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

[Guest]

Mutual fund body rejects link with IDA
'Not in the public interest'

Theresa Tedesco
Financial Post


Wednesday, November 16, 2005


The Investment Dealers Association has been rebuffed in its attempt to merge with the national mutual fund industry's self-regulatory agency because "it is not in the public interest" despite the IDA's plan to shed its role as a lobby for the brokerage industry.

According to a letter distributed to 180 members of the Mutual Fund Dealers Association of Canada two days ago, the self-regulatory agency's 13-member board concluded "that it should not enter into discussions at this time" to merge with the IDA to create one self-regulatory organization for mutual fund and investment dealers.

That rationale is based on the conclusion that "it is not in the public interest at this time," and that "a merger would raise a number of complex and difficult issues," said the letter from Larry Waite, MFDA president and chief executive.

"The commencement of merger discussions with the IDA would create significant, and in the board's view valid, confusion and concern on the part of members that the extensive time, effort and cost that has, to date, been directed at making the MFDA an effective regulator, was wasted," declared the letter outlining the reasoning for its decision.

The IDA's overture, which was presented formally to the MFDA in September, was formally declined by the self-regulatory agency's board of directors after a meeting on Oct. 25.

The IDA had publicly urged the MFDA and Market Regulation Services Inc. (RS) to engage in merger talks to bring together the oversight of Canada's brokerage and mutual fund-dealer industries with the policing of Canada's largest stock markets.

Since it stated its intentions in July, the national self-regulatory body that regulates and lobbies for the brokerage industry has argued unsuccessfully to get a commitment for the consolidation of the three self-regulatory agencies.

Earlier this year, RS, created three years ago, held exploratory discussions although its board has not authorized formal merger discussions with the IDA, which owns 50% of the market regulator.

Sources say the MFDA, created in 2001 to regulate the $550-billion mutual fund industry, says "while the MFDA and IDA perform similar regulatory functions, there is no regulatory overlap."

More important, critics of the merger have resisted the proposed consolidation in part because of the IDA's trade association role, which would create the perception that the brokers' lobby group would also be overseeing and regulating the trading by its own members.

Sources say the MFDA considers itself a "pure regulator" and is concerned about the "trade association culture" at the IDA.

But Joseph Oliver, president and CEO of the IDA, dismissed the concerns. "We were not speaking to them based upon the existing structure but rather on the assumption that changes would be made," he said yesterday.

Last month, the IDA put forward a proposal to its membership that would split the 89-year-old organization into two separate entities to address the perceived conflict of interest. The plan calls for the creation of a separate trade association to represent the brokerage industry and a second regulatory agency to police it. Approval from a majority of the IDA's 190 member companies is required.

Meanwhile, Mr. Oliver expressed disappointment with the MFDA's decision to turn down merger talks. "We continue to believe it's in the public interest to consolidate," he said.

However, the MFDA's board, led by chairman Robert Wright, wasn't convinced.

"The announced intention of the IDA to dispose of its trade association activities will need to be monitored with a view to determining whether, in practice, the different roles are effectively separated," declared the letter to mutual fund dealers and distributors.

© National Post 2005

[Guest]

Paul Bourque

SVP Regulation, IDA
"First, let's get the facts straight. The only legislative power the provincial governments "delegate" to the IDA is registration of brokers -- and even that is only delegated in B.C., Alberta and Ontario. The provincial governments do not "delegate" securities industry compliance and enforcement."

- Paul Bourque

Penalties needed
01 November 2004, NATIONAL POST

[Guest]

For the Record



Another reason why the IDA should not be regulating anyone.





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BY MATHEW McCLEARN

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June 06-19, 2005

Carolann Steinhoff was at the top of her game. Until she decided to quit ScotiaMcLeod. That's when an all-out rumble broke out over who would get her customers. Because, in the brokerage business, your book is everything

WHOSE CLIENTS ARE THEY, ANYWAY?



