our Appeal for them to further investigate our case. It required that we had to elevate our request the highest executive level before we received a response. )

• Myopic lack of competency by the SRO staff to perform a true in-depth review of an investors complaint. This has been demonstrated with the defective rationalizations for rejecting an investors complaint.

• The SROs not recognizing the damage of the deception when Advisors omit (non-disclosure) detrimental investment influencing information before processing an investment transaction.

• There should be a legal requirement that Advisors present Prospectuses to the investor before consummating an investment transaction. All investment influencing information should be highlighted. (presently the Law says that it is the Dealer who has the responsibility to deliver a Prospectus before or after a transaction - With our experience, to our detriment, this latter did not happen several times. When we brought this non-delivery to IIROC's attention, all that they could come up with was that they were quite satisfied with their audit of the Dealers processes and practices - there is nothing in the law about IIROC auditing the Dealers processes - the Law specifically says the Prospectuses must be delivered by the Dealer. There are also substantial financial penalties for non-delivery of the Prospectuses - one has to wonder if this ever happens. Enforcement, enforcement, enforcement, enforcement.)

P
=======

And later the same day he updated his comments with this:

something triggered me to send this email. I just saw a truism that well describes a phase of life we have gone through after placing our trust and life savings RRIFs in the hands of a TD Waterhouse PIA Financial Advisor 9-years ago.

That truism is "Experience is something you don't get until just after you need it".

I believe this truism is one that most seniors are faced with that needs to be brought to the forefront to show Regulators that there needs to be preemptive discipline DISCLOSURE Regulations spelled out as 1, 2, 3, etc. that are obligations for Dealers and Advisors to investors.

I know you prefer to see an abbreviated explanation of an issue, however, to illustrate my point, the attached documented 6-page March 22nd 2011 "experience" complaint we sent to BIG BANK NAME REMOVED is something that would not have not been necessary if the Dealer had provided us with a 1, 2, 3, etc., list of Regulatory obligations of the Advisor to the investor.

It has taken us those 3-years since March 22nd 2011 to gain the "experience" to discover what is wrong with the permissive investment industry system and the SROs.


P

===========

Sadly the world has changed enough in my time so that financial dealers are now seen as generally NOT trustworthy, with the odd exception to the rule, whereas just one generation ago the opposite was true. (regulators also generally captured and co-opted to be willfully blind to any serious or systemic public infractions)
Attachments
deception.jpg
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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Wed Aug 20, 2014 9:48 pm

Next name change for IIROC will be IISOC…..(if there is honesty involved:)

This article about FINRA the USA's broker self regulator group illustrates very well the type of behaviours that industry participants have always experienced with IIROC.

Those I talk to tell of an agency which talks a good game of regulation and protection of the public, as well as the industry reputation, but when push comes to shove, it is industry protection and damage control and damn the rest.

In this NY Times article about a US whistleblower, we see how the self regulator blew off his complaint and did not act. That is basically what our sock puppets do to honest and ethical market participants. There is just too much money to be made the old fashioned way, to bother with "fairness, honesty and good faith".

Screen Shot 2014-08-20 at 10.40.39 PM.png


The Man Who Blew the Whistle
AUG. 18, 2014


Joe Nocera

Late last month, the Securities and Exchange Commission issued an oblique press release announcing that it was awarding an unnamed whistle-blower $400,000 for helping expose a financial fraud at an unnamed company. The money was the latest whistle-blower award — there have been 13 so far — paid as part of the Dodd-Frank financial reform law, which includes both protections for whistle-blowers and financial awards when their information leads to fines of more than $1 million.

The law also prevents the S.E.C. from doing anything to publicly identify the whistle-blowers — hence, the circumspect press release. But through a mutual friend, I discovered the identity of this particular whistle-blower, who, it turned out, was willing to tell his story.

His name is Bill Lloyd. He is 56 years old, and he spent 22 years as an agent for MassMutual Financial Group, the insurance company based in Springfield, Mass. Although companies often label whistle-blowers as disgruntled employees, Lloyd didn’t fit that category. On the contrary, he liked working for MassMutual, and he was a high performer. He also is a straight arrow — “a square,” said the mutual friend who introduced us — who cares about his customers; when faced with a situation where his customers were likely to get ripped off, he couldn’t look the other way.

In September 2007, at a time when money was gushing into variable annuities, MassMutual added two income guarantees to make a few of its annuity products especially attractive to investors. Called Guaranteed Income Benefit Plus 6 and Guaranteed Income Benefit Plus 5, they guaranteed that the annuity income stream would grow to a predetermined cap regardless of how the investment itself performed.

Then, upon retirement, the investors had the right to take 6 percent (or 5 percent, depending on the product) of the cap for as long as they wanted or until it ran out of money, and still be able, at some point, to annuitize it. It is complicated, but the point is that thanks to the guarantee, the money was never supposed to run out. That is what the prospectus said, and it is what those in the sales force, made up of people like Lloyd, were taught to sell to customers. It wasn’t long before investors had put $2.5 billion into the products.

The following July, Lloyd — and a handful of others in the sales force — discovered, to their horror, that the guarantee didn’t work as advertised. In fact, because of the market’s fall, it was a near-certainty that thousands of customers were going to run through the income stream within seven or eight years of withdrawing money.

Lloyd did not immediately run to the S.E.C. Rather, he dug in at MassMutual and, as the S.E.C. press release put it, did “everything feasible to correct the issue internally.” For a while, he thought he was going to have success, but, at a certain point, someone stole the files he had put together on the matter and turned them over to the Financial Industry Regulatory Authority, which is the industry’s self-regulatory body. It was only when the regulatory authority failed to act that his lawyer told him about the whistle-blower provisions in Dodd-Frank and he went to the S.E.C., which began its own investigation.

The Dodd-Frank law has provisions intended to protect whistle-blowers from retaliation, but there are certain aspects of being a whistle-blower that it can’t do anything about. “People started treating me like a leper,” recalls Lloyd. “They would see me coming and turn around and walk in the other direction.” Convinced that the company was laying the groundwork to fire him, he quit in April 2011, a move that cost him both clients and money. (Lloyd has since found employment with another financial institution. For its part, MassMutual says only that “we are pleased to have resolved this matter with the S.E.C.”)


Mr. Nocera's rah-rah approach, praising the Dodd-Frank legislation for creating a reward for whistle-blowers, is too uncritical. The facts...

In November 2012, MassMutual agreed to pay a $1.6 million fine; Lloyd’s $400,000 award is 25 percent of that. It was a slap on the wrist, but more important, the company agreed to lift the cap. This will cost MassMutual a lot more, but it will protect the investors who put their money — and their retirement hopes — on MassMutual’s guarantees. Thanks to Lloyd, the company has fixed the defect without a single investor losing a penny.

Ever since the passage of Dodd-Frank reform, the financial industry has been none too happy about the whistle-blower provisions, and there have been rumblings that congressional Republicans might try to roll back some of it. The S.E.C. now has an Office of the Whistleblower, and a website where potential whistle-blowers can report fraud. It has given out $16 million in whistle-blower awards.

