Financial Abuse by "Trusted Professionals"

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Postby admin » Mon Sep 15, 2008 7:42 am

Wall Street has become fundamentally corrupt
By Steven Pearlstein
Friday, September 5, 2008; D01

We're entering that exciting phase of any financial crisis when the lawsuits come fast and furious, criminal charges are lodged, and Wall Street firms agree to pay hundreds of millions of dollars for having snookered their customers once again.

In recent weeks, Merrill Lynch, Goldman Sachs, Deutsche Bank, Citigroup, J.P. Morgan Chase, Morgan Stanley, UBS and Wachovia have reached settlements with state regulators under which they agreed to pay more than $500 million in fines and penalties. They have also agreed to buy back more than $50 billion in so-called auction-rate securities from retail investors who had been misled into believing that those securities were as safe as shares in money-market funds.

On Wednesday, a federal grand jury in Brooklyn indicted two former brokers at Credit Suisse on charges of lying to corporate clients about how $1 billion of their money had been invested. The investors thought it was in securities backed by federally guaranteed student loans. In fact, it was put in riskier mortgage-backed auction-rate securities that earned higher fees for the brokers and their firms, prosecutors said. The alleged fraud may have caused losses to the clients of as much as $500 million.

Earlier this summer, two executives from Bear Stearns were charged with nine counts of fraud for allegedly telling investors in a conference call that their hedge funds were in fine shape while, in private e-mails, they fretted over recent losses and, in one case, had just pulled their own money out of the funds. A month after the call, the funds collapsed, costing investors $1.6 billion.

Now comes word from the Bloomberg News Service that the Justice Department has launched a criminal investigation of J.P. Morgan Chase and other banks following civil allegations that they conspired to overcharge local governments for hedging on the interest rate risks in their bonds. One such government customer, Jefferson County, Ala., which claims it was overcharged by as much as $100 million in financing a new sewerage system, is now on the brink of bankruptcy.

What is so telling about these stories -- and, rest assured, there will be many more before we're finished -- is that they come only a few years after these same companies reached similar settlements for defrauding many of the same investors during the telecom and dot-com boom. While the fraud back then had more to do with bogus research and accounting and manipulation of initial public offerings, it is clear that they sprang from the same slimy ethical culture that has produced the current credit crisis. Wall Street has become a fundamentally corrupt enterprise in which the motto is: "We'll do anything for a fee."

I refer not to the narrow legal definition of "corrupt," but to the general instinct to mislead clients, double-cross and collude with counterparties, and pull the wool over the eyes of investors. It is the kind of corruption grounded in the attitude that it's all just a game in which the only rules are "buyer beware" and "heads I win, tails you lose." In a corrupt business culture like that of modern-day Wall Street, cynicism is rampant, candor and accountability are first casualties, and a man is measured by the size of his bonus rather than the depth of his integrity. It's not so much immoral as amoral.

The tell-tale signs of this endemic corruption now litter the financial landscape.

To find it, look no farther than the televised bleatings of research directors and equity strategists who, until the last few weeks, were still talking about a stock market rebound in the second half of the year and have never once forecast a losing year for the S&P 500.

You can find it in the spectacularly misguided mergers and acquisitions that were conceived, negotiated, blessed and underwritten by investment bankers who are paid enormous fees no matter how things turn out for investors. Their latest bright idea: the merger of Fannie Mae and Freddie Mac.

It's right there in the Wall Street Journal, where it is reported without a trace of irony, that some master of the universe who was forced out of Citi for overseeing the loss of billions of dollars has been snatched up by Morgan Stanley while another is staked for a couple of billion dollars to start his own hedge fund.

There would have never been a subprime mortgage crisis if Wall Street's underwriters had not been on the phone to bankers and brokers with incessant calls for more "product," by which they meant any loan for any amount to any borrower that could be packaged and sold off without even a pretence of due diligence and shopped around to the rating agency most likely to trade a triple-A rating for a triple-A fee.

These people are not your friends. They have already racked up half a trillion dollars in credit losses, wiped out five years of shareholders' profits and taken the wind out of the sails of the global economy. Given the situation, you'd think the leaders of this industry would have stepped forward to acknowledge the extent of the damage and apologize for their deep complicity in it. Instead, they have pointed fingers at the media and short-sellers, offered lame excuses about unforeseen market forces and warned of dire consequences from increased regulation, as if things were not dire enough already.

This is an industry that has lost all credibility -- with investors, with corporate clients and with the public. Its fundamental problem is a corrupt culture that is shaped by inflated fees and excessive compensation that bear too little relation to the risk, skills and innovation involved. Until that excessive compensation is competed away and that culture is transformed, Wall Street will continue to serve up a steady diet of booms, busts and financial scandals.

Steven Pearlstein can be reached
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Postby admin » Sun Sep 14, 2008 5:59 pm

Saturday, April 26, 2008

I congratulate the CTV for having the guts to light a fire under the brokerage business and expose the total disregard that can exist for your money! But, alas, don’t wait for anything to change anytime soon! Too many people are making too much money pretending to be working for you!
Lets track down how all these evil deeds might be able to take place even in the biggest nanny state (province technically) in the nation, Ontario! It is as simple as following the money that leaves the customer account and figuring out where it ends up!

Ø Your broker wakes up in the morning and says “should I spend hours researching the stock universe for a truly undervalued stock for my loyal customers……or should I pick up the brokerages list of “action stocks” I should be pushing….er recommending”. Assuming I go with the list I can always claim I only recommended the stock after diligent research including logging onto my company website and reading the list! This effort is rewarded by soliciting a sale and earning a few hundred bucks for myself and the mother corporation!

Ø For those following at home, try to picture about 10,000 brokers sharing the same morning exercise and multiply by about $200. per….hmmmm quick math gives me about $2 million and its not even coffee time yet!

Ø Now the math gets tougher because we need to balance debits and credits….I learnt that during my week as a teller! That means client accounts must go down by $2 million as well. So when you get up in the morning and have your coffee, you have already helped the economy grow….and by economy we do mean the brokerages/banks in this example!

Ø Now the bad part for your broker is that they need to split the commission with the parent corporation so your broker has only actually made $100. from your account this morning…although you of course have lost an additional $100 to feed the bank/brokerage.

Ø Of course the neat part for the broker is its only the morning and they have about 200 other pigeons… I mean customers…they can repeat their efforts with in the afternoon.

Ø Now comes the tricky part….the trades are reviewed for ‘suitability” to, you know, protect your interests from some stupid trade that might not be necessary. Now who provide this quality control check in the brokerage world? It would be the branch manager. The branch manager is an experienced broker who has learned all the tricks and can spot a poor trade with his/her eyes closed. For doing this diligent job the branch manager receives compensation. Now think back again to the $100. that the brokerage/bank has made. Would you be surprised to hear that the manager was in on the skim and might make an income based upon how much revenue is generated by the broker? This override on revenue generated should be just the incentive to keep the manager from actually opening those eyes we discussed!