When a person knowingly changes account statements

which misrepresent the truth in order to gain something, is that not fraudulent?



Why did the IDA go after Steinhoff instead of ScotiaMcLeod?



Any guesses?



The Chair of the Investment Dealers Association of Canada at the time was....

Brian J. Porter
Deputy Chair

Scotia Capital Inc.



Any more questions?

[Guest]

from the Ida.ca web site:

The securities commissions delegate certain aspects of securities regulation to the Investment Dealers Association of Canada, the Mutual Fund Dealers Association of Canada, Market Regulation Services Inc., and the Montreal Exchange.
These organizations are self-regulatory organizations (SROs). A self-regulatory organization is an organization that has been given the authority and the responsibility to regulate its members.
The Canadian SROs have been delegated responsibility by provincial governments to ensure that SRO Members meet agreed-upon standards that are written into the provincial laws governing securities. The SROs regulate markets and trading as well as Member firms, their employees, and their business practices, by:
setting standards that registrants must meet prior to employment;
creating rules governing how markets must operate;
monitoring and examining investment dealers on a regular basis including setting capital requirements to ensure firms are solvent and following all the rules;
extensively investigating suspected infractions; and
employing investigators and compliance officers to ensure the dealer community is meeting these standards.

The Investment Dealers Association is responsible for the regulation of its Members firms (Member Regulation) and monitors the bond and money markets. To find out if a firm is a member of the Investment Dealers Association, see our Member List.
The provincial securities commissions and administrators have formed a national group to work towards making securities regulations consistent and harmonized across Canada. This group is called the Canadian Securities Administrators (CSA).

(monitoring, evaluating, measuring thier own members appears granted to them...........but no where does it appear they have been given statuatory authority to enforce the provincial security act..........am I missing something here, or have the provincial commissions dropped the ball by assuming they could turn securities act complaints over the the IDA??)

[Guest]

interesting to see today's Globe and Mail article saying that the IDA has voted to "split" itself apart, making two divisions of the same organization.

In this they are finally admitting to the conflict of interest under which they operated for so many years.
One side of the Investment Dealers Association will now admit to it's role as an industry trade organization and lobby group for the interests of the industry. The other side of the IDA will continue to masquerade as some sort of a self regulatory agency, giving Canadians the impression that an impartial agency is charged with securities regulation. The sad part of this is that the Provincial Securities Regulators are sold on this concept, and they delegate any and all IDA firm conplaints directly to the IDA. This lets the provincial regulators off the hook (they feel) entirely for enforcement of securites law.
Meanwhile the only areas the IDA has authority over is regulation of it's own membership, (brokerage firms and their employees) and not status to enforce the Securities Act.
They are also trying to regain credibilty by offering to merge with the MFDA, and the MFDA is wisely having nothing to do with them.

(see ASC forum for related stories and potential class action)

[urquhart]

Here is another reputable industry player asking for the IDA to fix its sorry record of conflicts of interests. The IDA cannot be a self-regulator of investor abuses, while it is also an industry lobbyist. Canada's system of investor proection and securities enforcement is being revealed as a sham everytime there is civil litigation success, like the CIBC fiasco, and prosecution of Canadian companies and executives by U.S. authorities, like the Hollinger executives.
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Divide and dither

How can the Investment Dealers Association of Canada do one thing and its opposite?


By DOUG STEINER
Friday, August 19, 2005

The Investment Dealers Association of Canada, one of the multiple regulators that oversee my business, looks like a crazy fire station to me—first trying to prevent fires, then fighting blazes after they start while also running a store out back selling matches and gasoline. All these things are needed, of course. But should one organization do them all?

The IDA is the self-regulating body and trade association for the securities business. The selection of its board of directors and its senior staff is strongly influenced by investment dealers. The IDA has two distinct missions: 1) protecting investors, and 2) enhancing the efficiency and competitiveness of Canadian capital markets. Among many other things, the IDA makes sure that brokers are properly registered, and that dealers have enough capital to do business. IDA staffers mean well, and they would like to do a better job of protecting investors. The trouble is, the association also has to lobby governments for measures that will enhance dealer profits, not impair them.

