advisor fraud, professionals, or salespeople masquerading?

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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Thu Apr 30, 2020 5:10 pm

Assante offering free advice to those hit by crisis
Advisors will answer questions in one-on-one sessions

By: IE StaffApril 30, 2020 15:55

Advisors from Assante Wealth Management are volunteering their time and skills to help those affected by the current economic turmoil, the firm said on Thursday.

“Within hours of putting out the call to our advisors, we had more than 80 volunteers signed up wanting to help,” said Sean Etherington, president of Assante, in a release.

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“[A]ccess to financial advice is essential in navigating the many hurdles facing Canadians, whether it’s job losses, health setbacks or understanding government programs.”

The Assante advisors will be supported by resources from across parent company CI Financial Corp., including specialists in retirement, tax, accounting and estate planning.

The advisors will answer questions through one-on-one sessions, and participants aren’t expected to enter into full-time financial planning agreements, the release said.

The program will operate Canada-wide, and participants can sign up online. ... by-crisis/

in related news....
Advisor search at the Canadian Securities Administrators for Assante “Advisors” April 30, 2020

The image below shows 1155 persons with the Assante company registered at the CSA. Now of course the more important question is how many of those are truly registered as “advisors” and how many are sales agents with the “Dealing Representative” registration. To become a “Dealing rep requires a 90 day training period and is the license category that was known as “salesperson” until changes by the CSA to the terminology in Sept of 2009.

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click on image to zoom in and click “back” to go back to normal view


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click on image to zoom in and click “back” to go back to normal view

This image above, shows that there are zero persons shown at Assante with the Adviser registration category, (Advisor is the mis-spelled term often seen used in advertising to supposedly fool the lawful requirements of the “Adviser” category)


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click on image to zoom in and click “back” to go back to normal view

This image above, shows that 1137 persons at Assante are found to have the “Dealing Representative” registration, which is the salesperson registration category.

It is rather fraudulent to advertise sales agents as advisors, advisers and wealth managers etc, and it is contrary to the “representation” rules found in nearly every provincial Securities Act in Canada....but what does it matter to break the law when one pays the salaries of the securities regulators....


One could ask whether or not they will receive the “advice” of one of the eighteen (18) registered fiduciary “advisers” found at Assante on this date, or whether one will receive the “advice” from on of the 1137
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Fri Mar 27, 2020 7:37 pm

In a move that has bewildered many CFPs, the CFP Board of Standards just took a giant step backward in transparency. It chose to no longer inform consumers searching for a CFP of advisors' compensation models.

The CFP Board sets the standards for Certified Financial Planner certification. In an email on March 2, 2020, the Board informed its membership that, "Today, we have updated [the website] to remove information about compensation method," contending the best way for consumers to pick a CFP is through a conversation.

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In a move that has bewildered many CFPs, the CFP Board of Standards just took a giant step backward in transparency. It chose to no longer inform consumers searching for a CFP of advisors' compensation models.

(CFP has decided to forgo the “trustworthiness” of the CFP brand and instead go with a “trust me” game) (advocate comment)

The CFP Board sets the standards for Certified Financial Planner certification. In an email on March 2, 2020, the Board informed its membership that, "Today, we have updated [the website] to remove information about compensation method," contending the best way for consumers to pick a CFP is through a conversation.

This puts an additional burden on consumers wanting to avoid CFPs who are compensated solely or partially by commissions. No longer can consumers screen out CFPs who sell financial products as a first step toward finding a planner who is only compensated for their advice. They will now need to call the list of CFPs that meet their other search criteria and ask them about their compensation models.

Not only will this take more time and effort for consumers, it’s bound to be much more confusing.
The CFP website actually had a straightforward explanation of the three basic compensation models: Commission-Only, Commission and Fee, and Fee-Only.

While both Commission and Fee and Fee-Only advisors are held to a fiduciary standard, the major problem with a Commission and Fee planner, versus a Fee-Only planner, is the potential for a big conflict of interest. The higher the gross revenues a Commission and Fee planner earns from commissions on the sale of products (annuities, mutual funds, insurance, etc.), the higher the potential conflict of interest.
If a client needs a detailed financial plan addressing asset protection, estate planning, business succession, and real estate decisions, rather than investments, there isn’t much incentive for planners whose incomes are largely from commission sales to do a lot of technical analysis for something for which they will not be compensated.

The financial media regularly educates consumers on the benefits of engaging a Fee-Only advisor. Accordingly, a growing number of consumers who want comprehensive financial planning look for an unbiased Fee-Only advisor. It makes sense, then, that many CFPs who are Commission and Fee would want to give the illusion they are Fee-Only.

They accomplish this with a creatively designed term, "Fee-Based." This sounds a lot like Fee-Only, doesn’t it? Fee-Based is simply a "smoke and mirrors" term that means Commission and Fee, but it’s confusing to most consumers—which is the whole point.

How might a call go to some Commission and Fee financial planners? "Hi, I'm looking for a financial planner. Is your compensation model Commission Only, Commission and Fee, or Fee-Only?"

"We are a Fee-Based financial planning firm and have a fiduciary duty to put your needs first."

What does the consumer hear? That the advisor is a Fee-Only planner who is held to a fiduciary standard.Unfortunately, what they most likely will get is a planner who makes the majority of their income from commissions, has a conflict of interest, and specializes in investment products rather than technical, advice-driven financial planning.

Why did the CFP Board take this giant step backward in transparency? My hunch is that the CFP Board receives more dues income from Commission and Commission and Fee advisors than from those that are Fee-Only. The move to eliminate compensation from the consumer search tool certainly favors their highest dues-paying constituency.