Ø Thankfully the companies all have hard working and honest compliance folks who truly do keep a diligent eye on what trades are taking place. Now the skeptic might ask who are they looking to protect….customers or brokers? You see, if too much money is skimmed (think of Vegas) then the authorities (security regulators) might actually look real close at what is going on. Rule #1 is do not kill the goose!

Ø Now you the customer might eventually get upset and begin to see what is happening. Your complaint goes to the branch manager, who then evaluates your complaint with great concern. The focus is clear: might this complaint be big enough to harm the “goose”? Fortunately, the little guys known as clients are rarely of a size to do any significant harm to the goose. So your complaint is actually a request to the broker to potentially lower his/her income in return for which they will get an angry broker and lots of paper work.

Ø Now we are back to multiplication…..if the goose is exposed to too many complaints it may actually actually get sick. The branch manager (goose keeper) will, if push comes to shove, choose the goose over the individual broker! That’s because the system only works if the customers remain ignorant of the skim. If a dozen small complaints roll up to a regulator there is once more a potential risk to the goose.

Ø Hold on though! The industry has a secret weapon up their sleeve. The regulator is funded by the brokerage/bank. Indeed the full circle is now complete. Your money funds the broker, the branch manager, the compliance team, and the regulator! The only person not profiting would appear to be…!

I know this has been a long exercise, but remember, it’s only 10am. This industry still has the bulk of the day ahead of them! At a collective $2mm a pop, we should be thankful that the stock exchange does not share the 8-8 philosophy of the green bank!

Disclaimer: I really do want to point out that not all 10,000 brokers in the above scenario are churning accounts. The fun part of the game is you don’t know which ones are churning and which ones are working hard for their clients! A BIG clue can be found in your monthly statement! The better brokers are moving to a flat percentage fee where high trading is less of a concern for clients. If you make more than 10 trades a year maybe you should be talking with your broker……if they are back from Tuscany!
I think I am beginning to see why they are called brokers…….when they are done, we are broker! soismike ... chive.html
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Postby admin » Sun Jul 27, 2008 7:19 pm

non-bank ABCP
Atlas Cold Storage
Business Income trusts
Highest fund fees in the world
Mutual fund market timing scandal

Ken K
Billions in undue losses each year

“.. The American system [of enforcement] is much different. As a matter of legal culture we don’t put people in jail like they do. Our aim as a Commission is not to punish. We ensure they can't do it again by taking them out of the market.” –Sasha Angus, Director of Enforcement at BCSC. Source: T. Williams, A slap on the wrist? , IE Aug., 2006 pg 1 [This effectively says if a person involved in financial assault is caught, he/she is not held to account by BCSC. He’s banished from an industry or position and that’s supposed to be justice.]

"We are pleased -- we are free to regulate effectively in the public interest without concern that we are subject to legal action from individual investors"- Jeff Kehoe, IDA enforcement litigation director [ on hearing a Supreme Court decision that dismissed the idea that the IDA owes any duty of care to individual investors] Source: Oct. 26, 2002 [ What more can we say? his words speak for themselves ]

“ It’s not going to happen here. It’s just not part of the Canadian justice system and Canadians aren’t looking for that ”- OSC head of enforcement Mike Watson commenting with respect to lengthy sentences for white collar criminals. Nov. 2007 Source:

"Things have definitely gone backward since Bre-X.- The federal people point to the provinces, the provinces point (to) the federals. People point to different police forces and nobody does anything."-Al Rosen, one of the country's most outspoken forensic accountants. Source: Business scandals dog Canadian markets ... 1a50aeee6f
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Postby admin » Sun Jul 27, 2008 7:18 pm

How Wall Street Wrecked Your Retirement

By Nicholas von Hoffman,

The Nation.

July 25, 2008.

People are discovering they have been forced into a system in which others have gambled with their retirement savings and lost it.

Our disfunctional financial system hit a new low last week when Citigroup, the hopeless wreck of Wall Street, announced it had lost $2.5 billion in the past three months -- a cheer went up, and so did the Dow. Only $2.5 billion; people were afraid the losses would be much higher. Happy days are here again.
There are no happy days for the millions of Americans who have been trying to put away some money for their retirement in tax-sheltered entities like IRAs, Roth Accounts and 401(k)s. For them, the market's downward slope has been harrowing and frightening. When will the steady erosion of their savings end? And when it does, what will be left of their future financial security?

Many of the millions suffering through these worrisome months didn't buy a house they could not afford, didn't speculate on their homes, didn't let greedy impulses lead them to the edge of foreclosure or bankruptcy. Nevertheless, the excesses of their neighbors and the criminal folly of American finance is destroying their plans for retirement. It is dragging down much of the value of their homes, on which they have never missed a payment, homes on which they were counting on selling at retirement to help finance their last years in comfort.

For years, the privatization propagandists have been telling people that when the time comes, Social Security will not be there for them. Now many are learning that it's their private savings that may not be there. They are discovering they have been forced into a system in which other people have, in effect, been allowed to gamble with their retirement savings and have lost it.

The way the private, you're-on-your-own retirement system was supposed to work had individuals, during their younger, working years, investing in stock through tax-sheltered accounts. Almost nobody who is not breaking the law can choose among individual stocks and make money, so future retirees have been encouraged to buy mutual funds run by professional managers, who are supposed to be able to pick the winners.

Most of them aren't much better at doing that than are their customers, but in a rising market, a chicken pecking at stock tables can pick winners. In boom times, it doesn't matter that the future retiree must choose among thousands of mutual funds, many of which carry ruinously high fees. The damage to people's savings goes unnoticed until the market begins to go down.

Even as the market falls, future retirees are told not to panic, to keep their money where it is, because in the long run the value of their accounts will go up and they will have many a happy sunset year traveling the globe and showering their grandchildren with presents.

As the retirement date comes near, they are advised to begin selling stocks and buying fixed-income securities -- as bonds are sometimes called -- because these pay the interest they earn on a fixed schedule, providing a regular income.

For this to work, stock prices must be high when the holdings are sold and the bonds purchased must pay high rates of interest. But what happens when the stock market is in a nosedive and interest rates are half of the inflation rate, as is the case right now? Panic and worry, no golden years of travel, no presents for the grandchildren. The energy that was to be expended on leisure activities is spent instead trying to figure out how to make ends meet.

The bright spot is Social Security. That check does come with the regularity of the calendar, whether the market is up or down, whether interest rates be high or low and if, as is the case now, the Greenspan-Bush inflation is destroying family budgets. Social Security adjusts for the rising prices.

But Social Security is too narrow a ledge to stand on through the years between retirement and death. It was designed as the base on which other retirement savings were to be built.

Those savings -- the house and the tax-sheltered retirement accounts -- are shriveling up and blowing away. The persons for whom Americans' savings have been a reliable source of income are the brokers, the lawyers, the account administrators, the whole tribe of Wall Street fee farmers. They get other people's retirement money regardless of the direction the market may be moving in.