There are, without question, parts of the Dodd-Frank law that are problematic, not least the provisions dealing with the Too Big to Fail institutions.

But the whistle-blower provisions? They are working as intended. That is the moral of Bill Lloyd’s story.

http://www.nytimes.com/2014/08/19/opini ... istle.html
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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Mon Aug 11, 2014 8:25 am

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click once to enlarge, twice to zoom in


IIROC "self" regulation turns a blind eye to misrepresentation of 150,000 persons who are licensed and registered in a category legally titled "dealing representative" (formerly called "salesperson" until Sept 2009)…….and who wish to avoid the label of salesperson and instead use a title of "advisor".

(adviser is a regulated title, and is both clear and unclear whether they are two spelling versions of the same thing (which would be misrepresentation) or two totally different titles. (either way IIROC lets members who do not have the registration and HAVE another registration use whichever title they prefer for marketing and trust building. (Fair, honest, good faith?)

=========

From IIROC Rules Notice Guidance Note Dealer Member Rules
Use of Business Titles and Financial Designations

Joe Yassi
Vice President, Business Conduct Compliance 416-943-6903
jyassi@iiroc.ca
Use of Business Titles and Financial Designations
Internal Audit Legal and Compliance Operations Registration Research Retail Senior Management Training
14-0073 March 24, 2014

No IIROC Approved Person should hold his or herself out to the public in any manner, including without limitation, by the use of a business title or designation of qualifications or professional experience that deceives or misleads, or could reasonably be expected to deceive or mislead, a client or any other person as to the IIROC approval they hold, their proficiency or qualifications. (fair, honest, good faith)

1 “Registered Representative” refers to the name of an individual IIROC approval category. An individual approved by IIROC to act as a Registered Representative is permitted to trade and provide advice to retail customers with respect to securities.
2 “Investment Representative” refers to the name of an individual IIROC approval category. An individual approved by IIROC to act as an Investment Representative is permitted to trade in securities for retail customers. An Investment Representative is not permitted, however, to provide investment advice.
3 The term “financial designation” is used generically throughout this notice to include credentials that are used to indicate that the individual has specialized knowledge or expertise in an area gained through education and/or experience.

http://www.iiroc.ca/Documents/2014/3254 ... b67_en.pdf
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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Fri Jul 25, 2014 12:35 pm

An good example for Jane Jacobs book "Dark Age Ahead"

Jargon, obfuscation, distraction, diversion, spin, and misinformation………3 minutes


Screen Shot 2014-07-25 at 1.21.54 PM.png

[url]http://www.investmentexecutive.com/-/cifps-2014-the-evolution-of-the-investment-industry-and-professional-standards
[/url]


3 minutes (from a calm and pleasant spokesperson earning in the neighbourhood of 3/4 of a million dollars……speaking on behalf of her "self" regulatory organization) whereby 3 or more items of greatest importance to investors financial health are cleverly ignored, obscured, glossed over and obfuscated.

For those for whom 3 minutes is to much time (and I do not blame you:) to spend listening to investment industry marketing spin and propaganda, I have summarized the deceit below:

1) We are never going to inform consumers that our so-called "advisors" do not carry an "adviser" nor even an "advisor" licence, nor the proper government registration to be called either. (we will mislead you, which is dishonest) (CSA National Registration Search, available online, is the national registration search that contains the names of all registrants (individuals and firms) in Canada) More at footnote #1 below.

2) We are never going to be honest with consumers and tell them we do NOT even have to place their financial interests above those of our sponsoring dealers. (we will not be fair nor honest with you, whilst telling you that "we will be fair and honest"…….:) (search suitability standard vs fiduciary standard online) More at footnote #2 below.

3) We will do everything to proclaim the highest moral ground on investment dealer related matters, whilst supporting practices which obfuscate doing intentional harm to the the financial interests of Canadian investors…….for greater profits for our dealer/members. (we will lie) More at footnote #3 below.

4) We exist almost solely to support a myth…….a myth that our investment dealer/members, armed with commission-hungry salespeople and incentives to sell investment products or "investment-like" "products"……. are trusted, independently regulated and supervised, licensed and registered professionals, ……...who serve investors with an undivided loyalty to each one of their customers. Nothing could be further from reality.

I could go on, but what is the point? Until we in Canada have a willingness for open and honest debate, there is little to be gained. That day has not yet arrived, but it is coming. Until then, I bring this up to warn and protect consumers financial health. The so-called regulators are part of "gaming" the system to cheat investors.

For a bit of history and backstory of how this occurred in Canada, please visit the decade old but historically interesting site http://www.investorvoice.ca and click on the tab for IIROC, IDA and MRS.

(for a few thousand more examples, some solutions and free personal self defence against Investment Industry Sock Puppets (IISOC) please visit http://www.investoradvocates.ca )

[url]
http://www.investmentexecutive.com/-/ci ... -standards[/url]


footnote #1
CSA license and registration search for Canadian investment sellers:
https://www.securities-administrators.ca/nrs/nrsearch.aspx?id=850

FINRA (for USA broker/advisor) license check:
https://www.google.ca/search?client=safari&rls=en&q=finra+brokercheck+search&ie=UTF-8&oe=UTF-8&gfe_rd=cr&ei=NrDSU4_7AcnEoATD0oGQBw

CSA guide to understanding/defining what your license and registration category really means:
[url][url]https://www.securities-administrators.ca/uploadedFiles/General/pdfs/UnderstandingRegistration_EN.pdf[/url][/url]

footnote #2

88 words from SEC chairman Mary Jo White to explain difference between those in the broker role, verses the fiduciary adviser role:
http://youtu.be/TqBSiR6VwP4?list=UUy8dpTRZHEz-0JBa_l0w7AQ
transcript of SEC speech" Protecting the Retail Investor, Chair Mary Jo White
Consumer Federation of America, 2014 Consumer Assembly, March 21, 2014

New York Times, Trusted Adviser or Stock Pusher?:
http://www.nytimes.com/2010/03/04/your-money/brokerage-and-bank-accounts/04advisers.html?ref=business&_r=4&

Wall Street Journal, Should You Go to an Adviser or an Advisor?:
http://blogs.wsj.com/totalreturn/2012/07/05/should-you-go-to-an-adviser-or-an-advisor/

New York Times, Brokers Fight Rule to Favor Best Interests of Customers:
http://www.nytimes.com/2014/06/13/your-money/rule-to-make-brokers-act-in-clients-interest-still-pending-after-4-years.html?smid=tw-share&_r=1

Financial Times of London: ‘Trust me, I am a financial adviser’ is not good enough:
[url]http://www.ft.com/intl/cms/s/0/21b52478-068c-11e4-ba32-00144feab7de.html?siteedition=intl#axzz37J0tdqY7
[/url]

Jin Choi, Ph.D. Is Your Financial Advisor Deceiving You?:
http://www.moneygeek.ca/weblog/2014/06/05/your-financial-advisor-deceiving-you/

Forbes, Investors Misled By Brokers Masquerading As Fiduciaries:
http://www.forbes.com/2010/08/09/cfa-fiduciary-duty-personal-finance-broker-suitability.html

footnotes #3 & #4

Visit the decade old but historically relevant site http://www.investorvoice.caand click on the tab for IIROC, IDA and MRS. (it will provide some clarity and background to organizations like IIROC and IISOC)

Investor Advocates topics on tricks of the investment industry and "self" regulator organizations (IDA, IIROC, IISOC)
http://www.investoradvocates.ca

945739_194750250673630_2100776849_n.png


CIFPs 2014: The evolution of the investment industry and professional standards
Interview of Susan Wolburgh Jenah | June 09, 2014
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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Sat Jun 28, 2014 3:35 pm

Screen Shot 2013-12-14 at 7.20.03 PM.png
These are the seven "independent" directors at IIROC, the investment industry self regulatory player:

(the ones IIROC's Susan Wolberg Jenah claims keep IIROC from "regulatory capture:) The other seven are from the investment industry....