I don’t argue with the fact that a conversation with a planner is best (a handful of Commission and Fee planners receive 99% of their revenues from fees). Yet removing the compensation information makes it harder for consumers to make informed decisions. Hopefully the CFP Board will reconsider and reverse this decision soon. ... 6wVQ%3D%3D

Published by
Rick Kahler, MS, CFP®, CFT-I™, CeFT®, CCIM
Rick Kahler, MS, CFP®, CFT-I™, CeFT®, CCIM
Financial Adviser and Certified Financial Therapist-Level I™
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Mon Oct 21, 2019 6:22 pm

This post contains October 2019 information pertaining to the "financial advisor” bait and switch which is a pandemic upon Canadian investors.

The misrepresentation of commission investment sales agents (registered as "Dealing representatives") as if they were registered as fiduciary “Advisors” or “Advisers” (registered as Advising Representatives) forms a systemic “bait and switch” which both influences and misleads investors, and leads them into sales relationships whilst giving them the impression of a professional advisory relationship. It is in my belief evidence of pure consumer fraud and it is a fraud supported or aided by the complicity of self regulators like the MFDA and even government legislated regulators such as each Provincial Securities Commissions. These matters may meet the standards for both civil and criminal actions.

For purposes of quickly finding the evidence of systemic regulatory fraud or willful blindness to the fraud of millions of Canadians, I have placed in quotations (like this paragraph) the essential factors of the systemic fraud.


In short and sweet summation of the concerns for the public interest:

Concern #1 Desjardins Securities Full-service Brokerage firm appears to promise to the public the services of registered and regulated "investment advisors”, while knowing full well that none of the registrants at Desjardins Securities Full-service Brokerage firm hold the registration for an (1) Advisor, (2) Adviser or (3) Advising Representative

Each registration for Desjardins Securities Full-service Brokerage firm, that was searched at the Canadian Securities Administrators registration search page were found to be registered in the category of “dealing representatives”, which is a “salesperson” category according to records, history and the MFDA itself in this and all other similar matters.

Concern #2 The systemic nature of a country-wide pattern of intentional deception, fraud or fraudulent misrepresentation of a professional license or registration category, includes the MFDA itself, who is the expert and the regulator responsible for the protection of the public of exactly this kind of public deception.

Concern #3 The hidden quid pro quo of allowing the MFDA to be paid and influenced by the industry that they (MFDA) police, allows a reinforcement, and a continued concealment of a country wide pattern of deception upon investors. Such practices have been shown to easily cut the retirement security of investors by half, over a lifetime of investing. (OSC source)
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Re: Blair Harcourt Addison
Heard: June 5, 2019 in Toronto, Ontario
Reasons for Decision: October 18, 2019

Hearing Panel of the Central Regional Council:
Frederick W. Chenoweth, Chair
Cheryl Hamilton, Industry Representative
Matthew Prew, Industry Representative

Alan Melamud, Enforcement Counsel for the Mutual Fund Dealers Association of Canada
Blair Harcourt Addison, Respondent, did not appear personally or by counsel
As appears from the Affidavit of Service of Carlyle Murray, sworn January 23, 2019, and marked as an Exhibit in this proceeding, a copy of the Notice of Hearing, dated December 14, 2018, (“Notice of Hearing”) was served personally on Blair Harcourt Addison (“the Respondent”) on January 22nd, 2019.

Thereafter, and on January 29th, the first appearance in this proceeding was held before a public representative of the Central Regional Counsel of the Mutual Fund Dealers Association (the “Chair of the Hearing Panel”). The Respondent failed to attend the first appearance. Thereafter, and on February 27th, 2019, a continuation of the first appearance was held at the direction of the Chair of the Hearing Panel. The Respondent was duly served with Notice of the Continuation of the first appearance. Again, the Respondent failed to attend at the continuation of the first appearance. The Respondent failed to file a Reply to the Notice of Hearing.

During the continuation of the first appearance, following Submissions of Staff, the Chair of the Hearing Panel scheduled the Hearing on the merits (the “Hearing”) in this matter to take place on June 5th, 2019 at 10:00 a.m. The Affidavit of Sofi Vasiliadis dated June 3rd, 2019, and marked as Exhibit 5 in this proceeding, confirms that the Respondent was duly served with notice of this Hearing to proceed on June 5th, 2019. In spite of that notice, the Respondent failed to attend the Hearing, either personally or by counsel.

The Contraventions
In the Notice of Hearing, it is alleged that:
Allegation #1: Commencing on at least August 1, 2008, the Respondent misappropriated, or failed to account for, approximately $1,390,890 solicited or received from at least eight clients and six individuals, thereby failing to deal fairly, honestly, and in good faith with clients, failing to observe high standards of ethics and conduct in the transaction of business, and engaging in business conduct or practice that is unbecoming and detrimental to the public interest, contrary to MFDA Rule 2.1.1.

Allegation #2: Commencing on December 16, 2009, the Respondent borrowed approximately $107,302 from clients BH and IH, thereby engaging in personal financial dealings with the clients, which gave rise to a conflict or potential conflict of interest that the Respondent failed to disclose to the Member or ensure was addressed by the exercise of responsible business judgment influenced only by the best interests of the client contrary to the Member’s policies and procedures and MFDA Rules 2.1.4, 2.1.1, 2.5.1 and 1.1.2.

Allegation #3: Between May 8, 2012 and September 30, 2014, the Respondent misled the Member and MFDA Staff during an investigation into his conduct, contrary to MFDA Rule 2.1.1.
Allegation #4: Commencing September 27, 2017, the Respondent failed to cooperate with MFDA Staff’s investigation into his conduct, contrary to section 22.1 of MFDA By-law No. 1.