The conflict seems obvious to everyone except the dealers. The IDA's website refers to its "complementary" missions. The reasoning goes like this: Who else can protect people when only we know what's going on in the industry? Another benefit is that the public doesn't pay for the regulation. That's like saying that you don't pay for a car warranty.

In practice, the IDA avoids some important investor protection issues. Here's a small example. The association has just published a very useful guide to bond investing. But, oops, it doesn't mention that the IDA helped set up the rules for bond trading. And just try to figure out what the rules are for getting individual investors the best price on a trade, or how much commission dealers can charge.

The IDA allows dealers to skirt what I believe should be their duty to get individuals the best price. The guide explains that most bonds don't trade on an exchange—brokers trade them by phone. So an institution placing a big order might get a better price than you, and a dealer might charge a lower percentage commission on a $1-million order than on a $10,000 order. When talking to an adviser, the guide says, "you should discuss commission." Gosh, thanks for the tip.

In fact, trade-by-trade Canadian bond price data stretching back five years are available. A senior official at the IDA told me the issue of best price "is probably something that they should look at." I first heard that line more than two years ago.

Then there's the IDA's wonky approach to investor protection. Last December, the Ontario Securities Commission thumped four mutual fund firms that had allowed speculators to engage in market timing when trading their funds between 1998 and 2003. The OSC ordered the firms to pay back $156.5 million to investors. In March, the OSC ordered another fund firm to pay back $49.1 million. Of course, dealers executed those trades.

In December, the IDA pilloried the dealers involved in the case. Three dealers coughed up $41 million in penalties—then grumbled privately that it was a "shakedown." And the speculator clients? They aren't under the IDA's jurisdiction, and they got to keep their questionable profits. What happened to the $41 million? About $7 million went to mutual fund investors. The rest went to the IDA to cover the cost of hearings and to support "projects in the public interest."

Yes, the IDA is often great after the fact when it penalizes brokers or firms for playing fast and loose with clients' money. On its website, you can search a database of individuals and firms that have been penalized. But it doesn't include all the original complaints. Paul Bourque, the IDA's senior vice-president of member regulation, says that 91% of the 26,000 staff at member firms have had no complaints filed against them by clients or their firms. So, perhaps 2,300 have. Bourque mentioned that 23 individuals have had more than 10 complaints. Wouldn't you like to know if one of them is your broker?

Now the IDA has even bigger plans. In a speech in June, IDA president Joe Oliver said the association would like to consolidate efforts with the Mutual Fund Dealers Association—which oversees mutual fund sellers—and Market Regulation Services Inc., the independent regulator for Canadian stock exchanges. Those folks want none of it. Many of them also say that the IDA should form a task force to examine its own practices.

Some day, I dream of going to an IDA website and viewing a log of all investor complaints, and the responses of the hard-working IDA staff. On another page, the dealers who, in effect, run the joint will be able to defend their practices.

Doug Steiner is a managing partner in Venturion VGI, a Bay Street investment fund.

[Spock]

I would be interested to know of the 60 million in fines how much was collected and of the 32 people banned for life how many had already left the industry?

[Guest]

from OSC town hall questions and answers.............there is enough self serving prevarication in this answer to make a bull pinch his nose from the odor.


from
http://www.osc.gov.on.ca/Investor/TownH ... -and-a.jsp

51. Question for IDA and Joe Oliver re Senate Committee presentation: The CEO of the IDA, Joe Oliver, in his April 14, 2005 presentation to the Standing Senate Committee on Banking, Trade and Commerce, states on page 2 that “An investor who believes he or she has been subject to unfair or improper business conduct is encouraged to send a written complaint to the Association”. Why should an investor have confidence in sending a complaint to a lobby group of the brokerage industry which is registered as an official lobbyist in the Ottawa register?