IIROC's "Independent" (non industry?) Directors

Mariánne Harris former Managing director of Bank of America Merrill Lynch Canada.
Mike Gagne former CEO of Winnipeg Commodity Exchange
Brian Heidecker former board member of ATB Financial.
Jerry O'Mahoney ,Principal of Tralee Capital Markets limited.
James Donegan Pres. of OMERS Capital markets
Edward Iacobucci director ,Dominion of Canada General insurance Company.
Catherine Smith formerly of CIBC Wealth management.

All good people no doubt but do they represent Main Street? Why not include small investors, CARP, FAIR , SIPA, investor advocates ..to get a better cross section of the investing public and the issues they face?

(advocate update Aug 18th, 2014)

FINRA (industry self regulatory body in the US, for brokers) appoints IIROC Pres as "PUBLIC" director. Why are all the "public" regulatory chairs filled by the longest standing cronies in the business…..:)

http://business.financialpost.com/2014/ ... directors/

Screen Shot 2014-08-18 at 9.11.45 PM.png


Susan Wolburgh Jenah, who led the merger that created the Investment Industry Regulatory Organization of Canada and then ran that organization for six years, has been appointed as a public governor of Wall Street’s self-funded regulator.

Governors of the Financial Industry Regulatory Authority (FINRA) are appointed or elected to three-year terms……..continued at Financial Post link
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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Mon Nov 11, 2013 10:08 am

A very clear and succinct followup to the previous posting:

Larry, another abbreviated 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 IIROC are not interested in pursuing.

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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Sun Nov 10, 2013 11:06 pm

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Here is some back and forth between an abused, elderly investment client, with some sound questions, and IIROC, with "gamesman-ship" answers. Shame on them for playing games and for what appears to be obvious wilful blindness to investor victimization:

"Larry, here is the fuel for your fire. Here is the official IIROC response to the question I raised this past May regarding misleading designation titles used by -------- PIA Representatives. Look at the glib "kiss-off" when IIROC says,

" Please note that the term “Investment Advisor” is commonly used within the investment industry and its use by Mr.-------, in and of itself, does not amount to a breach of IIROC’s Dealer Member Rules. IIROC recently published for public comment a guidance notice that identifies supervisory best practices that would improve transparency regarding the use of business titles and financial designations and associated services offered by registrants of IIROC regulated firm".

IIROC sees nothing wrong in the "Sales Representative" using the title qualification deception of "Investment Advisor". Why is a "Sales Representative" allowed to deceptively masquerade as an "Advisor" to get the confidence and trust of an unsuspecting small investor ? How can the "Investment Advisor" be allowed to mislead the inexperienced small investor when the "Advisor" is really there to make a sale in order to reap a commission. This is even worse when the "Advisor" recommends that a couple of 70 and 72-year-olds purchase fraudulently misrepresented performance mutual funds for RRIFs on a DSC basis. This means that the "Advisor" was able to immediately pick up a 5% "Sales" commission. It is even more disturbing and pervasive when the "Advisor" knows that the investments must immediately start making RRIF payouts to those two 70-year-olds.

IIROC is supposed to be the most important body that we consider...... are masquerading as a small investor protector. Then they have the nerve to use the softsoap and permit this deception to continue with the assurance " Please note that the term “Investment Advisor” is commonly used within the investment industry" Here IIROC says everybody is doing it so that makes it OK.



=========================================================

From: Susan Farrell [mailto:SFarrell@IIROC.CA]
Sent: Tuesday, May 14, 2013 12:24 PM
To: --------
Subject: RE: IIROC File # 0467/Jun/11- IRROC Title Designation Regulations & False Promo Adevertising

Dear Mr.------------ ,

As previously explained, the age of the activity in question is a significant consideration when determining whether to pursue further action in all cases. In this particular instance, you have asked us to review activity dating back to 2004 – namely that-------- provided misleading promotional materials to you 9 years ago to elicit your attendance at a seminar for ----------mutual funds. You have also raised concerns regarding Mr. --------usiness title of “Investment Advisor”. Please note that the term “Investment Advisor” is commonly used within the investment industry and its use by Mr. -------, in and of itself, does not amount to a breach of IIROC’s Dealer Member Rules. IIROC recently published for public comment a guidance notice that identifies supervisory best practices that would improve transparency regarding the use of business titles and financial designations and associated services offered by registrants of IIROC regulated firms.

Mr. --------, IIROC will not be reopening our file to further review this matter for all of the reasons previously advised, and specific to the Brandes materials, the age of the activity.

Sincerely,

Susan Farrell | Director, Case Assessment, Complaints & Inquiries | Investment Industry Regulatory Organization of Canada | PH: 403.260.5669 | Fax: 403.234.0861 | sfarrell@iiroc.ca
IIROC: Protecting Investors and Fostering Fair and Efficient Capital Markets across Canada.

*Please note, as of November 26, 2012, the Calgary IIROC office’s new address is:
SUITE 800
BOW VALLEY SQUARE 3
255 – 5TH AVENUE S.W.
CALGARY, AB T2P 3G6



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From: -----------
Sent: Monday, May 13, 2013 2:16 PM
To: Susan Farrell
Cc:
Subject: IIROC File # 0467/Jun/11- IRROC Title Designation Regulations & False Promo Adevertising

Dear Ms Farrell,
On April 30th, we had brought up two newly discovered issues which we had previously not made as part of our original complaint to IIROC. Those issues were -

1. The misleading titles used by the --------------Representatives when soliciting our business. In the case of both--------- Representatives, they presented themselves as "Investment Advisors". These titles were on their business cards and as they signed Proposals. The connotation being that we could trust them to be giving us "advice" that would be in our best interest.

However, both our -----------Representatives were only registered and designated as a "Sales Representatives" or "Registered Representatives", when they influenced our investment decisions between 2004 through to September 2009. In other words the IIROC and OSC classified these individuals as "sales" persons who were out to sell investment products, whereas the investor is left with the impression that it is "Advice" he or she is getting, and the purchase of investments comes after due diligence "Advice" by the ----------- Representatives.

On this basis, we ask IIROC to pass judgment on this use of misleading titles in order for the Investment Dealer and its Representative to gain the trust of the unsuspecting and unsophisticated investor.

