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 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

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( 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

images.jpeg
images.jpeg (6.92 KiB) Viewed 19359 times
"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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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Tue Feb 15, 2011 4:46 pm

Feb 15th
to: Investment Industry Regualtory Organization of Canadan IIROC

Enclosed in order:

1) some enforcement matters relating to an investment person in Alberta
2) An article from Edward Waitzer, Financial Post · Tuesday, Feb. 15, 2011, suggesting that it is "fraud" to allow the misrepresentation that appears to be allowed by your agency (s)
3) An article from Ian C.W. Russell, Special to the Financial Post · Tuesday, Feb. 8, 2011, which appears to be written by another investment protection agency, seemingly in contrast to industry rules and supporting the misrepresentation or "fraud" against the public
4) Alberta Securities Commission Important definitions of the ASC’s Different Market Registrant Licenses from the ASC web site

It seems as if there may be a different answer to the difficult question of what is allowed and what is not, depending upon who is speaking. I write to you to see if you can clarify, on behalf of the public, the apparent misrepresentation of allowing persons licensed or registered in the category of "salesperson" (pre 2009) or "dealing representative" (post 2009) to call themselves anything and everything they wish to including such official license categories as "advisor", or non-official but equally misleading names such as "vice president", "wealth manager", "retirement advisor", "estate planner".

I realize in advance the difficulty that your organization may face in being truthful in this matter, but I urge you to please look past your immediate self interest, and look to the public interest instead. Millions of Canadians, friends and relatives of yourself, including your children, perhaps your children's children are at risk of being misrepresented by people who pose as professionals, without meeting the qualifications of having to act as professionals. This mistake should not be born on your head as well should it?

I thank you in advance for your reply with clarity so the public can be made aware in as simple and understandable terms as possible.

Larry Elford
lelford@shaw.ca

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

enclosure #1

"Financial professionals and salespersons in Canada are allowed to call
themselves advisors, irrespective of their professional designation."

IIROC’s In the Matter of Dale Richard Wells – Penalty below that was released last week on February 11, 2011.

This timely IIROC Enforcement Notice Decision released last week suggests to me that not all / that some IIROC “Registered Representatives” are not registered—licensed in Alberta as “advisers / advisors”.

Does this IIROC Enforcement Notice decision last week definitively refute your statement in your FP Comment column today,
that “salespersons in Canada are allowed to call themselves advisors”?




Enforcement Notice
Decision
Please distribute internally to: Legal and Compliance
Contact:
Warren Funt
Vice President, Western Canada
604 331-4750
wfunt@iiroc.ca

Elsa Renzella
Director, Enforcement Litigation
416 943-5877
erenzella@iiroc.ca
11-0062
February 11, 2011



IN THE MATTER OF Dale Richard Wells – Penalty

Following a disciplinary hearing held on September 2, 2010, in Calgary, Alberta, a Hearing Panel of the Investment Industry Regulatory Organization of Canada (IIROC) has found that Dale Richard Wells conducted his business in a manner contrary to IIROC Rules by providing advice in securities when he was not properly registered to conduct business of that nature.

Specifically, the hearing panel found Mr. Wells committed the following breach of the IIROC Rules:

During the period February 2006 to July 2008, he acted as an advisor, within the meaning of the Alberta Securities Act, without being registered as such, contrary to IIROC Dealer Member Rule 29.1.

The Hearing Panel’s decision and reasons on the merits can be found at:

http://docs.iiroc.ca/DisplayDocument.as ... anguage=en

Following a penalty hearing held on February 1, 2011, the Hearing Panel imposed:

a $10,000 fine on Mr. Wells

and required him to pay Staff’s costs of $13,000. The Hearing Panel will issue its written reasons on the penalty on a later date, which will be made available atwww.iiroc.ca.

IIROC formally initiated the investigation into Mr. Wells’ conduct in March 2008. The violations occurred when he was a Registered Representative with the Lloydminster, Alberta Branch of First Financial Securities Inc., an IIROC-regulated firm. Mr. Wells continues to be employed as a Registered Representative with First Financial Securities Inc.

The Notice of Hearing is available at:

http://docs.iiroc.ca/DisplayDocument.as ... anguage=en

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 (IDA) and Market Regulation Services Inc. (RS), 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 responsibility 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.



----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

enclosure # (2)







Make advisors work for investors

Edward Waitzer, Financial Post · Tuesday, Feb. 15, 2011
In January 2004, the Ontario Securities Commission released a concept paper advocating a "fair dealing model." The paper acknowledged that the regulatory regime -- regulating dealers and their representatives through the products they sell -- was based on the outdated assumption that transaction execution is the primary reason people seek financial services. Recognizing that most customers are seeking advice, the concept paper proposed changing the regulatory framework to focus on the advisory relationship.

Financial professionals and salespersons in Canada are allowed to call themselves advisors, irrespective of their professional designation. Few, however, are compensated directly for their advice. Instead, they are paid commissions to sell specific products. Addressing the conflicts of interest that result from commission-based compensation, the paper proposed that retail clients should be entitled to rely on objective advice that is in their best interest and, when there are conflicts of interest, they should be clearly disclosed so that the client can understand the conflicts and how they may affect the advice given.

In September 2004, the proposal was swept into a broader project of the Canadian Securities Administrators (CSA) and rebranded as the "client relationship model." Last month, the Investment Industry Regulatory Organization of Canada (IIROC) published its proposed reforms to establish requirements for the client relationship model. They specifically avoid imposing a duty on firms and their representatives to act in the best interest of clients, focussing instead on improving compliance with the existing "suitability" standard and improving disclosure with respect to conflicts of interest and performance reporting. IIROC noted that part of what influenced its thinking was an effort to harmonize with existing and proposed CSA standards (and other standards applicable to firms not under its jurisdiction).