Self-regulatory organizations are not limited to the securities industry—lawyers, doctors, engineers, nurses, the police, and virtually all professionals are regulated by self-regulatory organizations. All these organizations, like the IDA, have consumer protection mandates. On any issue where there may be a conflict between our Members’ interests and the public interest, the public interest will always prevail. The issue is not the existence of conflicts but how they are managed and whether the people managing them do so with integrity.


The nature of self-regulation implies a potential conflict which is addressed in a variety of ways. The securities commissions must approve all public interest by-laws after publication for public comment. The IDA is also subject to regular oversight and audit of our activities by the securities commissions. We rely on a series of checks and balances, including public directors on our Board and all our governance committees, including the Executive, Audit and Regulation Oversight Committees. Transparency is a high priority. Disciplinary hearings are open to the public and the complete disciplinary record—Notice to Public, Notice of Hearing and Particulars, Settlement Agreement, Reason for Decision, Disciplinary Bulletin and Media Release—is available on our website, along with monthly updates on complaints, investigations and prosecutions statistics.


We believe that our record speaks for itself. In the past three years, we have conducted 173 hearings, fined firms and individuals a total of $60 million, and banned 32 individuals for life.

"Yes, Joe, your record definitely speaks for itself". It is not very flattering of your organization when viewed from the outside.

[Guest]

Self regulation is a privilege, not a right. SROs are delegated regulatory functions by the Administrators, adn SRO by-laws and rules are designed to uphold the principles of securities legislation. The commissions monitor the conduct of the SROs as the SROs carry out this regulatory function, and review the rules of the SROs in the province to ensure that the SRO rules do not conflict with securities legislation and are in the public interest.

SRO rules must set a standard equal to or higher than those imposed by the provinces.

the IDA has lost the right to act for canadians, and the respect of canadians.............in my opinion

Now they appear in the news starting to change thier tune lately, after the damage they have done is becoming public.

[admin]

Once again the IDA proves (to me) that it is the Fox in charge of the henhouse by the type of people they stock this panel with.

"The task force will be composed of securities-law and corporate-governance experts, industry participants and senior corporate officers. It will have between eight and 10 members when it begins its work in the fall." (from the above national post article)

The IDA is for Investment dealers, funded by investment dealers, and totally unqualified to be allowed any regulatory role whatsoever in the Canadian Investment Industry. They are not doing the job as promised and should be held accountable at some point for the misrepresentation they practice.

[Guest]

IDA panel to probe securities rules
$7-million in funding: Independent task force won't address national regulator

Wojtek Dabrowski
Financial Post


June 27, 2005


BANFF, Alta. - A task force of legal, investment and corporate experts will undertake a sweeping review of securities regulation in Canada to determine how best to modernize current rules, the Investment Dealers Association will announce today.

With $7-million in funding from the IDA, the panel will look at issues such as enforcement, investor protection and the regulatory burden faced by market participants. Although it is being funded and established by the IDA, the task force will act independently.

"I don't think that regulation has kept up with capital-markets developments and the needs of individual investors," IDA president Joe Oliver said in an interview yesterday.

He will officially announce the initiative at the IDA's annual conference in Banff today.

The task force will be composed of securities-law and corporate-governance experts, industry participants and senior corporate officers. It will have between eight and 10 members when it begins its work in the fall.

Among them will be Jacques Menard, the chairman of BMO Nesbitt Burns Inc., and John Coffee Jr., a law professor and governance expert at Columbia University Law School. Jill Denham, former retail markets head at the Canadian Imperial Bank of Commerce, and Robert Pritchard, CEO of Calgary-based Taylor Gas Liquids Ltd., will also be members.