You can't call it a broken system because it was a bad one from the start. It is failing, just as its critics said it would. And what lies ahead for those whose retirement savings are gone may be a very unpleasant old age.
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Postby admin » Fri Jul 18, 2008 9:39 am

Disclose material facts

John De Goey

(March 2008) How exactly might a person define the word "material" — as in:

"Professional Advisors must always disclose all material facts when making product and strategy recommendations to clients?"

The dictionary suggests synonyms like relevant, substantial and pertinent could all be used in place of the word "material."

To my mind, any piece of information that causes a person to change their opinion or behaviour is material. For example, if you were a smoker and I were the first to inform you that cigarettes cause cancer, I would say that the information was material if it caused you to change your habits.

Obviously, one could quite properly add that the information could be relevant, substantial and pertinent whether one gives up smoking or not. At that point, materiality is debatable. However, once the end-user's behaviour changes, genuine materiality can safely be assumed to be the cause.

For some time now, I've been making written disclosure to my clients that most actively managed mutual funds lag their benchmarks and that the few that seem to outperform cannot be reliably identified in advance. Not surprisingly, most of my clients resist using actively managed funds once they've been presented with this information. There is nothing in the industry that requires that this disclosure be made.

As a result of this, it has become clear to me that disclosure is a significant contributor to consumer decision-making and can be used to manipulate choices. Similarly, non-disclosure can be used to direct and impact on decisions, too. What a financial intermediary (be it an advisor or product manufacturer or advisory firm) discloses often has an impact on what a consumer chooses. This then begs the question: where does one draw the line on what does and does not need to be disclosed?

Most advisors don't make disclosures about the relative merits of active and passive management approaches. Similarly, most clients don't change the way they invest or their belief systems about the subject after meeting an advisor. Ask me no questions and I'll tell you no lies.

I can't help but notice that disclosure often has a direct impact on the selection of products and strategies. After all, how can anyone be concerned about something that they are unaware of?

In the financial services industry, the sales culture holds sway over the professional culture largely because material disclosure, which is a primary attribute of professionalism, is bad for business. If advisors and the firms they work for were genuinely concerned about their clients' welfare, they would not only give good and comprehensive advice, but full disclosures would be commonplace.

As it now stands, only a small number of STANDUP (Scientific Testing And Necessary Disclosure Underpin Professionalism) advisors ever bother to explain this to their clients.

Advisors ought to be able to think for themselves and to recommend whatever products and strategies they feel are best for their clients. However, I don't believe that exonerates them from the willful concealment of material facts.

If nothing else, advisors shouldn't deny their clients of a right to be wrong. Advocate whatever you feel is best, but tell clients the other side of the story. Get them to sign off on your disclosure and then let them decide for themselves. Collectively, we have been too paternalistic for far too long.

This article first appeared in the February 2008 issue of Advisor's Edge Report.

John J. De Goey is a Senior Financial Advisor with Burgeonvest Securities Limited (BSL) and author of The Professional Financial Advisor II. The views expressed are not necessarily shared by

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Postby admin » Fri Jul 18, 2008 9:37 am



July 13, 2008
The Prescient Are Few
HOW many mutual fund managers can consistently pick stocks that outperform the broad stock market averages — as opposed to just being lucky now and then?

Countless studies have addressed this question, and have concluded that very few managers have the ability to beat the market over the long term. Nevertheless, researchers have been unable to agree on how small that minority really is, and on whether it makes sense for investors to try to beat the market by buying shares of actively managed mutual funds.

A new study builds on this research by applying a sensitive statistical test borrowed from outside the investment world. It comes to a rather sad conclusion: There was once a small number of fund managers with genuine market-beating abilities, as judged by having past performance so good that their records could not be attributed to luck alone. But virtually none remain today. Index funds are the only rational alternative for almost all mutual fund investors, according to the study’s findings.

The study, “False Discoveries in Mutual Fund Performance: Measuring Luck in Estimating Alphas,” has been circulating for over a year in academic circles. Its authors are Laurent Barras, a visiting researcher at Imperial College’s Tanaka Business School in London; Olivier Scaillet, a professor of financial econometrics at the University of Geneva and the Swiss Finance Institute; and Russ Wermers, a finance professor at the University of Maryland.

The statistical test featured in the study is known as the “False Discovery Rate,” and is used in fields as diverse as computational biology and astronomy. In effect, the method is designed to simultaneously avoid false positives and false negatives — in other words, conclusions that something is statistically significant when it is entirely random, and the reverse.

Both of those problems have plagued previous studies of mutual funds, Professor Wermers said. The researchers applied the method to a database of actively managed domestic equity mutual funds from the beginning of 1975 through 2006. To ensure that their results were not biased by excluding funds that have gone out of business over the years, they included both active and defunct funds. They excluded any fund with less than five years of performance history. All told, the database contained almost 2,100 funds.

The researchers found a marked decline over the last two decades in the number of fund managers able to pass the False Discovery Rate test. If they had focused only on managers running funds in 1990 and their records through that year, for example, the researchers would have concluded that 14.4 percent of managers had genuine stock-picking ability. But when analyzing their entire fund sample, with records through 2006, this proportion was just 0.6 percent — statistically indistinguishable from zero, according to the researchers.

This doesn’t mean that no mutual funds have beaten the market in recent years, Professor Wermers said. Some have done so repeatedly over periods as short as a year or two. But, he added, “the number of funds that have beaten the market over their entire histories is so small that the False Discovery Rate test can’t eliminate the possibility that the few that did were merely false positives” — just lucky, in other words.

Professor Wermers says he was surprised by how rare stock-picking skill has become. He had “generally been positive about the existence of fund manager ability,” he said, but these new results have been a “real shocker.”

WHY the decline? Professor Wermers says he and his co-authors suspect various causes. One is high fees and expenses. The researchers’ tests found that, on a pre-expense basis, 9.6 percent of mutual fund managers in 2006 showed genuine market-beating ability — far higher than the 0.6 percent after expenses were taken into account. This suggests that one in 10 managers may still have market-beating ability. It’s just that they can’t come out ahead after all their funds’ fees and expenses are paid.

Another possible factor is that many skilled managers have gone to the hedge fund world. Yet a third potential reason is that the market has become more efficient, so it’s harder to identify undervalued or overvalued stocks. Whatever the causes, the investment implications of the study are the same: buy and hold an index fund benchmarked to the broad stock market.

Professor Wermers says his advice has evolved significantly as a result of this study. Until now, he says, he wouldn’t have tried to discourage a sophisticated investor from trying to pick a mutual fund that would outperform the market. Now, he says, “it seems almost hopeless.”

Mark Hulbert is editor of The Hulbert Financial Digest, a service of MarketWatch. E-mail:
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Postby admin » Mon Jun 23, 2008 9:14 pm ... -says.html

Death Knell for Dominance in 401(k)s, Edelman Says
By Brooke Perrone
June 19, 2008
The Supreme Court's recent decision in LaRue v DeWolff to permit workers in 401(k) plans to sue administrators for high fees will inevitably lead to lower fees—and the end of the retail mutual fund industry's dominance of the market. That's the strong opinion of widely quoted, and frequent financial TV guest Ric Edelman.