To understand the difference between a "suitability" and "best-interest" standard, think of a student seeking advice at an electronics store about her need for a laptop. The salesperson recommends a highly priced unit with an expensive extended warranty -- all designed to generate the highest commission. The laptop is suitable--it will satisfy the student's needs. It clearly isn't the best solution and a disclosure obligation isn't likely to stand in the way of a motivated salesperson. If the salesperson had been bound by a "best-interest" standard, he would recommend a simpler, more reliable and affordable unit.

In the U.S., brokers and investment advisors are subject to different standards when providing investment advice. Many investors are unaware of these differences or their legal implications or find them confusing. In the wake of the global financial crisis, the Dodd-Frank Act required the Securities and Exchange Commission (SEC) to evaluate the effectiveness of existing legal or regulatory standards of care for providing personalized investment advice to retail customers. Five months later and with the benefit of over 3,500 comment letters as well as a survey conducted by the CFA Institute (which already requires both a suitability and best-interest standard of its members in order to use the Chartered Financial Analyst professional designation) SEC staff released its analysis and recommendations. It has proposed a uniform standard of conduct for all brokers, dealers and investment advisors providing personalized investment advice about securities to retail customers to act in the best interest of the customer.

The SEC staff study acknowledges that working through the details of such a standard so as to ensure it is practicable and cost effective will be complex. It does not propose a strict fiduciary duty, nor does it suggest rules to try to eliminate conflicts.

The U.K. Financial Services Authority (FSA) recently banned commissions for advised sales of retail investments and released proposals which would require advisors to explain why a product is better than a cheaper alternative. This and other more intrusive proposals are based on the FSA's realization that there are "fundamental reasons why financial services markets do not always work well for consumers."

The contrast in the direction, speed and intensity of regulatory reform between Canada and other major developed markets raises a number of questions and suggestions. Why did the OSC start down the path of a "best-interest" standard in 2004 and, while others (including the U.K., Europe and Australia) have caught up, we appear to have fallen back to where we started -- disclosure requirements and a relatively static "suitability" standard? To what extent is this a function of a fragmented regulatory framework suffering from bureaucratic inertia (and an industry suffering from regulatory fatigue)? What accountability mechanisms are required to motivate a more focussed and intense effort?

Why is it that Canadian regulators have shied away from proposing a "best-interest" standard? 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." Many argue that it's the buyer's responsibility to do due diligence and shop around for the best price. But should caveat emptor apply when buyers think they are hiring a professional to do the shopping?

There may be light at the end of this tunnel. Hopefully, the robust regulatory reform efforts underway elsewhere will inform and impose some discipline on our own. The OSC has a new chair. It recently established a highly credible Investor Advisory Panel, which has added this issue to its list of initiatives. FAIR Canada, the Hennick Centre for Business and Law, and the Toronto CFA Society are convening a second annual symposium on the subject next week. Finance Minister Jim Flaherty has demonstrated genuine interest in investor protection -- most recently supporting a national strategy to strengthen financial literacy.

Canada takes justifiable pride in its financial institutions and infrastructure. In doing so we can ill afford to gloss over the nature of customer relationships or be perceived to lag other markets in our efforts to ensure fair dealing in financial markets.

- Edward Waitzer is a professor and director of the Hennick Centre for Business and Law at York University and a former chair of the Ontario Securities Commission.

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

enclosure #3



INVESTING TODAY – SPECIAL SECTION

BUILDING TRUST

Searching for the right advisor
Ian C.W. Russell, Special to the Financial Post · Tuesday, Feb. 8, 2011
Over the course of a lifetime, the average Canadian makes some big expenditures -- such as housing, their children's education and eventually their retirement. The latter is especially important as government programs are inadequate for most Canadians and life spans have extended considerably.

But Canadians are too busy with job and family responsibilities and family life and lack the specialized expertise to manage their financial affairs as diligently as they need to be managed.

That is why most people need a trusted advisor to guide them through their financial decisions at every stage of their life.

A complex job requires professional commitment

Investment advice is a full-time job. This is not just because of the bewildering array of financial products and services, the incessant volatility of financial market asset prices, turbulence of the economy, expanding opportunities in a dynamic global marketplace and the importance of preserving capital given recent experience of unprecedented swings in financial markets and economic activity.

Financial management is a complex and full-time job because those assets selected to meet the return and risk objectives of the investor constantly change in value and risk, requiring corresponding portfolio adjustments to monitor the targeted risk-return investment objectives.

As well, investment objectives themselves change as investors move through their life-cycle, such as the shift from the goal of portfolio growth to income security as one approaches or enters retirement.

Where then do you find the right advisor? If the investor wants an advisor that can provide advice on the full array of financial products, including individual stocks and bonds, ETFs, mutual funds and privately managed funds, the starting point is to open an account with an IIROC-registered firm and an investment advisor employed by that firm.

The business activities of the IIROC-registered firm are subject to rules and oversight by the self-regulatory organization, the Investment Industry Regulatory Organization of Canada (IIROC).

An IIROC-registered broker meets high proficiency standards, duty of care to his or her client, rules governing the investment process and conduct of all client dealings, requirements for putting the client first in all transactions and ensuring best available price for purchased securities.

Moreover, IIROC-registered brokers are subject to high standards of supervision, regulatory oversight and audit. The IIROC-registered firm also meets rules and procedures for the safekeeping of client assets. It is no coincidence that the scandals that have beset the financial sector in recent years have occurred among firms outside the IIROC regulatory framework.

A good advisor must be more than someone able to give advice. The client must have confidence and trust in his or her advisor to forge a productive and successful working relationship.