2. False investment performance claims used in sales promotional material by the ----------- "Investment Advisor Representative" in order to convince the investor to invest in ----------- Mutual Funds. Please refer to the details included in the attached Complaint filed with the OSC against ------- in this connection. We are only asking IIROC to look at the ---------- and the -------- Representatives participation in this false and misleading promotional advertising, not the Brandes participation. (we understand that falls under the OSC direct jurisdiction)

Kindly let us know as to whether or not you will be dealing with these two additional levels of complaint.

Regards

(advocate comment: IIROC's rules require all market participants to deal with the public in a "fair, honest and good faith" manner at all times. Fooling the customer into believing that a licensed commission salesperson may actually be a trusted professional "advisor" does not seem to fit within the bounds of "fair, honest and good faith". Shame on IIROC for being wilfully blind to what appears fraudulent.)
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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Fri Oct 04, 2013 4:45 pm

http://www.thelitigator.ca/2004/07/the- ... investors/

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COMMERCIAL LITIGATION
The Investment Dealers’ Association Found Not To Owe A Duty Of Care To Disgruntled Investors
Angela Yadev
Affleck Greene McMurtry LLP
Commercial Litigation | Securities Litigation July 29th, 2004
Morgis v. Thomson Kernaghan & Co. (2003), 65 O.R. (3d) 321 (C.A.)

In a recent decision, Ontario’s highest Court considered whether liability can be imposed on the Investment Dealers Association of Canada (the “IDA”) for the economic losses sustained by investors in their margin accounts with an IDA member.

As a result of sustaining substantial losses in their margin accounts, several investors sued their investment dealer, Thomson Kernaghan & Co. (“Thomson”). Thomson’s IDA membership was subsequently suspended, and it was petitioned into bankruptcy. The investors then sought to add the IDA and certain IDA directors and officers as defendants. The IDA is a voluntary organization that is recognized by statute as being responsible for regulating the conduct of its member investment firms. In this case, individual investors claimed that the IDA owed them a duty of care to ensure that Thomson complied with the IDA’s rules, regulations and bylaws.

The Court of Appeal found that the IDA did not owe a duty of care to the investors because the IDA’s obligation to protect investors generally and the public in general, does not extend to any particular investor. As the Court found, imposing such a duty on the IDA, it would indirectly create “an insurance scheme for dissatisfied investors who have paid the IDA nothing.” Because the IDA owed no duty to the individual plaintiffs, their action was dismissed.

This is a significant decision because it expands upon earlier Supreme Court of Canada decisions establishing that statutory regulators (ie. the Law Society of Upper Canada and the Registrar of Mortgage Brokers) owe no duty of care to individual members of the public. Although the IDA is not a statutory body, it is cloaked with similar responsibilities to statutory regulators; and therefore, owes a duty of care only to the public as a whole – not to individual investors. In the future, be aware that other quasi-statutory bodies may also be found to be exempt from negligence claims by individuals.


Published July 29, 2004
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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Mon May 13, 2013 3:21 pm

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IIROC File # 0467/Jun/11- IRROC Title Designation Regulations
To: Susan Farrell IIROC

Dear Ms Farrell, I am now out of the hospital and recuperating, although in some discomfort to get too active at the moment.

On April 30th, we had brought up two newly discovered issues which we had previously not made as part of our original complaint to IIROC. Those issues were -

1. The misleading titles used by the XXXXX Representatives when soliciting our business. In the case of both XXXXX Representatives, they presented themselves as "Investment Advisors". These titles were on their business cards and as they signed Proposals. The connotation being that we could trust them to be giving us "advice" that would be in our best interest.

However, both our XXXXX Representatives were only registered and designated as a "Sales Representatives" or "Registered Representatives", when they influenced our investment decisions between 2004 through to September 2009. In other words the IIROC and OSC classified these individuals as "sales" persons who were out to sell investment products, whereas the investor is left with the impression that it is "Advice" he or she is getting, and the purchase of investments comes after due diligence "Advice" by the XXXXX Representatives.

On this basis, we ask IIROC to pass judgment on this use of misleading titles in order for the Investment Dealer and its Representative to gain the trust of the unsuspecting and unsophisticated investor.

2. False investment performance claims used in sales promotional material by the XXXXX "Investment Advisor Representative" in order to convince the investor to invest in XXXXX Mutual Funds. Please refer to the details included in the attached Complaint filed with the OSC in this connection. We are only asking IIROC to look at the XXXXX and the XXXXX Representatives participation in this false and misleading promotional advertising.

Kindly let us know as to whether or not you will be dealing with these two additional levels of complaint.

Regards
Peter W

(advocate prediction: IIROC is going to choke on this one. They will dismiss, deflect, defer, delay and deny, but they will not act to protect Canadians from intentional license misrepresentation)

Forgive the image from a US Senator, but her words say it all about Canadian investment "self" regulators as well.
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please view this video for further: http://youtu.be/KH6XMXlfdBw
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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Mon Jan 28, 2013 9:57 am

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......a victim of professional financial abuse by IIROC supervised persons writes this excellent submission to IIROC:
Call for Submissions IIROC Notice 13-0005 – Rules Notice – Request for Comments – Dealer Member Rules - Use of Business Titles and Financial Designations

To whom it may concern

Use of Business Titles and Financial Designations.

I write as an individual investor in response to your open call for comments on the Use of Business Titles and Financial Designations with the following observations and concerns:

IRROC appears to already have clear regulations that speak to the use of Business titles and Financial Designations from 29.7:
Misleading Trade Name
No Dealer Member or Approved Person shall use any business or trade or style name that is deceptive, misleading or likely to deceive or mislead the public.

Prohibition on use of Trade Name
The Corporation may prohibit a Dealer Member or Approved Person from using any business or trade or style name in a manner that is contrary to the provisions of this rule or is objectionable or contrary to the public interest.

In this country, “baking chip” companies cannot even label their product chocolate chips if their product doesn’t contain chocolate, and ice cream without cream can only be labeled “frozen dessert.” I am confused and disappointed that you are calling for comments when you clearly have regulations which address how to represent your licenced members, a product with far more implications than our sundries. Investors who do not have the skills or knowledge to invest by themselves choose to trust an IIROC licenced representative because of the implied trust your regulatory body provides. These deceptive practices prey on investors with a lack of investment knowledge and increases their vulnerabily.

When they trust an IIROC licenced representative, they expect a higher level of accountability than someone who is unlicenced, regardless of the IIROC business title or financial designation.
They trust that IIROC regulations will be followed. They expect that their accounts will be supervised and monitored for compliance with IIROC regulations. If at anytime, there is a lack of compliance, they expect that the firm and the individual representative will be held accountable for any damages.

As such, an IIROC licence in itself may suggest a fiduciary duty to investors, which IIROC may need to address by holding its registrants to a higher level of care. Anything less, and there is no reason to use an IIROC licenced representative or firm.

An area of additional concern that has not been addressed in your report is the use of misleading Headings in the common phone book. In the “Yellow Pages” my local area, one can find IIROC investment firms under the heading “Financial Planning Consultants,” which have IIROC representatives who are not Certified Financial Planners. This heading is then repeated by several internet search descriptors. This is probably the case throughout many “Yellow Pages.” The choice of IIROC firms using this heading who do not have any certified financial planners may suggest a fiduciary duty to investors who refer to this instead of the other available heading, “Investment Dealers.”