The Facts
The relevant facts are those set out in paragraphs 1 to 55 of the Notice of Hearing, which is attached as Appendix “A” to these Reasons. The extensive Affidavit of Laura Rowles, sworn May 21, 2019 and marked as Exhibit 6 to this proceeding, provided the evidence which confirmed the facts alleged in the Notice of Hearing.

In addition to Exhibit 6, being the Affidavit of Laura Rowles, the Panel had the benefit of the evidence set out in the Affidavit of JB, sworn May 16, 2019, marked as Exhibit 7, the Affidavit of BH, sworn May 1, 2019, marked as Exhibit 8, and the Affidavit of ED, sworn May 9, 2019 and marked as Exhibit 9, all of which further confirmed the facts set out in the Notice of Hearing.
From May 26, 2005 to September 15, 2017, the Respondent was registered as a mutual fund salesperson (now known as dealing representative) with Desjardins Financial Security Investments Inc. (“DFSI”), a Member of the MFDA.
At the time of the Hearing, the Respondent was not registered in the securities industry in any capacity.

The standard of proof in administrative proceedings, such as those instituted pursuant to MFDA By-law No. 1, is the civil standard of balance of probabilities. Since 2008, it has been settled law in Canada that “there is only one civil standard of proof at common law and that is proof on a balance of probabilities.” The Supreme Court of Canada has rejected the notion that the seriousness of the allegations or consequences change the standard of proof. In all civil cases, the trial judge must scrutinize relevant evidence with care to determine whether it is more likely that an alleged event occurred. Evidence must always be sufficiently clear, convincing, and cogent to satisfy the balance of probabilities test, but there is no objective standard to measure sufficiency.

Brauns (Re), 2013 LNCMFDA 68 at para. 15
F.H. v. McDougall, [2008] 3 S.C.R. 41 at paras 40, 45, 46 and 49
Accordingly, Staff bears the burden of proving the allegations against the Respondent on a balance of probabilities.
Brauns (Re), supra at para. 15
Section 24.1.1. of MFDA By-Law No. 1