The advisor, therefore, should have a good investment track-record, and provide clear financial statements to make all portfolio transactions, asset positions and performance understandable. The advisor must communicate frequently in terms comprehensible to the client, execute decisions in a thorough and diligent manner -- and charge reasonable fees for service. Further, an effective relationship is bolstered by the personal chemistry between the client and advisor.

The client should feel comfortable and open in dealing with his or her advisor and provide the personal financial information needed to make the appropriate investment decisions in line with portfolio objectives.

But all this comes back to the fundamental question. How does an individual find the right IIROC-registered Investment Advisor? Investors find advisors in many ways, through referrals from friends and family, from attending seminars hosted by an advisor, from advertisements in the media and from direct enquiries at IIROC registered firms.

Whatever the approach, it is important the client reserve judgment on his or her initial choice of advisor to ensure the right fit in terms of communication, quality of service and cost, and personal relationship. Investors should be prepared to shop around if they are less than satisfied with their initial choice. One wouldn't make any major decision without checking it out thoroughly. Choosing an investment advisor is one of the most important decisions you can make, and the potential benefits last a lifetime. A good advisor is well worth the time and effort of a thorough search.

-Ian Russell is president and CEO of the Investment Industry Association of Canada.

-----------------------------------------------------------------------------------------------------------------------------------------------


enclosure #4

Province of Alberta Securities Commission

http://www.albertasecurities.com/Inside ... tions.aspx
Important definitions of the ASC’s Different Market Registrant Licenses
Adviser
a person or company engaging in or holding out the person or company as engaging in the business of advising others with respect to investing in or the buying or selling of securities or exchange contracts (Examples: Portfolio Managers, Investment Counsel and Securities Advisers)

Dealer
a person or company that trades in securities or exchange contracts as principal or agent (Examples: Investment Dealers, Mutual Fund Dealers and Scholarship Plan Dealers)

Investment Counsel
an adviser who shall not instruct any trades in securities, or exchange contracts on behalf of any client without advising the client of the specific trade being proposed, and obtaining the approval of the client for that specific trade

Investment Dealer
a firm that is registered to trade, buy or sell all types of securities. The Investment Dealers Association (IDA) registers these firms on behalf of the ASC.

Investment Fund Manager (or “Fund Manager”)
a person or company who has the power to direct and exercises the responsibility of directing the affairs of an investment fund

Mutual Fund Dealer
a firm that is registered to trade, buy or sell mutual funds

Portfolio Manager
an adviser registered for the purpose of managing the investment portfolio of the adviser’s clients through discretionary authority granted by the clients
Registrant
a person or company registered or required to be registered under Alberta Securities Act or the regulations

Salesperson
an individual who is employed by a dealer for the purpose of making trades in securities or exchange contracts on behalf of that dealer



Securities Adviser
an adviser who provides advice to a non-specific client, for example a newsletter or magazine
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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Sun Dec 12, 2010 10:37 am

IIROC review shows big gaps in controlling “ new products” - no lessons learned

http://docs.iiroc.ca/DisplayDocument.aspx? DocumentID=F17D558137DF404A8FD920ED7834021E&Language=en

From March to May of 2010, IIROC conducted targeted regulatory examinations at a representative sample of Dealer Members who distribute structured products. Specifically, the review tested for adequate written policies, procedures, and underlying operational controls on “new products” introduced for sale to retail and institutional clients. The objective of this New Product Due Diligence review was to determine whether, and how, Dealer Members have incorporated the IIROC Guidance Note into their business practice. The disappointing results are summarized below :

1. The review found that two of the fourteen Dealer Members tested did not have written policies. Of those with written policies, many of the policies were deficient in some material aspect. Some had no meaningful written procedures to accomplish the intent of their policies. The deficiencies included a lack of clear definitions; insufficient internal review; an inadequate analytical framework to consider whether a “new product” should be offered; a lack of consideration of possible conflict of interest scenarios; the absence of consideration of proficiency, training and marketing issues; no process to monitor and review customer complaints, or for monitoring compliance with any restrictions on the sale of new products.

2. Some Dealer Members did not have a sufficient evidentiary record of controls supporting a “new product” due diligence process. ( deficiencies observed include inadequate controls underlying written policies; a lack of controls to capture sources of new products; no standardized process requiring a written new product proposal for internal review; and the absence of Product Due Diligence Committees.)

Dealer Members must be able to establish that they have a system of internal controls and supervision in support of investment suitability advice and recommendations for both retail and institutional clients, where applicable, with respect to “new products”.

[ IIROC issued Guidance Note 09 – 0087 Best Practices for Product Due Diligence on March 25, 2009. ] Investor advocates are disturbed by the findings. IIROC has not yet imposed any fines or sanctions as a result of the observed non-compliances.

Read also Crawling out from under IIROC by Mike MacDonald http://unbiasedportfolio.blogspot.com/2 ... iiroc.html , a more critical view of the findings.
from Ken at www.canadianfundwatch.com
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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Sun Oct 31, 2010 4:33 pm

Holy flypaper Batman!! We seem to be stuck with salaried industry puppets, and media folk who act more like TV infomercial hosts.
see below commentary on a recent BNN "infomercial" for the investment dealers self regulatory organization:


http://watch.bnn.ca/the-close/september ... clip362219

Susan Wolbergh Jenah, head of the Investment dealers organization called IIROC was interviewed on BNN lately. The link to the video is above.

My thoughts as I listened to the video are below in case you would like to see an alternate side to what I believe to be a totally conflicted, captured organization. I believe they are an industry funded group of "yes" men and women who help the industry to professionally abuse and cause financial damage to the public. My comments below.
----------------------------------------

Before we even get one minute 30 seconds into her interview on BNN:

She refers to registrants with IIROC, as “advisor’s”, and then she refers to them as “salespersons” in the first two minutes of her interview.