This past February, the Supreme Court ruled in favor of James LaRue, a worker suing the administrators of his 401(k) pension plan on breach of fiduciary duties, Edelman, a financial planner, notes. LaRue claimed that DeWolff, Boberg & Associates, Inc. ignored LaRue's instruction to change to more stable investments, eventually leading to depletion of his pension by approximately $150,000. The Supreme Court ruled that this was a breach of fiduciary duty under the Employee Retirement Income Security Act (ERISA).

Controversy over this case centered on whether LaRue was recovering remedies on an individual basis as the ERISA "provides remedies only for entire plans, not for individuals." In this case, however, the Supreme Court ruled that LaRue was not suing on such matters but rather on a breach of fiduciary duties that impaired the value of his individual assets.

The outcome of this case has caused concern and uncertainty as many wonder what the long-term implications will be and how they will affect pensions, 401ks and the relationships between employees and administrators of mutual funds.

Investors pay an average fee of 3% for mutual funds in their 401(k)s. To illustrate the impact these charges have on long-term investments, the U.S. Government Accountability Office reported last year that a 1% increase can lower future account balances by approximately 17%. Certainly, that's gotten the attention of investors - and is why Edelman recommends exchange-traded funds to his clients, as they "charge 90% less."

Originally published in Money Management Executive.
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Postby admin » Mon Feb 25, 2008 4:42 pm

Feb 25, 2008

Media Release and key question for Alberta Provincial Election Candidates

From: Larry Elford, founder of Representing the interests of several hundred investment industry professionals, and several hundred thousand investment consumers.

Fact #1 Financial industry dealers are allowed to self regulate (police themselves) in Alberta.

Fact #2 Financial industry participants are allowed direct access to the law and to the Alberta Securities Commission (the ASC). In contrast, consumers are directed to a non-government body.

Fact #3 If you were to approach the ASC with a complaint, you would be referred to “self-regulatory” agencies, which are private, funded, paid, and responsible only to the industry the consumer is complaining of. Consumers are not only denied access to the protection of Securities Law in Alberta, they are forced to report financial abuse directly to the association of dealers that they are complaining of.

Fact #4 If consumers wanted to rob a financial institution, they would not be allowed to alter the law to make their robbery “legal”. When financial institutions wish to rob consumers, they are allowed to go to the Alberta Securities Commission and apply for “exemptive relief” from the law. This makes anything they do to you, under this exemption “legal”.

Fact #5 There have been several thousand such exemptions to the law in Alberta over the years. All done with no public input, no involvement of a judge, no public notice, and no consumer representation in the actual decision making process. The Alberta Securities Commission refuses to provide reasons to show how those exemptions are in the public interest in any way. As a consumer you will get more notice of your neighbor’s plan to build a garage too close to your fence, than you will get if your financial advisory firm chooses to dump bad products on you using a legal exemption.

Fact #6 The Alberta Securities Commission is partially funded by financial dealers, and part time commissioners earn $180,000 per year. Top-level salaries at our ASC are above $500,000. Does this explain why our securities law gets “adjusted” for dealers?

Fact #7 Police are rarely invited to prosecute these kinds of financial crimes or frauds. Other criminal code violations get treated and handled by police agencies, while Securities Act violations are handled by an industry policy of letting the “financial industry look after the financial industry”. Fraud, forgery, breach of trust, etc., are among the types of illegal acts which fall under the “we look after ourselves” category. These acts will continue to occur unless we do something about it.

I ask candidates to call for a public inquiry under the Provincial Inquiries Act. An inquiry into failure to protect Albertans and failure to give the public access to the law. One case alone consists of an alleged $800 million dollar abuse of customers. Would you support such an initiative, and will you ask for public inquiry into these failures on behalf of all Albertan’s?

Larry Elford, (former CFP, CIM, FCSI, Associate Portfolio Manager, retired, 2004 after twenty years of trying without success to improve conditions in the industry)
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Industry promises not delivered

Postby admin » Fri Feb 22, 2008 11:46 am

2.2 BMO Nesbitt Burns Full Service Brokerage
BMO Nesbitt Burns’ Full Service Brokerage service (as of July 2007) makes the following claim on their website.
“Experience the full service difference by investing with a BMO Nesbitt Burns Investment Advisor. You can trust in our expertise to help you build a wealth management strategy uniquely designed to achieve your wealth management objectives”
The following are the more detailed claims made about their investment advisors and their expertise.
Investment Advisors
At BMO Nesbitt Burns, our Investment Advisors are committed to gaining a thorough understanding of your financial goals, evolving life circumstances and investment preferences to proactively address your financial interests and stay on top of your wealth management plan. Having trained and qualified according to some of the most comprehensive standards in the Canadian investment industry, they draw upon their extensive experience, expertise and one of Canada’s broadest selections of wealth management solutions, in order to ensure you develop a wealth management strategy that’s appropriate for you. You'll benefit from their insight as you work together to build a personalized program that is tailored to your financial needs.
Through the combined resources of BMO Nesbitt Burns and BMO Financial Group, our Investment Advisors can work with you to address all your financial needs, including estate planning, insurance and private banking. And as you move through life and your financial circumstances and goals evolve, you can rely on our Investment Advisors to continue to be a valued resource and driving force behind your wealth management plan.
Hands-on experience plus Canada's top-rated research team.
Better knowledge leads to better investment decisions.
This reality, reflected in four key ways, ultimately drives everything we do at BMO Nesbitt Burns.
To begin with, we rigorously train our Investment Advisors to assure an understanding of available products and services and how to assemble them in planning and developing client portfolios. Our advisors also draw ... efault.asp