The group's mandate will set it apart from most other groups looking at securities regulation in the country, Mr. Oliver said. That's because the panel will remain "neutral" on the contentious idea of replacing Canada's patchwork system of 13 securities regulators with a single body, he said.

The task force will report its findings and any recommendations by September, 2006, and plans to consult with any interested parties.

It will examine a broad spectrum of the contents of Canadian regulation, from prospectus filing requirements to whether hedge funds should have to register with securities regulators.

The IDA last month produced a report on hedge funds, which called for greater transparency and closer scrutiny of the asset class. The report came in the wake of the high-profile collapse of Portus Alternative Asset Management Inc., a Toronto hedge fund firm that sold its product to as many as 26,000 retail investors.

In looking at prospectus requirements, the panel wants to see whether an overhaul is necessary, Mr. Oliver said.

"Is the current prospectus useful or is it obsolete?" Mr. Oliver asked. "People tend, we hear, not to read prospectuses and when they try to, they often find them impenetrable."

The group will also examine how enforcement of securities laws and regulations can be improved in Canada. Everyone from business executives to retail investors has criticized the way white-collar wrongdoers are pursued in Canada.

Last month, Dominic D'Alessandro, Manulife Financial Corp.'s chief executive, said securities regulators would be more effective if they had "teeth" with which to pursue "bad apples" rapidly.

While the task force's mandate will be to look at modernizing Canadian securities regulation, it will look south of the border and to Europe for comparisons.

[admin]

Joe Oliver,
President, IDA
"The IDA is Canada's only national entity with delegated responsibility for securities regulation and investor protection." - Joe Oliver
Evidence given before the
Senate Standing Committee
on
Banking, Trade and Commerce
02 November 1998

6 YEARS LATER (almost to the day)
Paul Bourque
SVP Regulation, IDA
"First, let's get the facts straight. The only legislative power the provincial governments "delegate" to the IDA is registration of brokers -- and even that is only delegated in B.C., Alberta and Ontario. The provincial governments do not "delegate" securities industry compliance and enforcement." - Paul Bourque
Penalties needed
03 November 2004

Given that the IDA appears to not even be clear on what they are, what they do, and what legislation they are following...........how are we to believe that the law is being followed when the Alberta Securities Commision (or Ontario, or others) reduce their own workload by referring all related complaints to the IDA.

The chickens (clients) are complaining of abuse in the henhouse, and their complaints are all referred to the Fox's Association (IDA). The ASC/OSC/BCSC is in the job of doing..............what again? Protecting the public, or protecting their incomes? Shame on them for looking the other way and not saying the truth.

Thanks to www.investorvoice.ca for the research and quotes.....best site on the web for canadian investment industry practices

[admin]

1. Would you send an abused child to see the North American Man Boy Love Association with his complaint?

2. Would you send an elderly investment client who suffered financial abuse by an IDA firm to see the Investment Dealers Associaiton?

(hint, the answer to number one should be obvious)
(the answer to number two is one of Canada's greatest public embarrasements)

To allow either of these organizations to pursue their own private and self serving agendas is unfortunate. To allow the IDA to do so, while misleading the public they are objective and imparital judges is simply criminal.


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(admin adds Jan 2006, that the IDA, if it has in any way misrepresented it's dual role to the public, could find it's officers guilty of section 122 criminal code provisions titled Breach of Trust)

If the provincial securites regulators state that they delegate all IDA matters (complaints) to the IDA, and the IDA does not appear to have statuatory authority to enforce the securities act.........who is misinformed here?

Is the IDA allowed to enforce the Securities Act? Or as one senior IDA compliance officer has stated publicy, that about the only thing provincial securities commissions have delegated to the IDA is registration of salespeople?

Can anyone shed light on the legality of this, because all the provincial securities commissions seem to be well able to pass the buck to the IDA, but not very well able to prove this is the right and proper legal road to have travelled down. (ASC unwilling even to submit to proper provincial audit as required by law......are they the right people to serve us) (sorry, another forum, I know)