This “duality” of terms speaks volumes about how even the $700,000 paid, top person at the investment dealers organization, simply DOES NOT even understand her job.

(Unless of course her job is to be a highly paid “Yes” man for the industry that is paying her)

How are customers supposed to know if they are dealing with a commission seller of product, or a trusted advisor if the head person does not even know enough to clearly define the difference?
------------------------------------------------
At about 3:45 of the interview she describes what info is included about "advisors" on her new web site for consumers. Noticeably absent is "whether or not the person even owes a duty of care to place the interests of the client first". You would think a professional organization would take that matter into account...........unless they were deliberately misleading us or trying to misrepresent consumers.

----------------------------------------------

From about the 4:20 mark Howard Green asks the great question about product pushing and conflicts of interest...........Susan's answer seems to indicate that it is up to the client to try and determine if product is being pushed on you.......which seriously fails to professionally address an underlying question about her organization........"why does this organization not have professional standards of duty to the customer, or fiduciary standards of care for the consumer? Why does it ask the consumer to figure out if they are being "sold" bad advice or products? This is indicative of a "kindergarden" level of regulatory oversight by her organization, buy that I mean that a kindergarden level of student could do a more comprehensive job of protecting consumers. I believe this speaks volumes again, to a case that IIROC is a tainted and corrupted organizational "puppet" of the financial industry. Buyer beware.

------------------------------------------------

There is a name for this kind of violation of trust, where a powerful, or knowledgable, or expert organization or person, has an ability to sway, influence or "advise" on the actions of weaker persons coming to them for help.
(see CLIENTELISM and potentials for abuse at Transparency International anti corruption guide http://www.transparency.org/publication ... uage_guide )

For IIROC to be loosey goosey about the important foundational matters such as protecting against this abuse of the "imbalance of power and expertise" between customer and "advice giver/product seller" is again strongly indicative of a kindergarden level of organizational integrity and ethics.

--------------------------------------------------

At about 5:40, Susan Jenah says pretty much that it is a “trust me” game for the customer to “decide” whether or not they have a good feeling about the person claiming to advise them.............no professional standards, no specified duties of care............just “trust us” if you dare??
This woman’s naivete is incredible. Previous to his I could not even imagine how much professional ignorance or incompetence that one could buy for $700,000, but Susan is clearing things up a great deal.
(see http://www.realecontv.com/videos/bankin ... e-job.html
Or
http://www.bbc.co.uk/news/business-11642430

For up to date, real world examples of how this industry is worth of “trust me”.
-----------------------------------------------------

6:10, Howard Green buys into (and helps her to sell) the concept of “advice, and advisors) rather than letting the public be aware of the commission product sales natured role of the industry. In this regard, Mr. Green is acting as a bit of a shill for the industry, rather like the “interview guy” in a paid commercial program.

------------------------------------------------------

At 6:40 Susan talks about “the hard information” about your advisor.......which is rather feeble since her organization does not require her registrants to even disclose how they are licensed, how they are compensated, and if they owe “any” duty of care to the customer. Nothing better than “how do you feel” about your.......relationship. Hilarious that she would put this on the record.

------------------------------------------------




At 10:15 Susan talks about “disciplinary history” reported by her web site.......without full disclosure that this would refer to actions “by” an association of investment dealers “against” investment dealers. Fine, if not for the fact that the foxes are acting as judge, jury etc, for foxes. Not exactly fair nor professional, and their track record bears this out.

(something like only 2% of IDA (old version name) decisions went against the big banks who do 95% of all industry business......judgements a tad skewed by this cozy association towards protecting favored members, prosecuting those not favored, and mostly ignoring the public interest, serving the industry interest. Same old game.)

---------------------------------

IDA was a total shame. IIROC is wearing the same shoes. BNN seems to be helping.


larry elford, former CFP, CIM, FCSI, Associate Portfolio Manager, retired.
lelford@shaw.ca

--youtube channel about professional investment abuses:
http://www.youtube.com/user/investoradv ... ature=mhum

--xtranormal cartoons about investment industry abusers:   
http://www.xtranormal.com/profile/3166153/
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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Sat Aug 28, 2010 9:07 pm

here is a client complaint, rather well done, pointing out how his experience with IIROC is that they work for and protect the industry (which is true in my experience) and have little to no regard for repetitional bankruptcy or for the public. Men and women whose integrity is bought and paid for is my conclusion.

CRÉATIONS SYLVIO GAGNON 277 Meilleur Pvt Ottawa, Ontario Canada K1L 0A2

Email: sylviogagnon@rogers.com Web site: http://www.sylviogagnon.com Studio: 613 . 235 . 6415 Mobile: 613 . 290 . 6372
19 August 2010
IIROC, Carmen Crépin, VP Québec 5 Place Ville Marie, Bureau 1550, Montréal (Québec) H3B 2G2

Dear Ms Crépin,
WITHOUT PREJUDICE
Subject : Complaint 0818 Aug/09 - Raymond James and Marc Jémus
Thank you for your letter dated 13 May 2010. Unfortunately, my response was delayed because of the sale of our home and the difficulty coping with the relocation to a new environment. However, I did have telephone conversations with both you and Nicolas d’Astous on May 25th and 26th about this matter. At that time, I explained to you that Mr. d’Astous was wrong on several counts regarding the investigation of my complaint. You told me that you would review the matter with Mr. d’Astous but you did not advise me of the results of this review. This letter is a reminder of your promise to respond to me. It is also my official written response for the record.

First of all, I deplore the fact that it took 3-4 years for IIROC to start the investigation of this complaint. My first complaint letters to the regulators date back to 2006 and included the IDA, IIROC’s predecessor but IDA did not respond. According to my records, my first contact with IIROC came 3 years later when Nicholas D’Astous, at the request of Connie Craddock and Carmen Crépin, called me on Aug 12th, 2009 to initiate a possible investigation.