Investors are looking for investment firms and representatives they can trust. They are also looking for a regulatory board that backs up its regulations. Without this regulation, investors will become more independent and turn to ETF’s and self-directed investment solutions.
If investors cannot receive a trusted duty of care in their best interest from IIROC regulated firms, the investment advice industry will suffer.
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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Mon Nov 21, 2011 11:09 am

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Re Budnik 2011 IIROC 55

Here's an IIROC case for the record books .For the period from July 2, 2003 to September 15, 2006, Nicholas Budnik ( the Respondent ) traded in income trust securities, without regard to Client A’s investment objectives for the purpose of generating brokerage commissions;.

Client A’, an 87 year old woman had a clearly stated investment objective -50% income and 50% moderate growth in order to provide for her needs commensurate with her age; An analysis of the trades effected in Client A’s accounts for the period from July 2003 to September 2006 has shown that the Respondent made approximately 1,183 trades. These trades correspond to an average rotation rate of approximately 10 times annually. A sample of the retention period for the income trust units from July to Sept. 2004 shows an average of 4.71 days. Most of the transactions were done through Client A’s margin account and formed a substantial part of her portfolio.

In aggregate, the Respondent made cumulative purchases worth approximately $26,000,000 for the period of 2003 to 2006, for a portfolio having an average value of $670,000 over that period; . During the relevant period, Budnik received approximately $77,038 in commission payable by the issuers of the income trust IPO's. In addition, Client A paid approximately $42,500 in commissions. In Sept. 2006, Client A informed the Respondent that she wished to close all her accounts with Canaccord. The Respondent proceeded to liquidate, without Client A’s authorization, substantially all of the securities held in her portfolio;.On or about April 11, 2007, Client A filed a complaint with Canaccord .In her complaint, the client, who was 90 years of age at that time, informed Canaccord that she had absolute confidence in Budnik and that she did not question him. She erroneously believed he was acting in her best interest and did not put her capital at significant risk . On or about Dec. 15, 2008, the Respondent agreed to indemnify Client A by paying her an amount equal to $42,500 representing the commissions paid by the Client;

On or about February 13, 2008, Mr. Budnik was dismissed from Canaccord

He wasn't out of action long- from Feb. 2008 to August 2011, Budnik had been employed by Wellington West Capital Inc. as a registered retail representative .
Here's the modest price paid for his assault on this trusting senior::
(a) a fine in the amount of $50,000 ,(,b) disgorgement of profits received in the amount of $77,000 , (c) re-write the Conduct and Practices Handbook (CPH) examination within a period of 12 months from the acceptance of the present settlement; (d) suspension from registration in any capacity with IIROC for a period 3 months, (e) Upon being re-registered with IIROC, he will be subject to strict supervision for a period of 18 months, followed by close supervision for an additional period of 6 months and (f) pay investigation costs to IIROC in the sum of $3,000;
Now , what's wrong with this picture? A lot. How did the financial assault happen under the noses of Canaccord supervisors for over 3 years.? Before he left Canaccord ,Budnik was responsible for investments worth between $50 million and $55 million. Did anyone assess the tax liabilities incurred by Client A resulting from all the trading? Why did she need a margin account? Why did it take Canaccord from April 2007 to Feb.. 2008 to deal with Mr. Budnik? Why did he get hired by Wellington West given his Canaccord wrongdoings?

How can IIROC explain the wristslap penalty given that the elderly woman was sold unsuitable investments, her account viciously churned and 97 trades made without her knowledge or consent ? Does anyone really believe this settlement will deter others? [“ General deterrence will follow from an appropriate decision and deter others from engaging in similar misconduct and improve overall business standards in the securities industry”] . Why did it take until Sept.8, 2011 for a Hearing Panel to get around to dealing with this nasty case? Why isn't Canaccord held accountable for the abusive actions of its employee?
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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Thu Nov 10, 2011 12:49 am

49 Globe Mutual Special_046.jpg
( A good read prior to you putting too many eggs in any basket within a Canadian investment dealer. Here are some of the tricks, trips and traps that they use against their customers when they do not deliver what they promised. Key points or areas of common abuse are in red by myself) Thanks to http://www.canadianfundwatch.com for this valuable summary

Kenmar Associates Investor Education and Protection

IIROC dealer complaint handling- Kenmar experiences Nov. 10, 2011

As IIROC will be making a focussed review of how member firms handle investor complaints, we thought you might be interested in some of our experiences as Intervenor. A total of 61 complaints were analyzed. over the past 15 months We start with this generic rebuttal/rejection of claim in use by multiple firms.

“As you know, our firm mails account statements to its clients on a quarterly basis, as well as for months in which activity occurs, wherein the current value of investments is reflected. Trade confirmations are also issued shortly after each trade that occurs in an account. If at any time Ms. X’s intentions were not followed as you have suggested, we believe the seriousness of such a situation would have prompted notice to Branch Management for timely resolution. We have no record of any expressed dissatisfaction until we received the letter of complaint and claim .We suggest that investment advice is intended to provide a client with the guidance necessary to make a reasoned and informed decisions but it is not intended to substitute for the client’s own decision making.”

- actual text of a IIROC dealer letter to Ms. X’s legal counsel This type of boilerplate letter is often successful at dissuading a client from pursuing a valid complaint. We regard this practice as fundamentally unfair to trusting retail investors.

Introduction

When financially unsophisticated investors meet commission or quota- driven dealers, a toxic mixture is created. So, it's quite natural that problems will develop due to greed,or misrepresentation,. This is where an effective investor complaint handling process can help clients recover undue losses. Based on our limited sample, we believe that newly intrduced IIROC complaint handling rules have not yet improved the lot of retail complainants. It appears additional training and a culture change is required.

While formal mechanisms such as the International Standards Organizations’ (ISO) complaint-handling standard, ISO 10002, Quality Management - Customer Satisfaction - Guidelines for complaints handling in organizations, will ultimately play an important role, many financial institutions adopted their own practices that guide the complaint- handling function in accordance with IIROC complaint handling rule 2500B.

Our observation is that most investors do not complain because they do not believe they have any rights, do not understand the complaint process, are embarrassed by the losses or do not believe they have a chance of getting money back. Some just don't want the hassle and decide to lick their wounds, often discouraged by the strong initial response from the dealer . For this reason, we feel the actual number of valid complaints is much higher than stats indicate.

Kenmar Associates Investor education and Protection

All industry manuals, training and codes of conduct implore advisors that they owe a duty of care to their clients...anything less would contradict millions of dollars worth of industry advertising on the topic. Yet,there are numerous examples of claimants that have received a letter from the firm saying that they have a bad claim, and the case is ultimately settled for a large sum of money because it was in fact a very valid claim. Of the 61 cases we got involved in, there is not one example of the firm fessing up to a problem. This is discouraging since we have been successful in obtaining restitution in nearly all the cases, albeit after some pretty close quarter jostling. There is no doubt in our mind that our intervention was the primary driven for settlements. That is not saying much for the dealers. complaint handling practices .