The Respondent’s Misappropriation
The standard of conduct codified by MFDA Rule 2.1.1 requires that Approved Persons deal fairly, honestly, and in good faith with clients; observe high standard of ethics and conduct in the transaction of business; and refrain from engaging in any business conduct or practice which is unbecoming or detrimental to the public interest. The Rule is central to the MFDA mandate of enhancing investor protection and strengthening public confidence in the Canadian mutual fund industry. Again, the Affidavit of Laura Rowles, Exhibit 6 confirmed the allegations against the Respondent in this respect.
MFDA Rule 2.1.1.
Breckenridge (Re), 2007 LNCMFDA 38 para. 71
The Respondent’s Personal Financial Dealing
The Affidavit of BH establishes that the Respondent engaged in personal financial dealing with a client, resulting in a conflict of interest, following which he failed to act appropriately. The Respondent borrowed the $107,351.80 from a client to purchase an investment property for himself and to pay legal fees, solely for his own benefit. The Respondent then failed to repay a substantial portion of the loan, i.e $87,351.80.
Hearing panels have repeatedly held that borrowing money from a client gives rise to a conflict of interest under MFDA Rule 2.1.4. As stated by the Hearing Panel in Gaunt (Re):
A conflict of interest occurs when one party to a matter advances, uses or pursues his own interests in dealing with another person, to whom he has an obligation of dealing fairly, to the detriment of that other person or to his own advantage rather than the person to whom he owes the duty of fairness.
Gaunt (Re), 2013 LNCMFDA 63 at para. 47
Latour (Re), 2016 LNCMFDA 195, at para. 38
Piper (Re), 2018 LNCMFDA 31, at para 12
MFDA Rule 2.1.4
MFDA Rule 2.1.4 requires that an Approved Person disclose an actual or potential conflict to the Member, and together, the Member and the Approved Person address the conflict by the exercise of responsible business judgment influenced only by the best interests of the client and in compliance with MFDA Rules 2.1.4(c) and (d).
MFDA Rule 2.1.4
Moreover, in this case, the Respondent did not disclose the borrowing from Mr. H to DFSI. To the contrary, the Respondent concealed the borrowing when DFSI questioned him in connection with the investigation into his borrowing from another client. Moreover, the Respondent did not “exercise …care and diligence in the circumstances to address the conflict or potential conflict of interest, in the best interest of the client.” Instead, the Respondent renewed the borrowing twice on the basis that he could not repay the principal; forced Mr. H to discharge the security the Respondent had initially provided; failed on numerous interest payments; and failed to repay a substantial portion of the loan.
Finally, DFSI’s policies and procedures prohibited its Approved Persons from borrowing from clients. Rule 2.5.1 requires Members to establish policies and procedures to ensure the handling of their business is in compliance with the By-laws, Rules, and Policies and applicable securities legislation. Approved Persons have a corresponding obligation to comply with those policies and procedures pursuant to Rule 1.1.2. As stated by the Hearing Panel in Franco (Re):
The obligation of Approved Persons to comply with the policies and procedures of the Member that they are registered with is a cornerstone of the self-regulatory system. When Approved Persons disregard those obligations, the Member’s ability to supervise the conduct of such Approved Persons and protect the interests of clients and the public is undermined.
Franco (Re), 2011 LNCMFDA 55 at para. 38
Frank (Re), 2015 LNCMFDA 75 at paras. 56-58
MFDA Rule 2.5.1
MFDA Rule 1.1.2
Accordingly, the Respondent’s conduct contravened MFDA Rules 2.1.4. and Rule 1.1.2. In addition, by borrowing from a client and failing to repay the loan, the Respondent contravened the standard of conduct set out by MFDA Rule 2.1.1.
Latour (Re), supra, at para. 39
The Respondent Misled, both DFSI and the MFDA
At the time the Respondent had an outstanding loan from Mr. H, the Respondent was being investigated in connection with borrowing from another client who complained to DFSI. Both DFSI and the MFDA questioned the Respondent in connection with their investigations. The Respondent denied any personal financial dealing with any clients other than the one that complained.
Misleading the Member and the MFDA in the course of an investigation is plainly a contravention of the standard of conduct by MFDA Rule 2.1.1. By so doing, the Respondent undermined DFSI’s ability to fulfil its supervisory role and ensure the handling of its business in compliance with the MFDA Rules. Similarly, the Respondent undermined the MFDA’s ability to fulfil its regulatory mandate of investor protection.
Nunwelier (Re), 2012 LNCMFDA 46 at paras. 27-33
Pattison (Re), 2017 LNCMFDA 77 at para. 21-22
Crackower (Re), 2005 LNCMFDA 11 at para. 12.
As a consequence of the misconduct manifested in this case, DFSI and the MFDA did not know about the loan from Mr. H to the Respondent, they were prevented from taking steps to address the conflict of interest, which ultimately resulted in serious harm to Mr. H.
The Respondent Failed to Cooperate with Staff’s Investigation
As set out in the Rowles Affidavit, the Respondent failed to respond to numerous correspondence from the MFDA seeking information concerning the matters that are subject of the proceeding. The Respondent then moved to a new address without advising the MFDA, preventing the MFDA from being able to reach the Respondent to request an interview. The Respondent therefore failed to cooperate with Staff’s investigation.
Pursuant to section 22.1 of MFDA By-Law No. 1, all Approved Persons and former Approved Persons have an obligation to provide information, documentation, and attend an interview requested by Staff.
The obligation to cooperate with the MFDA is a necessary corollary to the MFDA’s duty to conduct such examinations and investigations, as the MFDA deems necessary, relating to matters of compliance with the MFDA’s by-law, rules, or policies.
MFDA hearing panels have repeatedly held that an Approved Person’s failure to cooperate with an MFDA investigation undermines the MFDA’s regulatory obligations under section 21 of MFDA By-law No. 1. The MFDA requires cooperation from Members and Approved Persons to investigate the conduct of registrants in the mutual fund industry and fulfil its regulatory mandate of investor protection. As stated by the Hearing Panel in Vitch (Re):
There can be no exception to that obligation. The fulfilment of that obligation is particularly important to the MFDA because it has no statutory power to search and seize or to compel the production of documents. Without the cooperation of Members and Approved Persons, the MFDA’s ability to investigate and discipline its Members and Approved Persons is gravely fettered.
Vitch (Re), 2011 LNCMFDA 63 at paras. 55-56
Tonnies (Re), supra, para. 41
Armani (Re), 2017 LNCMFDA 185 at paras. 8-10.
As a result of the Respondent’s failure to cooperate, Staff could not determine the full nature and extent of the Respondent’s misconduct, including whether the Respondent solicited other clients and individuals to invest in off-book investments, solicited, or obtained loans from other clients and individuals, or failed to account for monies provided to him by other clients and individuals.
The primary goal of securities regulation is the protection of investors and fostering confidence in the capital markets and the securities industry. In Tonnies (Re), the Hearing Panel recognized that its role when imposing sanctions is not the punishment of the Respondent, but rather restraining future misconduct in furtherance of these goals. The Hearing Panel stated:
The Ontario Securities Commission has set out succinctly its role, not dissimilar to the role of this Panel, in determining penalty in Re Mithras Management Ltd. Et al. (1990), 13 O.S.C.B. 1600. The Commission stated at 1610:
…[T]he role of this Commission is to protect the public interest by removing from the capital markets – wholly or partially, permanently or temporarily as the circumstances may warrant – those whose conduct in the past leads us to conclude that their conduct in the future may well be detrimental to the integrity of those capital markets. We are not here to punish past conduct; that is the role of the courts, particularly under section 118 of the Act. We are here to restrain, as best we can future conduct that is likely to be prejudicial to the public interest in having capital markets that are both fair and efficient.