As I told you on the phone, I am extremely disappointed to discover that a IIROC Senior Investigator has not been able to decipher the insidious wrong doings of a notorious common fraudster like Marc Jémus. Jémus must be laughing all the way to his favourite off-shore bank. He fooled everyone including you and myself. He duped the Banks, the Regulators, the Superintendent of Bankruptcy, the RCMP, the Courts of Law and even Revenue Canada. He must have connections in high places to be able to walk away unpunished from repetitive financial crimes.
I agreed to meet with Mr. d’Astous in Montreal but before making the trip I purposely asked him if I was wasting my time and money on this case. He assured me not. IIROC is a serious organization, it employs a highly qualified staff with experience and a high sense of ethics.

I bought in and I trusted Mr. d’Astous’ word. My wife and I spent 4 hours explaining to him and Yannick Béland the problems we encountered with Marc Jémus. The meeting was video-taped but the copy was not made available to us. Much of the information focused on B2B Trust, Desjardins, Raymond James, Marc Jémus, Mark McDermid, Richard Martel, Amira Mamhikoff, Marc Marcotte, and other less significant players. However, in your conclusion letter, you state that within this group, you only have jurisdiction over Marc Jémus and Raymond James. Anybody else is irrelevant. Then, tell me why Mr. d’Astous was so eager to obtain all this personal and confidential information from me if he could/would not use it? You will agree that a complainant can only feel aversion toward a breach of trust such as this one.
In addition, I gave Mr. d’Astous access to all my files through two (2) DVD disks. One disk contained all the emails sent and received; the other all the letters sent and received plus telephone conversation notes. I could not be more open, truthful and cooperative. The following table demonstrates the amount of effort I have put into this project.

Alas ! Mr. d’Astous and I do not live on the same planet. To read on page 2 of the report that there is not enough proof to conclude that Raymond James committed a fault and that there is not one proof that the recommendation made to us by Jémus breached the rules of IIROC is ludicrous. My complaint is very specific: I blame Raymond James for not supervising Marc Jémus and I also blame Jémus for orchestrating this fraud. The IIROC investigation did not address either of my concerns, as I will demonstrate below.

After reading the conclusions of the IIROC investigation report, I feel like I am the evil one, and, that I should apologize publicly for all the wrong I have supposedly done. Now, Ms Crépin, don’t feel bad...everyone else has made me feel this way - the AMF, MFDA, IDA. OSC, OBSI, Law Society of Upper Canada, Raymond James, B2B Trust, Desjardins, and finally Marc Jémus himself. Their modus operandi is to blame the victim for being so stupid as to agree to these transactions. The idea is to wear out the victim by using delay tactics and intimidation. It is common knowledge that in all your investigations undertakings you submissively serve your masters (bankers and brokers) at the detriment of the small investor.
In other words - you are in conflict of interest and you obviously will not bite the hand that feeds you. Please try to be objective and fair and think about the devastating consequences that a biased decision by a regulating agency can have. Must I say more?

Regarding my complaint and the conclusions of your investigation stated in your letter, I wish to make the following specific observations:

1. There were two (2) transactions handled by Jémus who was a registered member of Raymond James who in turn is a member of IIROC. In round figures, one transaction was for $68,600, the other for $8,000. The report has completely ignored the latter. Why have you omitted the $8,241.29 cheque I endorsed and labeled “Pension Positive in trust for investment as a 2nd mortgage on 691 St-Louis, Gatineau” and gave to Jémus by hand ? Instead of proceeding with the mortgage investment Jémus misappropriated the funds and deposited the cheque in his personal bank account. I gave IIROC copies of all the necessary documentation to investigate this transaction and we discussed the whole matter when I met d’Astous in Montreal. As far as I know, misappropriation of funds is still a serious criminal offense in Canada. I would think that IIROC would have a rule against such a dishonest activity. Why don’t you take a stand and make your position clear ?

2. Page 1, para 2 of your letter states that Jémus advised us to lend a private loan of $68,600 to Marcel Chartrand. This is not true. The fact is that Jémus advised us that there may be “possible second mortgage investment opportunities coming up and that he would advise us at the opportune time”. There was no mention of a loan to Chartrand, nor the amount, nor the asset to be mortgaged. These were to be determined later after reviewing a specific proposal from Jémus. Unfortunately, we were not given this opportunity because Jémus, at that time, was in “Ponzi mode” and he needed money to fend off angry creditors. Therefore, in collusion with lawyer Marc Marcotte and figurehead Financial Planner Mark McDermid, Jémus concealed and processed the papers without our authority. In order to transfer funds from Raymond James to B2B Trust, Jémus, in collusion with McDermid, Mamhikoff and Marte1, forged the documentation and opened a bank account at Optifonds (Desjardins) in the name of Monique Gagnon without her authority. THE SIGNATURES ON THIS DOCUMENT (OPEN A NEW ACCOUNT form) ARE FAKE SIGNATURES. You can verify and confirm this with the AMF and the MFDA as I did myself.

3. Page 1, para 3 of your letter states that our account was under the responsibility of Mark McDermid. This is completely false. MARC JÉMUS WAS OUR REPRESENTATIVE - NOT MCDERMID. We have never met Mark McDermid and we do not know him. You are consciously making this unfair statement. It is completely irresponsible coming from the part of a senior investigator at IIROC whose mandate is to protect the investor from fraud.