upon the best investment knowledge and market expertise including top-ranked equity research. BMO Nesbitt Burns independent mutual fund research further sets an industry standard for depth and breadth.
With global investing being a growing factor for all Canadians, we have also tapped into a network of exclusive research sources. In the U.S. – the international market of greatest interest – we have access to three of the finest research houses who collectively cover over 5,000 companies in the U.S. and abroad.
Finally, we keep our clients fully informed about their accounts through comprehensive statements. We have also invested in developing leading edge systems, providing clients with online access to account information and research on mutual funds, and Canadian and U.S. equities.
2.3 BMO Investor Rights
The following are excerpts from the (as of July 2007) BMO Nesbitt Burns’ Charter of Investor Rights. While this information has only been recently produced, BMO Nesbitt Burns do state that these rights have always been implied rights.
• Work with an organization and an Investment Advisor committed to understanding your needs.
o The investment advisory process starts with a commitment to Knowing Our Clients. Our Investment Advisors take the time to understand each client's unique financial situation and objectives. Based on this information, they recommend strategies to meet your needs and they have the responsibility to ensure that the strategies are appropriate for you.
• Work with an Investment Advisor who conducts him or herself with high standards of professionalism and integrity at all times.
o Client interests always come first. Professionalism and integrity mean that our Investment Advisors know you and your unique needs and that they follow regulations designed to protect all of our clients. Moreover, our commitment to putting clients first is demonstrated by our client account management and monitoring technology and by our supervisory system.
• Access to qualified expertise to help you reach your financial goals.
o As a full-service investment firm, BMO Nesbitt Burns is committed to providing clients with a wide range of wealth management expertise and services. Our Investment Advisors must complete comprehensive training and continuing education programs as their careers progress. They have access to best of class economic and market research, sophisticated software programs, tools and strategies as well as all the wealth management expertise offered by the BMO Financial Group.
• Clear and comprehensive information about your accounts.
o We ensure that you are always fully informed about your investments through comprehensive account statements, provided for each quarter and for every month there is activity in your account. You also have the ability to access your account information online at any time through our online client information centre. You will be notified of important business and regulatory changes through statement bulletins and inserts or special mailings.
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Postby admin » Thu Feb 21, 2008 7:15 pm

Financial abuse is widespread, accepted and institutionalised in the financial services industry.
Financial abuse occurs most often as a direct result of actions of self interest but a good percentage of all abuse occurs as a result of ignorance

see the full report at ... 202005.doc
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Postby admin » Thu Feb 21, 2008 6:57 pm

you, yes YOU. You are being abused by your mutual fund salesman. Whether you realize it or not is another question entirely.

The interesting thing about fraud is that is often goes undetected by the victim for quite some time, and often is never detected at all. ... 0abuse.htm

This site describes financial abuse, and I am of the opinion (backed by industry sales statistics) that four out of five "advisors" in Canada are practicing financial abuse with their trusting clients.
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Postby admin » Tue Jan 29, 2008 12:18 pm

while this posting below applies to retirement accounts in the USA, investment customers in Canada would be advised to be aware of the issues it brings forth. They may apply to your RRSP or traditional investments.

Fees on 401(k)s Rock Boomers Facing Flawed Disclosure (Update1)

By Darrell Preston and Gary Matsumoto

Jan. 29 (Bloomberg) -- For the 12 years Jerry Schneider has invested in the 401(k) retirement plan offered by his employer, Portland, Oregon-based engineering firm Elcon Associates Inc., he has battled to learn how much he pays in fees and then has tried to get Elcon to reduce them.

Every time Schneider, 62, thought he'd succeeded, he discovered more charges, he says.

The latest blow came in September. Schneider found that undisclosed expenses for securities trades, administration and advisory services were driving the cost of Elcon's plan to at least 3.5 percent of the amount he invested. He says he was furious because Elcon Vice President Kinh Pham had told workers in a February 2007 memo that Elcon had cut fees to 0.10 percent. Pham declined to comment for this article.

``We're getting bamboozled,'' says Schneider, who hoped to save $1.5 million for retirement when he joined Elcon's Seattle office in 1995. He now has about $450,000. ``To let people willy-nilly take out fees without knowing it is not what I want to do.''

Since its introduction 30 years ago, the 401(k) has become the fastest-growing form of retirement savings plan for U.S. workers, who can no longer count on employer-provided pensions. Congress added Section 40l(k) to the U.S. tax code to establish the plans, which let employees invest in tax-sheltered savings accounts and then withdraw cash when they quit working.

19-Fold Growth

From 1985 to 2006, the number of active 401(k) participants climbed fivefold to 50 million. Assets in the plans soared more than 19-fold to $2.97 trillion as of June 30, according to the Washington-based Investment Company Institute, an association for companies that offer mutual funds and other investment vehicles.

What most of these workers don't know is that fees, rebates and revenue-sharing agreements among employers, 401(k) administrators and mutual funds -- many of them buried in the fine print or not disclosed at all -- are slowing the growth of their nest eggs. The U.S. Department of Labor lists 17 distinct 401(k) fees, including ones for record keeping, legal services and toll-free telephone numbers.

Hidden fees of 1 percent can reduce a worker's 401(k) returns by about 15 percent over 30 years, says Stephen Butler, president and founder of Pension Dynamics Corp. in Pleasant Hill, California, a 30-year-old retirement plan consulting firm.

No Bill, No Say

``These are expenses that investors never receive a bill for and they never write a check for and they have no say in when the plan is set up,'' Butler says. ``It's a loss to their accounts that happens with 100 percent certainty.''

The most an investor should pay for a mutual fund-based 401(k) is 1 percent, says Gregory Kasten, a financial planner at Lexington, Kentucky-based Unified Trust Co., who advises wealthy individuals on $2 billion of investments. The average fee for stock mutual fund plans is 0.76 percent, according to the Investment Company Institute.

``If the fees in a plan are costing more than 1 full percentage point, the extra money sloshing around is profit,'' Butler says.

Schneider says he was shocked to learn that in addition to the 0.10 percent management fee on his Elcon account, he pays at least seven other charges to companies that provide 401(k) services. A 0.5 percent fee goes to the providers of the mutual funds in his plan. Then John Hancock Financial Services Inc., the Boston-based unit of Manulife Financial Corp. hired to administer the plan, takes 1.32 percent for those duties and a 0.75 percent advisory fee.

`Witch's Brew'

On top of that, 401(k)s pay commissions to traders who buy and sell securities in a plan's mutual funds. Schneider says he's charged 0.76 percent for these fees, which, like the others, come out of his returns.

With trading commissions, a 401(k) may then pay a portion back to the mutual fund in so-called soft-dollar transactions. Such payments have gone for office rent, theater tickets, trips and fancy meals for money managers, U.S. Securities and Exchange Commission Chairman Christopher Cox said in a May 31, 2007, speech to the National Italian American Foundation in New York.

``This witch's brew of hidden fees, conflicts of interest and complexity in applications is at odds with investors' best interests,'' Cox said.

In another maneuver known as revenue sharing, mutual funds may rebate fees to 401(k) administrators. In this way, a company running the retirement plan uses employees' own money to offset costs -- often without the workers' knowledge. Pat Beesley of Beecher City, Illinois, and 10 other employees of Memphis, Tennessee-based International Paper Co. sued their employer in September 2006, alleging such an arrangement.

Revenue Sharing

The complaint, filed in U.S. District Court in East St. Louis, Illinois, alleges that in addition to $1.2 million of disclosed fees that International Paper pays for its workers' 401(k) plans, employees pay $3.6 million through undisclosed fees plus millions of dollars in revenue sharing.

``Participants of the plans are forced to pay, from their retirement savings, excessive and unreasonable fees and expenses that are not incurred solely for their benefit,'' the lawsuit says. The suit is in the discovery phase with a trial scheduled for June.