Tonnies (Re), supra at para. 45
Pezim v. British Columbia (Superintendent of Brokers), [1994] 2 S.C.R. 557 at paras. 59, 60
Breckenridge (Re), supra at para. 74.
Sanctions imposed by a Hearing Panel should therefore be protective and preventative to likely future harm to the markets. To determine whether a sanction is appropriate, the Panel should consider:
The protection of the investing public;
The integrity of the securities markets;
Specific and general deterrence;
The protection of the MFDA’s membership; and
The protection of the integrity of the MFDA’s enforcement processes.
Tonnies (Re), supra at paras. 44, 46
Hearing Panels have also previously considered the following factors when determining whether a sanction is appropriate:
The seriousness of the allegations proved against the Respondent;
The Respondent’s past conduct, including prior sanctions;
The Respondent’s experience and level of activity in the capital markets;
Whether the Respondent recognizes the seriousness of the improper activity;
The harm suffered by investors as a result of the Respondent’s activities;
The benefits received by the Respondent as a result of the improper activity;
The risk to investors and the capital markets in the jurisdiction, were the Respondent to continue to operate in capital markets in the jurisdiction;
The damage caused to the integrity of the capital markets in the jurisdiction by the Respondent’s improper activities;
The need to deter not only those involved in the case being considered, but also any others who participate in the capital markets, from engaging in similar improper activity;
The need to alert others to the consequences of inappropriate activities to those who are permitted to participate in the capital markets; and
Previous decisions made in similar circumstances.
Tonnies (Re), supra at para. 48
Breckenridge (Re), supra at para. 77
Finally, the Hearing Panel should also refer to the MFDA’s Sanction Guidelines. The Guidelines are not mandatory or binding on the Hearing Panel, but provide a summary of the factors upon which discretion can be exercised consistently and fairly. Many of the same factors that are listed above, which have been considered in previous decisions of MFDA Hearing Panels are also reflected and described in the Guidelines.
Mutual Fund Dealers Association of Canada Sanction Guidelines, dated November 15, 2018.
As found by the Hearing Panel in Ng (Re), “misappropriation is among the most serious types of misconduct encountered by securities regulators …” The Respondent was in a position of trust with his clients, and as noted in the Affidavit from his clients, he exploited that trust to misappropriate funds for his own uses.
Ng (Re), supra at paras. 106-107
Dilorenzo Affidavit, para. 6
JB Affidavit, para. 30.
Similarly, the Respondent abused his position of trust to borrow funds from Mr. H and chose to prefer his own interests to that of a client’s. The Respondent had Mr. H give up the security for the loan when it no longer served the Respondent’s interests, and the Respondent failed to repay the loan notwithstanding that he was told about the negative impact his conduct was having on Mr. H and his wife.
Emails from Mr. H to the Respondent, Exhibit 7 to the H Affidavit.
Tonnies (Re), supra at para. 31
Finally, the Respondent demonstrated a total disregard for the regulatory obligation he had, as an Approved Person. The Respondent misled DFSI and the MFDA in connection with a previous investigation, withholding critical information to secure a settlement. The Respondent further failed to cooperate with the investigation into his conduct in this matter. The comments of the Hearing Panel in Dixon (Re) apply equally to the Respondent:
The Panel considered that the failure of the Approved Person to cooperate with an MFDA investigation by among other things, not complying with a request by an MFDA investigator made pursuant to s. 22.1 of the By-law is a serious misconduct. It subverts the ability of the MFDA to perform its regulatory function by fully investigating a matter and determining all of the facts. Further, the failure to provide information requested in an investigation undermines the integrity of the industry’s self-regulatory system and the effectiveness of its operations, including the MFDA’s mandate to protect the public.
Dixon (Re) 2017 LNCMFDA 247 at para 12
Nunweiler (Re), supra at para. 46
The Respondent was previously subject to an MFDA disciplinary proceeding in connection with personal financial dealings with a client, the very same conduct for which the Respondent is in part facing a disciplinary hearing again in this matter. As discussed above, the Respondent misled DFSI and the MFDA by failing to disclose his borrowing from Mr. H during the investigation of this earlier matter.
The Respondent has not demonstrated a recognition of the seriousness of his misconduct and the harm he caused his clients and others. The Respondent failed to cooperate in the MFDA investigation in this matter, and the Respondent has not responded in any manner to this proceeding.
In total, the clients and others affected by the Respondent’s conduct suffered financial harm of at least $1,408,191.58. In addition, the client and others suffered stress and emotional suffering as a result of the Respondent’s misconduct. While the clients and others were ultimately compensated by DFSI, this cannot ameliorate the breach of trust perpetrated by the Respondent.
The Respondent benefitted from the receipt of at least $1,843,718.58. While a portion of this was repaid to the clients and others, importantly, this was done solely to maintain the charade that the money he had been provided was invested so that he could continue to perform his scheme and extract additional funds.
The Respondent poses an ongoing serious risk to investors, if he were permitted to continue to operate in the capital markets. The Respondent’s misconduct is egregious and he has demonstrated that he is ungovernable.
The Respondent has caused significant damage to the integrity of the capital markets. The ability of mutual fund dealers to facilitate the participation of the public in the capital markets requires that the investors trust mutual fund dealers with their money. The misappropriation of client and others’ funds and the failure to appropriately address conflicts of interest undermines this trust, harming the mutual fund industry and the capital markets more broadly.
Ayala (Re), 2017 LNCMFDA 237 at para. 11
This harm is further aggravated in this case by the Respondent’s disregard for the MFDA and its processes, which undermines its mandate of investor protection.
In addition, the Hearing Panel considered MFDA Staff’s proposed sanctions, which were a permanent prohibition, a fine in the amount of at least $1,520,890.00, and reviewed the previous similar cases of Backer (Re), 2019 LNCMFDA 14; Latour (Re), 2016 LNCMFDA 195; McIntosh (Re), 2013 LNCMFDA 58; and Nunweiler (Re), 2012 LNCMFDA 46 submitted by MFDA Staff.
The Hearing Panel was also provided with a Bill of Costs for this case. MFDA Staff sought an award of costs of $14,700.00.
For all the above reasons, the Panel concluded that the contraventions committed by the Respondent are extremely serious. Accordingly, the following penalties were imposed upon the Respondent:
The Respondent is permanently prohibited from conducting securities related business in any capacity while in the employ of or associated with any MFDA Member, pursuant to section 24.1.1(e) of the MFDA By-law No. 1.
The Respondent shall pay a fine in the amount of $1,608,192.00 pursuant to s. 24.1.1(b) of MFDA By-law No. 1.
The Respondent shall pay costs in the amount of $14,700.00, pursuant to s. 24.2 of MFDA By-law No. 1.
If at any time a non-party to this proceeding, with the exception of the bodies set out in section 23 of MFDA By-law No. 1, requests production of or access to exhibits in this proceeding that contain personal information as defined by the MFDA Privacy Policy, then the MFDA Corporate Secretary shall not provide copies of or access to the requested exhibits to the non-party without first redacting from them any and all personal information, pursuant to Rules 1.8(2) and (5) of the MFDA Rules of Procedure.
DATED: Oct 18, 2019