Form 30034-4-(07-2000) TRANSFER AUTHORIZATION FOR REGISTERED INVESTMENTS is a forged document that shows Mark McDermid is our Financial Planner. (see copy attached) McDermid has admitted that he never met us, let alone represent us. Monique Gagnon’s identity and signature were stolen by Jémus to process this document and transfer the funds to B2B Trust through an authorized agent acceptable to B2B Trust, i.e. Optifonds, Dealer #9220 – McDermid, Agent #1711). I maintain that Raymond James was asleep at the switch and let this transaction go through without raising the flag to warn us. The control system at Raymond James and B2B Trust failed to detect this unauthorized breach of security. I hold Raymond James partly responsible for this error and they must be accountable.

4. Also mentioned previously, Marc Jémus is a notorious common fraudster well known in the Ottawa-Gatineau region. His name has been prolific in the media for several years. He has been under investigation by the Regulators, the RCMP and other law enforcing bodies but I must say, never accused and found guilty..... yet. The Crown Prosecutor is soon expected to make a decision to press criminal charges against him. Personally, I have an appointment with him in Gatineau Québec Small Claims Court on September 13th ,2010. This will be the third time that I bring Jémus to court to claim the $8,000 he misappropriated in 2004. Twice before he has evaded paying his debt by invoking the law on Bankruptcy. Hopefully, he may not be so lucky this time. Note that the next day, September 14th , Jémus will be in court to request the discharge of his debts from his personal bankruptcy. All of the 150 victims of this fraud will strongly oppose this request
through our lawyer Me Claude Gervais.

5. Note that Raymond James was the investment firm and Jémus was the registered member
approved by IIROC during all the ill-fated transactions I had with Jémus. I relied on his association with Raymond James, a reputable investment firm, and every time I had dealings with Jémus I trusted that Raymond James would firmly stand behind Jémus. I had no reason to not rely on the Raymond James reputation and Jémus’ past honesty which he had manifested towards me for many years. In their correspondence with new clients and that included me, Raymond James takes great pride in saying that they are responsible for their members as if they were employees of Raymond James. ( “...Raymond James assume de façon irrevocable toute responsabilité à votre endroit et continuera d’être responsable des actes et omissions de votre conseiller en placement ...” statement dated 30 September 2003, signed by Ken A. Shields, President and CEO) and sent to all clients of Raymond James ).

Likewise, on 14 September 2004, Marc Jémus wrote to Monique Gagnon bragging about his newly found virtues with Raymond James and the impeccable service he would bring to us. ( see copy of letter attached ) On the contrary, he duped us and caused the loss of Monique’s life time savings for her retirement and Raymond James failed to warn us of the impending disaster. It is a shame that Raymond James will not face up to this responsibility and IIROC will not enforce their own rules to protect the small investors.

 Page 2, para 1 of your letter states that: “.....nous sommes d’avis que Raymond James n’a pas fait preuve de négligence dans le traitement de votre compte.” My translation follows: “....in our opinion Raymond James has not acted negligently in the handling of your account.” I repeat: I always said that Raymond James was negligent in the supervision of Marc Jémus himself, not the supervision of my account.

I would like IIROC to ask the following questions to Raymond James and relate their answers to me. I did ask these questions to Peter Matter – VP at Raymond James but his responses were non-answers. I suspect that Raymond James is not telling the whole truth and they should be asked again the following questions:

 Why did Raymond James hire Marc Jémus after he had been fired for misconduct at Optifonds (Desjardins) ? His bad habits: lying and no copies to the client.

 Why did Raymond James hire Marc Jémus after he left employment at I-Forum and Norshield, two investment firms that defrauded investors of millions of $.

 Did Raymond James verify his credentials/references before hiring him ? Who
with ?

 Why did Raymond James allow Jémus to deal in products in which he had a
personal interest/benefit ?

 Why did Raymond James authorize Jémus to practice when they knew or ought
to have known that Jémus was a rogue member who had been conducting
fraudulent transactions since 2000 ?  Why did Raymond James terminate Jémus on March 2005 after only a few
months of employment ? Why was this not disclosed to clients?  Why did not Raymond James immediately warn us that this financial predator was loose and on the prowl ?

 Lastly but most importantly, why did Raymond James guarantee both Monique
Gagnon’s and Marc Jémus’ signatures on Mar 22, 2005 after they had fired Jémus on March 17, 2005 ? (see copy attached) This document is not valid for the simple reason that Raymond James garanteed the signature of Marc Jémus on a document requesting the transfer of accounts from Talvest to Raymond James knowing that Jemus had previously been fired by Raymond James.
In conclusion, I request that you revisit this investigation and bring to it the necessary corrective action. I have stated in previous paragraphs several false statements that are prejudicial against us. We request that the investigation report be corrected to reflect the facts and the reality. The investment and financial world is full of half truths that try to dissimulate the horror stories experienced daily by small investors in Canada. I also invite you to join me in advising the media and educating the public to help reduce the incidence of financial fraud in this country.

Do not hesitate to contact me if you require additional information. Yours truly,
Sylvio Gagnon Attachments (3)

P.S. As I sign this letter, I learn from our lawyers and I am happy to report that our class action has been approved by Judge Michel Déziel. This quick approval is a good indication that our arguments presented in court were solid and credible. If we need to go to trial I look forward to testify more specifically on my case. I expect the other victims will do likewise.
cc: Larry Waite; Connie Craddock; Dave Wilson; Shaun Devlin; André Marin; Jean St- Gelais; David Gallant; Eric Jacob; Maxime Boutin; James Callom ; Me Sabine Adam; Me Claude Gervais; Me Robert Racicot; Kim Lachapelle; Media; Stan Buell
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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Mon Feb 01, 2010 3:11 pm

Hello Dylan. I am just seeking written clarification on three or more questions to do with a retail, bank owned investment representative. The type of person who is licensed to sell stocks, bonds and mutual funds. The registration and license category used to be that of "salesperson" at the provincial securities commission until Sept 29, 2009, and now I understand that it has changed to "dealing representative".