`Blended Into Fabric'

International Paper, which denied the allegations in court documents, doesn't discuss specifics of ongoing litigation, spokeswoman Amy Sawyer says. ``In terms of our 401(k) savings plan generally, we provide a plan for employees that offers them a broad range of high-quality investment options,'' she says. ``We are committed to ensuring that these plans are competitive in terms of both their performance and fees.''

Schneider says he has no way of knowing whether Elcon has soft-dollar or revenue-sharing agreements because the company refused to tell him about its contracts with plan administrator John Hancock.

Melissa Berczuk, a spokeswoman for John Hancock, declined to comment for this article.

``The way some of these fees are hidden is that they're blended into the fabric of the fund so that they're almost impossible to discover,'' says Matthew Hutcheson, a pension consultant in Portland. Hutcheson crunched numbers and reviewed the fine print in hundreds of pages of Elcon's 401(k) documents to uncover fees not disclosed to employees.

`Powerful Head Wind'

Butler uses the example of a person who invests in the Fidelity Freedom 2020 Fund to show one way investors wind up paying more. If a person buys the fund from Fidelity, he pays a fee of 0.76 percent, Butler says, citing Morningstar Inc., which tracks fees and returns. An investor who buys the same fund through a 401(k) may pay 0.25 percentage point more via a so- called 12b-1 fee. This fee is designed to offset the 401(k)'s marketing and other expenses.

The amount ceded to fees widens as investors lose the benefit of compounding returns during decades of working. An employee with $25,000 in his 401(k) and 35 years until retirement would see his savings reach $227,000 if the fee is 0.5 percent and he earns a 7 percent return, the Labor Department says.

If the fee is 1.5 percent, the balance will be $163,000 -- 28 percent less. ``Fees of that size provide a powerful head wind to sail against,'' Kasten says

Cox lays some of the blame for lagging investor returns on undisclosed charges and diminished compounding.

`Truly Astronomical Shortfalls'

``Financial services industries are able to skim off much more of the assets they handle than would be the case in a well functioning market,'' he told the Mutual Fund Directors Forum conference in Washington in April.

``The difference materially burdens an investor's annual expected return. And compounded over the retirement time horizon of even someone in his or her 50s, this can result in truly astronomical shortfalls.''

Legislation introduced in the U.S. Senate last year would aid consumers in making better sense of their 401(k)s. Senators Tom Harkin, an Iowa Democrat, and Herb Kohl, a Wisconsin Democrat, co-sponsored a proposal to require that investors get more information on fees. The new law would disclose revenue sharing and other relationships between parties with financial interests in the retirement plans.

``More and more Americans are relying on 401(k) plans to provide their retirement income,'' Kohl says. ``In spite of that, there are few requirements for fund managers to tell participants how much they are paying in fees.''

Eating Better

What really bugs the senators is that 401(k) providers may strive to keep participants in the dark. The American Benefits Council, which represents sponsors of the plans and the companies that administer them, says it's not a good idea to tell investors too much.

``If they're overwhelmed by the amount of information they receive, there is the danger that some won't participate,'' says Jan Jacobson, legal counsel for retirement policy at the council.

Daniel Peterson, who advises on 401(k)s, disagrees. ``When they put nutritional labels on food, did people stop eating?'' says Peterson, a managing director at Tualatin, Oregon-based G Fiduciary LLC, which provides 401(k)s for employers. ``No, they just started eating healthier.''

No Tahiti

Ogery Ledbetter learned the hard way what it means not to know enough about her 401(k). First, the 56-year-old Ford Motor Co. assembly line worker in Chicago says she lost money on the Ford stock in her account. Ford's shares were trading at $6.69 at 11:06 a.m. in New York Stock Exchange composite trading. That's down from $29.50 on Aug. 9, 2000, when Bridgestone Corp. recalled as many as 14.4 million tires used on Explorer sport utilities and other vehicles.

Last year, Ledbetter found she was paying $299 in annual costs she didn't know about for trading securities in her plan's mutual funds. That added 41 percent to the $737 in fees she paid for management of the funds provided by Fidelity Investments, according to an analysis by financial advisers Hutcheson and Kaston.

Jennifer Engle, a spokeswoman for Fidelity, the world's biggest mutual fund company, says the firm doesn't comment on clients. ``We provide our plan sponsors full information about fees,'' she says. ``We believe our fees are very reasonable.''

Now with $93,300 in 401(k) savings, Ledbetter says she won't be taking dreamed-of trips to Australia and Tahiti when she reaches her hoped-for retirement age of 62. She won't even be able to quit her job as planned.

``I'm going to have to add another six or seven years to how long I work,'' Ledbetter says.

Ford spokesman Tom Hoyt says the types of fees labeled as ``hidden'' are transaction costs. ``They are difficult to quantify and cannot be avoided entirely,'' he said in a Nov. 30 statement. ``Every 401(k) plan incurs these types of fees.''

Losing Out

While workers are losing out to 401(k) fees, retirement plans are a big -- and growing -- business for the companies that market and administer them. The number of U.S. residents over age 65 is expected to more than double by 2030 to more than 70 million, according to the U.S. Census Bureau.

Hewitt Associates Inc., Merrill Lynch & Co., T. Rowe Price Group Inc., Fidelity and dozens of other firms manage and collect fee revenue from 401(k)s. Fees for all U.S. retirement plans total as much as $89.1 billion a year, according to Hutcheson and Butler, who arrive at the estimate by taking 3 percent of the $2.97 trillion of 401(k) assets.

Rising Profit

At T. Rowe Price, the eighth-largest U.S. asset manager, 44 percent of the $16.6 billion of new mutual fund investment in the first nine months of 2007 went to retirement funds, the company's third-quarter report says. The Baltimore-based firm says it earns an average fee of slightly more than 0.5 percent for managing its mutual funds, including those in 401(k)s.

Nationwide Financial Services Inc., based in Columbus, Ohio, generated earnings of $216.5 million from retirement plans in 2006, about 28 percent of its profit, according to its annual report.

Principal Financial Group Inc., which derives most of its income from retirement products, had record third-quarter earnings of $312.9 million in 2007, up from $254.7 million a year earlier. The Des Moines, Iowa-based company had $306 billion under management as of Sept. 30.

Butler says 401(k) administrators may pick the mutual funds they offer customers based on potential revenue sharing. In this way, the companies can increase profits because the plan participant winds up footing the bill for administrative costs.

``They're automatically deducted from what would have been earnings,'' Butler said during testimony before Congress in March 2007.

`High Blood Pressure'

Columbia Air Services Inc., which sells, leases and services small airplanes in Groton, Connecticut, sued Fidelity over alleged revenue sharing. The complaint, filed in U.S. District Court in Boston in July, claims that Fidelity took rebates from mutual funds chosen for the company's 401(k) plan, forcing employees to overpay for services. Fidelity should have cut its fees by the amount of the rebates, the lawsuit alleges. Fidelity has filed a motion to have the suit dismissed.

``Plaintiff's claims are fundamentally defective on many levels,'' Fidelity wrote in the motion. No trial has been scheduled. Nick Burlingham, Columbia Air's corporate attorney, declined to comment.