Some background

Here’s an interesting actual case that exhibits a variety of investor abuses. Ms X is a 78- year-old widow, functionally blind, speaks English poorly and has a grade school education. Further, the advisor knew she was in Florida from Nov-March and did not have access to her mail. Several letters are on file stating she does not understand the confusing statements, the fees charged by the fund companies and can’t figure out if she’s losing or making money. In fact she lost about half her RRIF within 2 years, her advisor never advised her of the risks involved and he knew that she was heavily dependent on RRIF withdrawals to pay her rent, clothe herself and eat. She was advised to put 88% of her portfolio in equity growth funds for her RRIF; all purchased on a DSC basis and all high MER proprietary funds with lucrative trailer commissions. Her trust in the advisor was completely abused but the brokerage firm thinks all is well and won’t settle the $175,000 claim without a fight.

The standard of care necessary to consider a negligence action are largely based upon the Know-your-client rule which requires that a dealer rep ascertain material information about a client's financial circumstances and investment objectives and he is required to make suitable investment recommendations in light of this information. The courts rely upon the codification of this obligation which is found in Regulation 1300 of the IIROC . As noted below, the KYC system appears to be broken.

The KYC's seem to be loosely managed at most firms. We have encountered:

1. The NAAF does not collect sufficient information to assess suitability of particular products or investment strategies of the Member. For example, if selling exempt securities under the accredited investor exemption, the NAAF should include income and net worth information specific enough to demonstrate compliance with the exemption conditions.
2. Where ranges are used, at times they are too broad. For example, long
term time horizons defined as greater than 3 years and the top category for net worth is greater than $100,000;
3. KYC choices on the NAAF are ambiguous. For example, time horizon of “not applicable” is meaningless
4. For joint accounts, , the KYC information collected for each account holder conflicts and it is not clear what KYC information relates to what account; There should be one KYC/account.
5. KYC information is inconsistent. For example, a client with a speculative investment objective wanting capital preservation.
6. Minimal information on the client's ability to absorb loss; this is especially important for retirees and pensioners..Actually, loss capacity is not a theme on NAAF's but loss tolerance is. They are not the same.
Software exists to cleanse to perform sanity checks on data entries but it does not appear to be widely deployed.

In addition, as noted by an MFDA KYC sweep, dealers record risk tolerance either as a number or range of numbers without providing explanation of what the number means or how it was derived. e.g. a NAAF may indicate medium risk means a value of “4 to 6” and a client may be given a numerical value of “4”. There may be no information or documentation provided to the client as to how the number “4” was derived, no explanation on the NAAF regarding the difference between a medium risk client that rates a “4” versus a “5” and no explanation of what medium risk means in terms of how it will relate to the types of investments that will be purchased.
The success of many complaints hinges on what the client investor told the advisor about the type of investments desired as determined by the New Account Application Form [this form should be signed by clients, a copy retained and updated as required ] and how the advisor interpreted this instruction when he/she filed out the firm’s Know Your Client (KYC) form. We find that few firms provide a copy of the completed KYC form to clients; a copy seems to suddenly pop up at dispute time. KYC forms are not standardized-they vary from Company to Company. Terminology is fuzzy and misleading in most cases. Few people understand the importance of the NAAF and tend to be cavalier with their responses. We ask that IIROC definitize and standardize KYC system requirements and enforce them with meaningful sanctions and fines.

Using a knowingly flawed NAAF/ KYC as a basis for suitability is just plain wrong. In our view a fair complaint decision cannot be made when the core foundation is unreliable.
Dealer attitudes/handling of complaints

Here are some issues that individually and/or collectively create a barrier to support fair settlement of client compensation claims :
• Client requests for documents such as a copy of a KYC or a transaction confirmation slip are too often ignored or drawn out.
• Acknowledgment letters are generally received within 5 business days They are silent however on statute of limitation time period issues.
Investors are made to feel stupid ; not shown respect. During interviews ,there is often an attempt to put words into client mouths that prejudices their claim.
• the portfolio’s asset allocation is wholly unsuitable either because it is inconsistent with stated needs, temperament, age, marital status,loss capacity and health or physical/ mental disabilities yet the investor is held accountable.
• Dealers are unable or unwilling to show calculations to support portfolio design construction.
• When the portfolio character is a significant departure from the client's historical conservative investing pattern and/or risk/loss tolerance,the response we receive is “So what?”
• the advisor failed to deliver a IPO/fund prospectus. Dealers simply say it was mailed. In any event, the attitude that full disclosure can justify a risky investment is too prevalent. This attitude surfaced in the RBC DS response to OBSI's loss calculation request for Comments.
unduly expensive mutual funds were purchased without advising of alternative equivalent but lower MER funds or ETF's. This is argued as not being unfair or dishonest. As long as it's “suitable”
• a client's financial and/or linguistic literacy is such that they were totally dependent on the Reps investment recommendations for buying/ selling or/and the timing of such transactions. Reps they say are not fiduciaries and that investors are responsible for investment decisions even when there is a clear dependence on the Reps recommendations. Trust is very high Financial literacy is not high in our small sample..
• There does not appear to be any specific initiatives in place to deal with seniors issues.. We are met with consternation when we talk about age, client health, time horizon and monthly income needs as suitability factors. We have yet to see any indication that reps or complaint investigators look for signs of dementia or other age related ailments.
Some observations on industry complaint responses
Here’s a few arguments commonly used by IIROC member dealers to deny/minimize client restitution claims:
• Responses are abrupt – cannot be considered “substantive” A clear plain language recital of the complaint is not always provided. It is very rare to see details of how restitution has been computed. Most responses are provided within 90 days sometimes much faster. Cases involving off-book transactions or client loans to Reps are summarily rejected as not the fault of the firm. We believe the IIROC rules should be clear that Firms are responsible for the action(s) of their Reps. including off-book and frauds such as signature forgery or,theft ( aka “misappropriation”) .

Industry complaint investigators try to limit the period of time for losses by claiming that definitive loss mitigation action should have been taken early. This is usually an arbitrary date with little supporting rationale. Often, it's the Rep that said not to sell yet the complainant is held accountable for non-mitigation. There are attempts to use the KYC. Form even if it is demonstrably incongruent with the investors signed New account application Form (NAAF) and even if it contains material errors/omissions. In too many cases there is no signature-;often reps complete the form and ask clients to sign on the bottom line afterwards. the NAAF (s) and KYC (s) may or may not be applied to separate accounts depending on which position minimizes the claimed loss i.e. they may apply the investment objectives and risk tolerance from trading account A to RRIF account B if it suits their case. There seems to be some confusion as to whether or not separate NAAF's are required per account. Opportunity costs/losses aren't part of the current industry mindset Notional portfolio loss calculations are outright rejected by IIROC members.[ However,if it is favourable to them, they use back-testing data to argue that even if the proper asset allocation had been followed, losses would still have been incurred ] Selling a DSC fund with a six-year redemption schedule to a 87-year-old may not be deemed unsuitable. i.e.. fiduciary accountability is given the short end of the stick.