Would you be so kind as to give me IIROC rules and regs on what a person in this category is allowed to call themseves, what they are licensed as, anything they have to do or say or represent to the public or to customers as to their title, their role and their duty of care for the customer. Also, can you inform me if there is anything they are NOT allowed to represent themselves as, titles such as "advisor" ,"estate planner", "vice president", "partner", "senior advisor"., etc etc that I have seen advertised by some?

Thank you very much for providing clarity with respect to IIROC rules and regulations on this matter.

best regards

larry elford
On 29-Jan-10, at 2:08 PM, Dylan Rae wrote:

Hi Mr. Elford,

Could you kindly provide me with a contact number so I can have the appropriate person here contact you directly?

Regards,

Dylan

Dylan Rae | Public Affairs Specialist, Public Affairs Department | Investment Industry Regulatory Organization of Canada | PH: 416 943 5846 | Fax: 416 364 0753 | drae@iiroc.ca




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-----Original Message-----
From: larry elford [mailto:lelford@shaw.ca]
Sent: January 16, 2010 12:15 AM
To: Dylan Rae
Subject: IIROC rules against "title inflation", a question for you Dylan

Hello Dylan, Larry Elford here in Alberta.

I was wondering if you could help me find the answer to an investment
industry question or point me to the rules and regs to search.

I am trying to answer a question of what an investment person can or
cannot represent him or herself as.

With license, roles, titles galore, are there any guidelines or rules
about what can be represented and what cannot?

thanks much for any help you can be.

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

Postby admin » Sat Nov 28, 2009 12:01 pm

From our files: ―...Warren Funt, the IDA's vice-president for Western Canada, says any criminal
matters are passed on to the police.‖When a criminal offence occurs, we refer the matter. We do
so even though in certain circumstances we would be surprised if police acted." Funt adds that
there are two types of forgery issues-— one that involves fraud and another that is simply a case
of a dealer filling in a missed signature for his or her client — and that the two are dealt with
differently. "A forgery is not always a forgery," he says. "It's not that simple in most
circumstances." ..‖. http://www.investorvoice.ca/PI/3115.htm July31, 2007 [The IDA has since
merged with TSX RS and is now known as IIROC]
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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Wed Jun 17, 2009 10:45 am

Mike Macdonald
Thursday, June 11, 2009

WHY I FEAR F.A.I.R.!



F.A.I.R. OR NOT FAIR?

I WOULD GRADE THEM
FAIR AT BEST!

The Canadian Foundation for the Advancement of Investor Rights (F.A.I.R.) was launched in September of 2008. Undoubtedly you have been as overwhelmed with their good work as I have!

Ermanno Pascutto, the Executive Director, has raised the funds ($3.7 million) necessary to launch the Foundation from IIROC; and of course IIROC is a merged entity created by Investment Dealers Association (IDA) and the Market Regulatory Services organization (MRS). We are delighted to see that such distinguished investor advocates are willing to back this venture!

For those of you without a sarcasm detector, the Investment Dealer Association and MRS are two of the very good reasons we need an advocate for the investing public. Both are “self regulatory bodies”, which in the investment industry seems to mean they help ensure the big players run the industry without having to worry about real regulatory bodies constantly demanding they do what is right for investors!

The goals of an organization often provide some insight into how they will carry themselves in the process of assisting you and me. As an investor advocacy group I would expect that the foundation would

n “provide clear policies for immediate implementation”,
n “demand action on outstanding issues”, and
n “fight to ensure investors are treated fairly”!

In fact F.A.I.R.’s primary goals include such hard hitting items as:
o “making reports”,
o “proactively identifying trends”, and
when bad stuff happens to investors they will
o “encourage action”!

So, you just lost your pension money in the market, discovered the advice you received was suitable for either an 18 year old with $40.00 to invest or a gazillionnaire looking for losses! You are mad, frustrated and most importantly broke!

n Your Advisor referred you to his boss, the Investment Dealer, who said tough luck buddy.

n You complain to the ombudsman for the dealer (if they even have one) but again, tough luck! !

n You can go to the Ombudsman for Banking Services and Investment (OBSI), again good luck!

n The IIROC folks appear to have no interest in the matter and the local paper agrees you got shafted but it is so common it’s not even news.

n So you head to the F.A.I.R. folks and say THIS IS NOT RIGHT!

So what can we expect? Based upon the goals of the foundation it may look like this:

Yes, we have identified that a trend that appears to be emerging is that you and your fellow investors are getting shafted on suitability. As a matter of fact we are preparing a report as we speak outlining this trend and also encouraging the IIROC to review their files and see if they are seeing a similar trend. If so we can assure you we will suggest they take some action at an appropriate time to make things somehow better. We want to be careful of course not to do anything drastic that might imply our “one time” funding (nudge, nudge, wink, wink) was being utilized to serve the one sided needs of the powerless investor at the expense of the well funded industry big boys!

What do we need? A great response to an investor would be something like this:

You are right, you have been shafted along with hundreds of others who have called and emailed us with their concerns.

We are preparing a press release naming the major offending firms and demanding a meeting with the Presidents within the week.

If it does not happen we are launching a media blitz and a letter/email campaign to all MPP’s and MP’s.

We are also going to be sending registered letters to the independent members of the Board of the firms who are the greatest offenders based upon our data.

We have begun to raise funds to support a class action suit against the major brokerage firms and mutual fund firms for return of hidden fees and lack of disclosure of fees in plain English/French.

The advisors have been knowingly selling funds without ensuring the investor is aware of and understands all the fees and risks and alternative investments they should be aware of!

In short we are going to be the worst nightmare for the IIROC and every other SRO who has let the investor down!