``Hidden fees are a little bit like high blood pressure,'' says Jeff Acheson, director of retirement planning at Pittsburgh-based Schneider Downs & Co. ``You don't really feel it, and you don't necessarily see it, but it'll eventually kill you.''

Fine Print

Acheson, who works in Columbus, advising companies on designing retirement plans, found half a percentage point in undisclosed fees from trading commissions in a 401(k) offered by National Sign Systems. National Sign eliminated the cost when it switched to Schneider Downs from Nationwide Financial Services, says Catherine McIntyre, benefits manager for Columbus-based National Sign.

The savings translated into about $1 million over 20 years, she says. ``Schneider Downs offered us an opportunity to save money from an administration standpoint and for the participants to have more going into their accounts,'' McIntyre says.

Analyzing 401(k) plans to unearth hidden fees is daunting, Acheson says. One set of clues can be found in the annual returns 401(k) plans must file on Form 5500 with the Labor Department. This form requires information on some fees, although not all. Administrative costs, which aren't noted on investors' financial statements, must be listed in 5500 filings.

`Hidden in Legalese'

Reading a plan's fine print may reveal other costs such as fees to buy in to or exit investments, charges for rebalancing investment allocations and the expense of getting daily computer access to account balances, among others.

To find the fees in his company's own 300-worker 401(k), Acheson reviewed more than 20 documents, including mutual fund prospectuses. Schneider Downs cut total fees half a percentage point to 0.75 percent from 1.25 percent, Acheson says. ``They're hidden in the legalese that you have to be able to interpret,'' he says. ``It's very challenging even for those that have some degree of background in the financial services business.''

Total fees -- disclosed and hidden -- can hit 2 percent for companies with hundreds of workers and 3 percent for firms with fewer than 100, says Hutcheson, who has studied scores of plans. That's double or triple the 1 percent maximum investors should pay.

In extreme cases, fees can be much higher. Jerre Daniels- Hall, a Port Orchard, Washington, teacher alleges in a lawsuit that a 403(b) plan run by the National Education Association for the South Kitsap School District has fees totaling 12.17 percent for some employees. A 403(b), similar to a 401(k), is available to workers in government and nonprofit corporations.

Unhappy Teacher

Daniels-Hall says the fees include a 0.15 percent annual administrative charge, an annual contract fee of $30, a deferred sales charge that may total 7 percent and asset management fees that range from 0.78 percent to 2.57 percent, according to her complaint, which was filed in July in U.S. District Court in Tacoma, Washington. In addition, investors were socked with annual expense fees and as much as 1.55 percent for other charges, the lawsuit alleges.

The National Education Association offers a plan that gives members in any size school district anywhere in the country retirement savings options, says Lisa Sotir, general counsel for NEA Member Benefits Corp.

``It's hard to deliver a program like this with a low fee because there are commissions paid to agents,'' Sotir says. ``We don't condone high fees, but we want our members to choose the plan that is best for them.''

Demystify Fees

Prospective retirees are beginning to agitate for better disclosure. At least five reform proposals are circulating in Washington. The Labor Department is considering three regulations. The first would require more details on form 5500 filings. A second would demand information on relationships between service providers and plan sponsors. The third would require more disclosures of fees for investors.

In July, U.S. Representative George Miller introduced the 401(k) Fair Disclosure for Retirement Security Act of 2007. The bill requires 401(k)s to reveal all fees investors pay. The Senate legislation by Kohl and Harkin asks the same.

None of these changes may do much good for Schneider. He says he started paying attention to his mutual fund returns in the 1970s, before he joined Elcon, noticing there had been no increase for five years. Fees slowed growth back then and have continued to stymie his efforts to save in his 401(k), he says.

Schneider says he'd like to retire in September or October. He isn't sure that will happen. ``It depends on how everything works out,'' he says. ``Trying to figure out the fees is not a full-time job, but it could be.''

Unless 401(k)s end stealth charges and demystify their fees, the more than 70 million Americans who will hit retirement age in 2030 may get less than they expected.

To contact the reporters on this story: Darrell Preston in Dallas at ; Gary Matsumoto in New York at .

Last Updated: January 29, 2008 11:35 EST
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Postby admin » Sun Dec 23, 2007 12:00 am


December 23, 2007
Everybody’s Business
Tattered Standard of Duty on Wall Street

Philip Anderson
WITHOUT trust, there can be no free-market capitalism. Capitalism took root in Europe when wealthy families had excess income to invest, and they entrusted their money to managers who would treat their funds with due care.

Such standards of care required that those handling someone else’s money behave with extreme rigor and honesty. The standards, which came to be known as fiduciary duty, were the same duty a court required of, say, a trustee dealing with the property of a widow or a child.

Trustees always had to behave with the interests of the trustor uppermost — there could be no conflict of interest or even the appearance of one. Every relevant fact about an investment and a trusteeship had to be disclosed. As the law came to be interpreted in the United States, the trustee had to disclose every fact or belief that might influence an intelligent, reasonable investor.

These laws were codified in state and federal courts after revelations of stock market corruption before and during the crash of 1929. There could be no material deception and no “scheme or artifice to defraud.” The investor’s interests always had to be superior to those of the investment bank, financial adviser or broker.

For a good long time after World War II, the laws of fiduciary duty were observed. But by the 1980s, the law started to break down in a major way. There had been small scandals in the 1950s and ’60s. But by the end of the 1980s, the Drexel Burnham / Michael Milken junk-bond scandals had exploded, revealing that deception was routinely practiced against the buyers of junk bonds.

Then came the closely related savings-and-loan scandals, leaving taxpayers defrauded in a major way. Then we weathered the high-tech scandals of the late 1990s, in which the bluest of the blue-chip brokerage firms and investment banks placed excessive valuations on companies that they peddled to investors. These investors were often in a trustor-trustee relationship, they suffered losses on a scale never before seen and yet almost no one was punished.

Now, we have the collateralized mortgage obligations and their attendant losses in the subprime mortgage mess. The problem is a familiar one: basic hocus-pocus about what the securities were worth. Of course, there was boilerplate in all of the offerings saying that anything could happen. But that boilerplate is so ubiquitous, and covers so much, that it has come to mean nothing. What did mean something was the name of the underwriter selling the securities. If it was a big name, a name redolent of power and antiquity, a buyer could assume that it could be trusted.

Of course, as we know now, that turned out to be wrong.

The biggest of the big names were among the most aggressive in betraying their clients’ trust, as I see it. Some of the biggest names were selling securities that they — apparently — barely understood themselves. In so doing, they exposed their buyers, and their stockholders, to immense losses. (Think Merrill Lynch, Bear Stearns, Lehman Brothers and many others.) Other major players, including Goldman Sachs, were aggressively shorting the very same sort of products they were underwriting.