Better , more prescriptive,IIROC Suitability Guidelines are needed. An argument is put forward that a non-discretionary account deserves little sympathy even if all buy/sell recommendations came from the dealer rep, . The industry promoted concept of trust seems to melt away at the time of dispute, arbitration or trial. The time value of money may be ignored in the loss calculations or interest may be computed in a manner that favors the industry participant. Lawyers argue that a more appropriate surrogate for opportunity cost should be the pre-judgment interest rate stipulated in the Courts of Justice Act The dealer may claim that the signed NAAF suggested that a client claimed to be an experienced investor and could accept risk Some erroneously argue that previous ownership of mutual funds constitutes “average” investing experience. Specific aspects of a complaint may be addressed and others completely ignored
of all this, dealers may unilaterally close the case file and simply refuse to
On top correspond further, leaving binding arbitration, OBSI or costly civil litigation as the only alternatives.

Then there is the elephant in the room. When several large dealers openly challenged OBSI's recommendations, the effect was immediate. Retail investors had to think twice about sending complaints to OBSI when they disagreed with the firm's offer. When they realized the high cost of litigation, many buckled and took the lowball offers. This type of dealer action is not in keeping with the spirit of Rule 2500B . [ even without this
dispute , in Q2 OBSI reported that nearly 4 in 10 (38 %) complaints involved overturning IIROC dealer decisions. This statistic should be of concern to IIROC. As pointed out earlier, there are many more complaints that remain unfairly dispositioned because of exploitive dealer complaint handling practices.]

Indeed, the Navigator report on OBSI operations assigns blame for the current impasse to dealers, not OBSI. The report notes, industry cooperation and compliance has degenerated, "with firms walking away, threatening to walk away, using more aggressive negotiating tactics and, in some cases, outright refusing to comply with recommendations."Ultimately, the Navigator report concludes, regulators must step in to shore up the service: "We do not believe that the current impasse between industry and OBSI can be resolved in any sustainable way with only minor refinements. The situation has moved beyond that. We argue that resolution of the current impasse will require the active intervention of the regulators and a multi-faceted package of reforms designed to act as a ‘circuit-breaker'."We agree and point out that if dealers treat OBSI with such disrespect, one can imagine how individual retail investors are treated.
One needed reform will be an amendment to NI31-103. T
he report also calls for a series
of fundamental reforms, recommending, among other things, that regulators make
membership in OBSI compulsory and give OBSI binding powers over industry firms.
The report calls on regulators to endorse - and for the industry to accept - OBSI's basic
framework for investment-loss calculation. The industry firmly opposes notional
portfolio calculations which are widely accepted in other jurisdictions. IIROC should
definitively endorse the notional portfolio methodology ,eliminating this baseless irritant.
According to rule 2500B , Dealer Members must have policies and procedures in place to
monitor the general nature of complaints. IIROC requires that when a Dealer Member
reasonably determines that the number and / or severity of complaints is significant, or
when a Dealer Member detects frequent and repetitive complaints made with respect to
the same matter , then internal procedures and practices must be reviewed, with
recommendations to be submitted to the appropriate management level to remedy any
such systemic or recurring matters. We cannot confirm that this occurs but we feel that
the IIROC rule itself should be more prescriptive. It should specify that senior
management must
act
decisively when a pattern or systemic issue is present.
As an aside we believe that dealers , not individual Reps,should be held accountable for
poor advice and supervision. i.e. Fines should be levied against dealers where actual
collection is virtually assured

The big issue is what to do when the firm has denied a client complaint . How is a small retail investor to determine if the firm’s response is unsatisfactory? On what basis can he/she make an informed decision about this if he/she (1) are not knowledgeable about the merit of their complaint; (2) are not informed about the criteria used by the firm to decide complaint; (3) are not in a position to determine whether or not the firm’s decision is accurate and fair. A fair complaint handling system would make these concerns redundant.
We hope this overview is of use to IIROC. Do not hesitate to contact us should there be any questions about this report.
We add parenthetically the role that misleading Rep titles plays in complaints.
Investor advocates have for years sought prohibitions against financial “salespersons from
advertising senior-specific certifications or professional designations that were not
actually earned, are non-existent or self-conferred. There should also be prohibitions
against advertising certifications and designations conferred by an organization not
meeting certain recognized professional criteria .Currently, all "advisors"
do not adhere to a fiduciary standard. In fact, only a small percentage of those offering investment
advice, retirement planning and mutual fund information, are held to a fiduciary standard
.
More often than not, the cloudy and confusing titles lead clients to place their trust in an
individual who has very different goals than the client
. While the client’s goal may be to
map out their best possible financial future, the non-fiduciary “advisor” (whose first
commitment is to the broker-dealer they represent) is more interested in selling products
that pull in a sales commission for themselves.
This clear conflict- of-interest comes as a
huge surprise to many investors who incorrectly believe that all dealer Reps play by the
same rules.

We recommend that IIROC lay down some robust groundrules and enforce them so that
investors better understand the client-Rep relationship.
Summary
We have identified a significant number of deficiencies in dealer complaint handling
processes and practices. We've also highlighted some actions IIROC must take to
improve the situation. See also Dr. Reeves work on complaint handling.
http://www.pjreeve.com/pjr/blog/Entries ... ATION.html
We take this opportunity to express a concern over an apparent trend of borrowing to
invest. It seems to us that tighter IIROC rules and guidelines on leveraging would help
reduce some of the nasty abuse cases we see.

Ken Kivenko P.Eng November , 2011
DISCLAIMER
Information contained herein is obtained from sources believed to be reliable, but the accuracy is not guaranteed. The material does not constitute a recommendation to buy, hold or sell. The purpose of this Document and others in the series is to educate investors by bringing together personal finance information from a variety of sources. It is not intended to provide legal, investment, accounting or tax advice and should not be relied upon in that regard. If legal or investment advice or other professional assistance is needed, the services of a competent professional should be obtained.
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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Sat Nov 05, 2011 6:46 am

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From: Ken Kivenko
To: susan wolburgh jenah (Investment Industry Regulatory Organization of Canada)

Sent: Saturday, November 05, 2011 9:16 AM
Subject: IIROC dealer complaint handling


Susan,
We note that in your recently released 11 page Compliance report you say that in the current examination cycle you'll be focusing on compliance with the client complaint handling rule, which came into effect in 2010. According to the report, the review will consist of a client complaint handling survey and the examination of client complaints handling processes at select dealers. The report says that the initiative is designed to ensure that firms have implemented the rule in the context of their business models; examine the procedures and processes introduced to achieve the rule's desired outcomes; look at whether the rule has enhanced consumer protection; and, understand any challenges or operational difficulties encountered by firms. We are delighted to see this because so many investors are having a very bad experience with IIROC dealers complaint handling.If the desired outcome is that complainants are treated fairly, we'd have to say there's a lot of improvement needed.and fast . Main Street is suffering badly.

Back in May ,the U.K. Financial Services Authority (FSA) http://www.fsa.gov.uk/pages/index.shtml fined Bank of Scotland (BOS) £3.5m for mishandling complaints about its retail investment products, and ordered it to pay £17.5m in compensation. The watchdog's investigation found that BOS complaint handlers failed to investigate properly by not taking account of all relevant customer information, not assessing complaints competently and fairly, and making poor decisions on whether the investments were suitable for customers who complained.The FSA also said that BOS failed to analyse why complaints were flooding in, and this failure prevented it from quickly identifying ways to improve its business/sales practices.In Canada we see many systemic issues that need attention.Several other banks were also fined.