Okay, maybe I am looking for more than any foundation sponsored by the industry can offer. My point is that no group who accepts funds from an industry SRO can truly reflect the average investor.

n We need an Eliot Spitzer (the lawyer not the politician) who can hold large dollar penalties over the heads of these firms. Money talks and no investment firm is going to voluntarily give up easy money just to do what is right!

MY POINT: The situation is a crisis for small investors and a bump in the profit trail for major investment firms. Until the issues of the average investor can threaten the bonus of the big bosses NOTHING will EVER change!


Let me by very clear, F.A.I.R. are great people and I do not in any way doubt the integrity of the Directors of the Foundation. However, they set a dangerous precedent because they are toothless watchdogs; but they give politicians and the investment firms the ability to point and say “the interests of small investors are being met” by this august body of advocates.


Simply put; the best intentions of the F.A.I.R. Foundation is no match for the fire power of the investment firms. In real life David gets pounded to a pulp by Goliath!

Reality sucks, eh!

Sois mike
Posted by sois mike at 1:01 PM
Labels: WHY I FEAR F.A.I.R.
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Re: IDA spends it's credibility, changes its name to IIROC

Postby admin » Mon Dec 15, 2008 11:57 pm

Surprise!! The IIROC, IDA or Industry sponsored self police agency has caught another minnow to show us how effective they are. Stop the presses. We are safe in their care.

see the following release in the Investment Executive magazine, the industry trade mag:

Panel finds four instances of inadequate supervision


Monday, December 15, 2008
By IE Staff

A hearing panel of the Investment Dealers Association of Canada has sanctioned a Vancouver man for failing to adequately supervise options trading activities.

Following a disciplinary hearing held on Sept. 10-13, 2007 and Sept. 18-21, 2007 in Calgary, the panel found that Peter Deruyter Van Hee, as the Designated Registered Options Principal of Union Securities Ltd., failed to adequately supervise the account management and trading ................................................etc.,etc., etc

(advocate comments continued................another example of the private industry watchdogs sniffing out the smallest, least powerful players in the game for punishment, while those largest market participants go without a glance.
With over 90% of Canadian business done by the large players, and 90% of the funding for IIROC coming from those players, it is obvious as to why only some 2% of "actions" go against those big funding players. It is so nice to be able to police ones own actions................)
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Postby admin » Mon Sep 15, 2008 1:18 pm

BETWEEN THE LINES
Get a grip
Why does most securities enforcement
and regulation rest on conflicted SROs
and ad hoc committees?

Al Rosen
From the September 29, 2008 issue of Canadian Business magazine
Just when it seems that securities enforcement in Canada and the U.S. couldn’t be on more divergent paths, something comes along to change your mind — but not in a good way.

While self-regulatory organizations (SROs) exist in many professions, like medicine and law, they are perhaps most notorious in the securities and investment industry, where the financial stakes and conflicts of interest are high. Given the likelihood of abuse in the self-regulatory system, it should surprise nobody that there are regular and numerous head-scratching incidents to make investors wonder who is really protecting them. So why do Canadian legislators continue to rest the bulk of securities enforcement and regulation on the shoulders of conflicted SROs and ad hoc committees?

Perhaps the two biggest issues to solidify the contrast between Canadian and U.S. securities regulation this year have been the ABCP saga and the increasingly dangerous morass of IFRS.

With the first issue, asset-backed commercial paper, individual and institutional investors alike thought they were getting safe investments for parking short-term money. Instead, they got risky exposure to poor investments, had to seek out loans while their money was frozen, and could still face serious losses over the short term.

The moment the ABCP crisis erupted in August 2007, control was seized not by the Canadian government, and not even by a known SRO, but rather by a makeshift alliance of lawyers, institutional investors and various other parties. While the funds remained frozen, vital information was withheld, delay after delay surfaced, highly inventive legal manoeuvres took place and, over a year later, many institutional investors have been bullied into accepting unnecessary losses. While there are many parties that need to share the blame, it is clear that our government oversight failed miserably.

Contrast that with a very similar situation in the U.S. There the offending investments are auction-rate securities, the market for which started freezing up in late February. Within six months, regulatory investigations had been completed, and state and federal regulators were prepared to press charges against the biggest issuers of the securities. Not surprisingly, multibillion-dollar offers to buy back the funds from clients quickly surfaced.

It’s amazing the benefits that an active government can bring to securities markets. Unfortunately, Canadians can only stand by and watch in jealousy.

Turning to IFRS, the new International Financial Reporting Standards coming to Canada, our governments have shown equaldisinterest in overseeing an SRO that is selling investors down the river because of clear financial conflicts of interest. In Canada, IFRS was rubber-stamped by the accounting standard-setters who are financially controlled by the auditors who, in turn, disavow any duty of care to investors. While the Canadian Securities Administrators asked for public comment on the new standards, they also telegraphed their clear prejudice by attaching what amounts to a highly misleading letter of recommendation from the conflicted auditors.

In the July 21 issue, this column explained how numerous responses from various government ministries essentially passed the buck when it came to questioning the adequacy of IFRS for investor needs. Despite the fact that our legislators never intended to let our auditors hand over control of accounting standards to a foreign entity, that is what happened.

The mere thought of adopting IFRS in the U.S. prompted the House Financial Services Committee to grill Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke on the perceived wisdom of adopting IFRS, given its widely reported shortcomings. And that is just the first of many government hurdles that will need to be cleared before the U.S. even considers the mandatory use of IFRS.

The lesson seems clear: it’s time to dump the SROs when it comes to overseeing securities enforcement and accounting standards. The financial stakes are too high, and the conflicts of interest in self-regulation are too great to ignore.

Al Rosen is a forensic accountant and principal of Rosen & Associates in Toronto. He writes frequently for Canadian Business magazine.
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