Frederick W. Chenoweth

Cheryl Hamilton
Industry Representative

Matthew Prew
Industry Representative

The image below is from the "Full-service Brokerage" - Desjardins Securities, web site, Oct 21, 2019, promising over 300 financial advisors to the public.

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click to zoom in on image

The following image shows over 10,000 persons registered with the Canadian Securities Administrators, while the image after that shows how many??? are actually registered in the Advising Representative category.

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click to zoom in on image

The following image shows how many persons at Desjardin hold an Advising Representative registration to reflect the promise by Desjardin of "At Desjardins Securities, we have more than 300 highly qualified investment advisors[ 1 ] note, who know the stock market like the back of their hand. With their advice and their expertise, they can offer you customized investment solutions and strategies that will enable you to achieve all your financial objectives.

Screen Shot 2019-10-21 at 7.35.39 PM.png

click on image to zoom in
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Posts: 3068
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Tue Sep 24, 2019 4:14 pm

There's a difference between ‘adviser’ and ‘advisor’
Do you call yourself an adviser or an advisor? Chances are, if youre a Registered Investment Adviser, you call yourself an adviser.

By Christopher Carosa | December 01, 2014 at 07:00 PM | Originally published on Benefitspro Magazine

Screen Shot 2019-09-24 at 5.13.21 PM.png

Do you call yourself an “adviser” or an “advisor”? Chances are, if you’re a Registered Investment Adviser, you call yourself an “adviser.” On the other hand, if you’re a broker, you probably refer to yourself as an “advisor. On the other hand, if you’re a broker, you probably refer to yourself as an “advisor.”.”

Full article found here:

Christopher Carosa
Chris Carosa has been writing a weekly article and monthly column for BenefitsPRO online and BenefitsPRO Magazine since 2011 and is a nationally recognized award-winning writer, researcher and speaker. He’s written seven books, including From Cradle to Retire: The Child IRA; Hey! What’s My Number? – How to Increase the Odds You Will Retire in Comfort; A Pizza The Action: Everything I Ever Learned About Business I Learned By Working in a Pizza Stand at the Erie County Fair; and the widely acclaimed 401(k) Fiduciary Solutions. Carosa is also Chief Contributing Editor of the authoritative trade journal and publisher of the Mendon-Honeoye Falls-Lima Sentinel, a weekly community newspaper he founded in 1989. Currently serving as President of the National Society of Newspaper Columnists and with more than 1,000 articles published in various publications, he appears regularly in the national media. A “parallel” entrepreneur, he actively runs a handful of businesses, including a small boutique investment adviser, providing hands-on experience for his writing. A trained astrophysicist, he also holds an MBA and has been designated a Certified Trust and Financial Advisor. Share your thoughts and story ideas with him through Facebook ( Twitter (
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Sat Sep 07, 2019 8:32 am

Scotiabank cuts deep in wealth management

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Scotiabank cuts deep in wealth management
UPDATED MAY 16, 2018

Bank of Nova Scotia's latest restructuring efforts have spread to its wealth management arm, with major changes to the ScotiaMcLeod retail adviser network announced this week.

In mid-April, the bank announced a review that "advances strategic measures to further position the bank for long-term success," citing "significant ongoing shifts in consumer behaviours, particularly digital banking adoption."

Rival Big Six banks face similar threats and have been cutting costs as Canadians increasingly opt for digital banking.

This week, Scotiabank's wealth management unit was also targeted by the review, with at least 7 per cent of ScotiaMcLeod's brokers let go, as well as their assistants, according to people familiar with the decision.
Scotiabank would not confirm the exact number affected.

The nature of the job losses represents a shift in the lender's long-term wealth management strategy.

When cost control is a top priority, there is little surprise when underperforming staff are dismissed.
But the latest cuts targeted brokers who brought in as much as $650,000 in annual fee-based revenue, a source said, including those with assets under management ranging from $75-million to $100-million – a level that previously allowed advisers to qualify for bonuses.

Now, the bank seems focused on serving the wealthiest clients and employing brokers with megabooks of business – the most assets under management – a burgeoning trend across the industry. Story
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Sat Sep 07, 2019 8:19 am

Walking into a GOC Canadian Chartered Bank Act branch to talk to an advisor about investments can be an exercise fraught with hidden risks.

Here's some background information that might help you avoid some of the pitfalls.

~Graham Hughes, PFP (23-years)
Screen Shot 2019-09-07 at 9.18.43 AM.png

The Problem With Canadian Investment Advisors
Inside Out: What’s Wrong With Canada’s Investment Industry?
September 5, 2019
by Graeme Hughes, PFP
There’s an awful lot of noise being generated around the investment industry in Canada. It’s as if everyone agrees that, somehow, the system is broken, but no one can quite agree on what the problem is, or how to fix it. Unfortunately, in my view, the anger is often misdirected, and in the absence of a clear understanding of what’s broken, it’s hard to imagine that a fix will happen any time soon.

To try and maybe clear the air a little, I’d like to offer my take on what I think is the point of failure, based on my many years of experience in the industry. Hopefully, we can figure out both the challenges and opportunities that exist, and eventually work toward an industry that works for all.

So here is my view of Canada’s investment industry, looking from the inside, out.