The FSA noted general deficiencies -these included delays in responding to customers, poor quality investigations into complaints, and issuing correspondence that failed to fully address all concerns raised by customers and that failed to explain why complaints had been upheld or rejected.The banks also failed to provide customers with their Financial Ombudsman Service referral rights within the appropriate time period. If a business does not give a customer these referral rights when giving their "final response" to a complaint, or doesn't explicitly mention the six-month period within which a consumer has to bring such a complaint, that time limit will not generally apply.Of the "routine and non-complex" complaint files reviewed by the regulator between September and December 2009, 53% show deficient complaint handling, 62% failed to comply with FSA requirements on timeliness and disclosure of ombudsman referral rights, and 31% failed to demonstrate fair outcomes for complainants.

The FSA investigation also found the banks did not provide adequate training and guidance to staff on how to investigate a complaint; that the monitoring of complaint handling and the information produced was ineffective in assessing whether consumers were being treated fairly; and that the banks failed to ensure complaint handlers properly reviewed complaints, taking into account all relevant factors.

In Canada, the situation is the same or worse according to our observations.Our NAAF/KYC system is broken, leaving investors open to unsuitable investments , abusive trading practices and excessive/unecessary leveraging.This is the root cause of many complaints. Complainants are telling us that the dealers do not address the issues articulated, are dismissive in their responses, claim that demonstrably unsuitable investments are suitable,assert complainants are experienced investors when they are neophytes and argue that advice was "only a recommendation" , and that the investor makes the final decision.With few exceptions,there are no special procedures for dealing with seniors, the infirm, recent immigrants or the handicapped.Referrals to OBSI are of mixed quality.

Speaking of OBSI , it is here where we can really see the indusry attitude and approach towards complaint handling in their behaviour . The Khoury report assigns blame for the current impasse to the industry, not OBSI.Nevertheless, the Canadian industry's protests aren't likely to evaporate simply because an independent reviewer( Navigator) has found them to be baseless .The OBSI dispute-resolution service can function effectively only with industry support and it isn't present. The report notes, industry cooperation and compliance has degenerated, "with firms walking away, threatening to walk away, using more aggressive negotiating tactics and, in some cases, outright refusing to comply with recommendations."Ultimately, the Navigator report concludes, regulators must step in to shore up the service: "We do not believe that the current impasse between industry and OBSI can be resolved in any sustainable way with only minor refinements. The situation has moved beyond that. We argue that resolution of the current impasse will require the active intervention of the regulators and a multi-faceted package of reforms designed to act as a ‘circuit-breaker'."One needed reform will be an amendment to NI31-103. The report also calls for a series of fundamental reforms, recommending, among other things, that regulators make membership in OBSI compulsory and give OBSI binding powers over industry firms. The report calls on regulators to endorse — and for the industry to accept — OBSI's basic framework for investment-loss calculation. The industry firmly opposes notional portfolio calculations which are widely accepted in other jurisdictions. IIROC should definitively endorse the notional portfolio methodology ,eliminating this baseless irritant.

In our view, IIROC will have to start fining dealers to attract senior management attention and a change in culture.Merley publishing a report with a list of "best practices" will achieve very little to protect financial consumers.
Finally, we believe that the IIROC rule itself is not robust enough given the scandalous condition complaint handling in Canada finds itself. It needs a revision to incorporate the findings and results to date.
We are willing to assist IIROC in any way possible in its examination. Attached please find our Complaint System evaluation Checklist that may be useful.Without senior management buy-in, the system won't function properly.
Investor Complaint handling in Canada is a Public Interest issue and deserves considerable IIROC/CSA/MFDA attention and action.

Warmest regards,
Ken Kivenko P.Eng.
President, Kenmar Associates.
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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Wed Feb 16, 2011 8:31 pm

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"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.".......the above line is from a National Post article published and posted 15 Feb 2011, by a former OSC commissioner, suggesting that what IIROC (and others) are doing to misrepresent the public about their members is "fraud"

the below press release is evidence of shameless self interest, promotion and in my opinion, fraud, by IIROC
You be the judge of who is lying to you............

For further information, please contact:
Connie Craddock Vice President, Public Affairs 416-943.5870 ccraddock@iiroc.ca
IIROC launches new IIROC AdvisorReport
August 30, 2010 (Toronto, Ontario) – The Investment Industry Regulatory Organization of Canada (IIROC) has introduced a new resource to help investors learn the background of advisors who are currently approved to work at IIROC-regulated firms. In a single, easy-to- generate online report, investors can obtain relevant information that will help them make informed decisions when choosing an advisor.
With the new IIROC AdvisorReport, investors will be able to immediately access current information on an advisor’s educational background including industry courses that are completed for proficiency requirements; find out what functions or roles the advisor has received IIROC approval to perform; and learn about the advisor’s disciplinary history.
“Recent frauds and Ponzi schemes that have victimized investors underscore the need to give investors better tools to verify that their financial advisor is registered with and regulated by a securities industry regulator,” said Susan Wolburgh Jenah, IIROC President and Chief Executive Officer.
“That’s why we are taking steps to help investors readily access relevant information about an individual or firm. In addition to IIROC AdvisorReport, we have developed a new brochure
Why IIROC Matters to You, the Investor, that describes the benefits of working with an IIROC- regulated firm and approved registrant and a new web site feature Know Your Advisor.”
IIROC AdvisorReport is the central feature in the new Know Your Advisor section of the IIROC website. Know Your Advisor provides background detail on the information found in the IIROC AdvisorReport, including explanations of the IIROC approval categories, Frequently Asked Questions and search tips. Know Your Advisor also helps investors to find information about individuals or firms who are regulated by other Canadian regulatory organizations. There is a link, for example, to the Canadian Securities Administrators’ National Registration List and Disciplined Persons List.
IIROC AdvisorReport builds on IIROC’s earlier service, the Member Firm/Registrant Info Service, which was launched in 2003. This popular service recently averaged more than 1,700 visits per month online. It was a two-step service, with IIROC disciplinary records available through one search tool at http://www.iiroc.ca and information on current approval categories, educational background (including industry courses completed for required proficiency standards) and any terms and conditions placed on approval or registration, available only through written request to IIROC. This two-step process is being eliminated and IIROC AdvisorReport now consolidates this information in one, easy-to-use report.
IIROC AdvisorReport backgrounder
***
IIROC is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada. Created in 2008 through the consolidation of the Investment Dealers Association of Canada and Market Regulation Services Inc., IIROC sets high quality regulatory and investment industry standards, protects investors and strengthens market integrity while maintaining efficient and competitive capital markets.
IIROC carries out its regulatory responsibilities through setting and enforcing rules regarding the proficiency, business and financial conduct of dealer firms and their registered employees and through setting and enforcing market integrity rules regarding trading activity on Canadian equity marketplaces.
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