Now, Goldman can spin this as “risk management” and insist that it was doing it to protect its stockholders. (Remember, though, that Goldman’s lushly compensated traders and executives get a far larger share of the pie than we pitiful stockholders do.) But selling short the same securities or very similar ones that they were peddling to the clients is extremely hard to reconcile with basic fairness.

Goldman asserts that it did nothing wrong in its handling of C.M.O.’s, saying that most of the entities that bought them were highly sophisticated and capable of making their own investment decisions. Goldman declined to show me a list of its large buyers. It also offered no opinion on what its duties might be to small investors who were ultimately exposed to the C.M.O.’s it sold to larger entities.

Goldman emphatically says its short sales and similar trades were normal hedging operations. The firm declined to show me a chart of the scale of its short sales over the past several years.

After talking to Goldman, I was very impressed with how sure it is of its position. The people there are the ultimate salesmen. But the enviable and phenomenal self-assurance of any one investment bank is not the point. The point is this:

Don’t expect the securities firms, or the securities laws, to help clients who suffered huge losses.
BASICALLY, a crossroads was passed in the Drexel / Milken scandals. Although hundreds and perhaps thousands of men and women were profiting from misconduct, only a few people, including Mr. Milken himself, went to prison. And even he emerged from prison a very rich man (and by what I see here in Los Angeles, a model citizen).

Today, in the midst of the mortgage mess, we see people breaching their fiduciary duty and getting away with it. A few may lose their jobs and wander off to a wealthy retirement. But the ordinary stockholders of the banks and mortgage companies are staggered. Entities that sought a marginally better return on their money and were sold exposure to the C.M.O.’s are pauperized because of the losses. And there are reports that Wall Street is expecting $38 billion in bonuses this year.

I keep hearing well-meaning people say that America is not a nation if it doesn’t have control over its borders. But are we a nation if there is no meaningful restraint on what people can do with an offering statement and a computer screen inside our borders? We surely cannot remain a republic under law if there is no law except the axiom from “Richard II” that

“they well deserve to have, that know the strong’st and surest way to get.”
Ben Stein is a lawyer, writer, actor and economist. E-mail:
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Postby admin » Fri Oct 12, 2007 9:27 pm

here is a good example of how the rules in the investment industry do not always get applied if they help raise industry revenue:

IDA rule from web site ... 57&tocID=8

10. Is there any requirement as to titles registered salespersons, officers and other employees can have?

The IDA has no specific regulations in force regarding the titles given to salespersons. However, no employee is permitted to use titles that suggest he or she is registered in a capacity in which s/he is not in fact registered.

Such titles include:

• Officer titles as defined in IDA By-law 1.1. These are: Chairman or Vice-chairman, President, Vice-president, Secretary, Assistant Secretary, Treasurer, Assistant Treasurer, Comptroller, General Manager or any other position designated as an officer position of a Member by By-law or similar authority;

• Branch Manager or Assistant Branch Manager;

• Sales Manager;

• Portfolio Manager or Assistant Portfolio Manager;

No employees are permitted to use the title "Director" or "Managing Director" on their business cards unless they are registered as members of the Board of Directors of the Member or the title includes a function, such as Director, Information Technology or Director, Research.

Members must ensure that the officer title reported to the IDA Registration department matches the title used on the Officer's business cards and correspondence.

(advocate comments
I find the line "However, no employee is permitted to use titles that suggest he or she is registered in a capacity in which s/he is not in fact registered." rather interesting in that nearly every single investment person in Canada is qualified as and registered as a "salesperson". See for registrant list to find your salesperson's registration category. And yet, nearly 100% of salespersons use a different legal registration category, that of "investment advisor" which requires totally different education and experience, and promises a totally different duty of care owed to the public. It is this misleading advertising, and misrepresentation that is illegal under the Competition Act of Canada)
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Postby admin » Sat Oct 06, 2007 5:41 pm

from this article by Financial Post journalist Barry Critchley, you can get a glimpse of the legal abuse and corporate abuse that is applied to Canadians once they complain about financial abuse.

Berkshire accused of legal piling on
Barry Critchley - Financial Post
Friday, October 05, 2007
In most sports, there are various rules regarding piling on. Those who disregard them
are penalized.
A group of disaffected clients of the Berkshire Group -- specifically, those who put their
faith in Ian Thow, the firm's former senior executive based in Vancouver -- feel similar
rules should apply to the way large and well-funded financial institutions deal with
Those clients -- who are part of a larger group who claim they lost $32-million over a
period ending in the early summer of 2005 -- feel Berkshire, now owned by Manulife
Financial Corp., is piling on by making them go through interminable delays, be it
through the courts or through dealings with various regulatory bodies, to get
For instance, next Friday Berkshire was scheduled to bring a series of motions against
Brad Goodwin, one of Thow's former clients, for allegedly disclosing information to a
journalist. (The matter has been adjourned.) Goodwin, who along with his family has
filed a lawsuit against Thow and Berkshire, has so far spent more than $200,000 on
legal bills and his case has yet to reach discovery. "It's just corporate bullying," said
Goodwin. "They want to get our lawyers tied up in there for three days and just bleed
the life out of us. It's so expensive to fight these motions. They are absolutely doing
everything they can to bury us. They're beating us down."
A number of Thow's former clients say they're upset, claiming Berkshire hasn't been
reined in by Manulife, one of the country's most respected financial institutions. Many
felt Manulife, usually lightning fast at stamping out fires, would have taken a more
hands-on approach and sought to put the matter behind it after it bought Berkshire in
August. As Doug MacKay, the prosecutor for the British Columbia Securities Commission
said at its hearing into Thow: "He [Thow] intentionally and systematically stole millions
of dollars from his clients, many of whom were elderly and apparently vulnerable to
Thow's apparent charms."
Other examples of piling on: - According to people who have filed complaints, Berkshire
has refused to co-operate with the Ombudsman for Banking Services and Investments,
an independent agency whose mission is to fix conflicts between participating banking
and investment firms and their customers. For the OBSI to complete its work, it needs
October 2007
Page 8
Small Investor Protection Association - A voice for the small investor
SIPA Inc. - P.O. Box 325, Markham, ON, L3P 3J8 - Tel: 905-471-2911 - e-mail: - website:
some input from Berkshire. - Last January, Mr. Justice R. Goepel criticized the way
Berkshire was behaving in a court case brought by George Thomson, a Nanaimo
businessman and also a former client of Thow. "Berkshire's failure to comply with the
rules of court and various court orders made during the course of this application is not
acceptable," Judge Goepel said.
At least one body seems to be breaking free of the pile.
The Mutual Fund Dealers Association announced yesterday it has issued a notice of
settlement hearing against Berkshire. The proposed settlement agreement concerns
allegations that Berkshire "failed to conduct reasonable supervisory investigations of
Thow, and to take such reasonable supervisory and disciplinary measures as would be
warranted by the results of its investigations," contrary to two specific MFDA rules.
The MFDA has the real power over Berkshire's fate and future operations.
The hearing is scheduled for Oct. 22 in Vancouver.
© National Post 2007
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