Table of Contents
A Background On The Structure Of The Industry
The Road To Hell Is Paved With Good Intentions
Not All Bank Employees Are Equal: Salespeople
Bank-Based Financial Planners
Where It All Falls Apart: The Sales Process
Do MFDA Advisors Really Believe In What They Are Selling?
Why Don't Regulators Do Something?
So What's The Solution?
A Background On The Structure Of The Industry

The investment industry in Canada is broken down into two teams, in a way. Team #1 are brokers, who are licensed under the Investment Industry Regulatory Organization of Canada(IIROC). Brokers are licensed to sell stocks, bonds, and Exchange Traded Funds (ETFs), as well as mutual funds. They can also have add-on licensing that allows them to sell more sophisticated securities such as options. They generally work for either bank-owned or independent brokerages, and frequently have a financial planning designation (PFP, CFP, etc.) as well.

Team #2 are advisors who are licensed under the Mutual Fund Dealers Association of Canada (MFDA). MFDA-licensed advisors are able to sell mutual funds only, not stocks, or bonds. They may sell ETFs if they meet certain proficiency requirements, but that is a more recent development and most MFDA-licensed firms lack the necessary trading platform to transact in these products. These advisors sometimes have a financial planning designation, and they are most often found in Canada’s banks. They are also present in independent firms such as Investor’s Group and Primerica.

Although I have worked for both IIROC and MFDA firms, this article will largely discuss the MFDA business as it seems to be the side that generates the most complaints, appears to have the most problems, and is the business I know best.

Keep in mind as well that I left the business two years ago, so some things may have changed in the time that has passed.

The Road To Hell Is Paved With Good Intentions

One area where the banks have offered a good deal to Canadians is in making advisors available to people of even modest means.

If you walk into an IIROC-licensed brokerage in any major market in Canada (particularly a bank-owned brokerage) you’ll probably be hard pressed to have a conversation with anyone unless you have at a bare minimum $500,000 to invest. The pressure on brokers to cater to wealthier clients is highlighted by a certain bank-owned brokerage that not too long ago axed any advisor who wasn’t generating at least $650,000 in fee-based revenue. Brokers generally have no time or appetite for the small investor. (link: "Scotiabank cuts deep in wealth management”, )

Enter Canada’s banks, who have an MFDA-licensed advisor available to help just about any size investor, even if you are starting from $0. The banks even provide accredited financial planners, usually for families that have in the neighborhood of $100,000 or more to invest. As far as democratizing advice and making it widely available, the banks have done a pretty good job.

Unfortunately, this is pretty much where the good news ends. The banks have allowed their dominance of this market to lead to some very bad habits.

Not All Bank Employees Are Equal: Salespeople

One of the challenges of the bank model is that it can be hard to know who, exactly, you are talking to in the bank. The most common employee who may talk to you about investments is the general salesperson. They often go by titles such as Financial Services Manager or Financial Advisor, but often these are folks who were tellers a few months ago.
The only licensing they usually have is a license to sell mutual funds, which is obtained by completing a short course, followed by a 100-question, multiple-choice exam that they need to score at least 60% on. After that is completed, they receive another 90 days of on-the-job training and supervision.

In addition to investments, these salespeople are also tasked with selling bank accounts, credit cards, term deposits, and sometimes mortgages.

Needless to say, these folks are often not well equipped to do much on the investment side of things except take instructions from a client. Any advice they give is very likely to be a generic talking point that was passed on to them from the institution they work for, that they may or may not understand.

These salespeople are often under intense pressure to sell product. At one institution I worked for, the branch manager was mandated to sit down with each salesperson three times a day:

once in the morning to talk about their appointments and what they planned to achieve that morning;
once at noon to see if they met their morning sales objective and talk about their objectives for the afternoon; and
a final time at the end of the day to see if the afternoon objective was met.

This type of intense scrutiny goes beyond micromanagement and is dangerously close to simply being insane. All sales made by the salespeople are closely tracked, and salespeople, sometimes from across the country, are compared against each other based on the volume of sales made. And look out if you happen to be hovering near the bottom of those lists!

Sales performance is also used to determine year-end bonuses and, in many cases, eligibility for promotions.

Bank-Based Financial Planners

The in-bank financial planners represent a step up from the salespeople. More often than not, the term “Financial Planner” is in their job title, and these days they almost always have to have a financial planning designation to be in this role. That designation is typically either the CFP (Certified Financial Planner) or PFP (Personal Financial Planner).

The good news is these folks have the extra training and can often do a reasonable or even good job of financial planning, if they so choose. The bad news is that the sales pressure experienced by the other bank staff is applied equally, if not more so, to the planning team. Financial Planners are also either base-plus-commission employees, or commission only.

My experience is that the banks put very little emphasis on completing quality financial plans (although some planners do this anyway) and see the financial plan as a way to get information out of the client, and provide up front value that will then make the client feel obligated to invest with the advisor. Quality control, when it is done at all, is at most a spot check of a couple of plans that were done in the previous quarter. Often the planner is told which plans will be looked at in advance, in case any cleaning up is needed.

In one audit of my financial plans, my supervisor, who was conducting the audit, confided that he had never completed a financial plan himself, and that I would have to ‘tell him what he was looking at’.

Where It All Falls Apart: The Sales Process

When you are a bank employee, the bank makes no bones about the fact that everything, at the end of the day, is about the bottom line. And nowhere is that clearer than in the sales process. Without giving away any corporate secrets, and based on my own experiences, here’s a rough idea of how commissions tend to work for many bank-based financial planners:

Assets that are “new to the bank”, which usually means on deposit less than six months or a year, generate regular commissions, whereas assets that have been on deposit longer generate as little as 5% of the commission.
Selling certain products, such as wrap accounts, portfolio solutions, or select funds targeted by the institution, can boost commissions by 60% or more.
Index funds can generate commissions that are as little as 10% of the regular commission amount.
Selling non-bank funds is either prohibited, or done at drastically reduced commission rates.
Guaranteed Investment Certificates (or Term Deposits) generate a fraction of the commission of mutual funds.
Stock-market-linked GICs generate a bonus over and above the regular GIC commission amount.
It’s easy to see how a structure like this can drive perverse behaviors. The push is on to sell mutual funds over GICs, high-fee wrap products over “stand-alone” funds, bank funds over funds from other manufacturers, and no one ever, ever, sells an index fund.

Further, existing clients are often ignored in favor of chasing new assets. I even knew planners who recommended clients transfer assets to another institution, then write a cheque for an investment purchase, so that the assets would be commissioned as “new” and qualify for the much higher payout.

These numbers didn’t just impact commissions. Planners have sales targets that have to be made as well, and the penalty for missing them consistently is often termination. An index fund that generates only 10% of the commission, may also generate only 10% of the credit to your sales target. So a $100,000 investment sale is only credited as $10,000. In many cases, any planner who consistently sells cheap index funds will first starve to death, and then be fired.

And the termination threat is very real. I don’t think I ever worked on a team that had more than 20 people on it, yet every year at least one or two would either be let go, or would jump just prior to being pushed.

This is only the tip of the perverse-sales-process iceberg. There simply isn’t enough time or space to delineate all the ways that numbers, sales, and clients are twisted and manipulated to conform to questionable corporate mandates.

Do MFDA Advisors Really Believe In What They Are Selling?

This is a question I have been asked a number of times, and it’s hard to answer. Certainly, for mutual-fund focused businesses, low-cost ETFs are seen as an absolute threat. And a lot of effort is put into countering that threat through “educating” the sales teams.

Over the years, I have been subject to plenty of training on:

The purported benefits of active management.
Why passive investing can’t possibly match the benefits of actively-traded funds.
How mutual fund fees (often well in excess of 2%) are providing value to clients by providing an avenue to obtain valuable planning services.
Why selling bank funds is superior to selling funds from non-bank manufacturers.
For advisors who spend years being subjected to this, it’s hard not to absorb it to a degree. And it’s often seen as critical information in order to maintain your selling advantage in the face of competition from other firms, and an increasingly skeptical public.

Deep down, I think most advisors know fees are an issue. They saw it in all the hand-wringing over the CRM2 disclosure guidelines. However, there is simply no benefit in even acknowledging it because it doesn’t fit the narrative of the corporations they are working for. Trying to push the low-fee narrative will only land you in hot water for not aligning yourself with “the team”.

Why Don’t Regulators Do Something?

So, with all this going on that’s clearly not in the interests of investors, surely the regulators will step in and clean house, right?

Don’t bet on it.
Both the MFDA and IIROC are what’s known as “self regulatory” organizations. In other words, they are set up by the industry, to regulate the industry.

Let’s look at the MFDA. According to their 2018 Annual Report, the MFDA took in $35-million in revenue.
Where did that money come from? It came from the member firms. Where did it mostly go? Well, $26-million went to salaries. Do you really think a bunch of people who are collecting nice paycheques from the industry are going to be really enthusiastic about biting the hand that feeds them? Probably not.

Further, about half of the board of directors of the MFDA are representatives of the member firms. Again, how likely are they to crack down and clean up? I’m guessing not very.

So What’s The Solution?

We’ve come to the point where the industry, both on the IIROC side and the MFDA side, really needs transformative change to once again focus on the client. Too often, writers and commentators are quick to place the blame at the feet of bad advisors, but as can be seen from the above, bad advisors are really a symptom of bad institutions.

The advisors, to a large degree, simply work in an environment where they have no autonomy, no authority, and no voice in how the business is run.
Most bank-based financial planners are given a document to sign at the start of each new fiscal year. That document is the compensation plan and sales targets that will apply to you, as a planner, for the year ahead. Your options often are, literally, sign it or leave. No discussion. No negotiation.

In order for change to happen, it has to come, not from the employees, nor from the self-regulatory organizations. It would have to come from the federal or provincial governments, via the securities commissions.

I would humbly recommend that a great first step would be to do the following:

An outright ban on any compensation structure that encourages the sale of one product, or one particular manufacturer’s product, over another. All advisors should be free to recommend a product that they feel is in the best interests of the client in front of them, without worrying about impacts to their paycheque, or longevity in their job.
Further, MFDA-licensed firms have the ability to sell ETFs, so they should train their employees appropriately and get the necessary infrastructure in place to do so.
Lastly, anyone advising on investments should be trained to accept that they are advisors first. Not salespeople. That means the needs and interests of the client must be paramount.
Further, all advisors, not just financial planners, should be subject to ongoing continuing education requirements.
The reality is that the lion’s share of advisors in Canada work for either one of the Big Six banks, or one of the brokerages that they own. If you change the practices of these six companies, you will have almost instantly changed the industry. That should be the focus of everyone who wants to see the industry do better.

Failing that, the one thing these institutions love more than anything else is their profits. If you want to push for change, either move your assets to a self-directed platform (my favorite is Questrade, which I use myself), or find an independent, fee-based advisor who will take you on.

If enough people vote with their feet, and their assets, maybe the Big Six banks will be forced to change sooner, rather than later.

Important Disclaimer: This site contains affiliate links to products. We may receive a commission for purchases made through these links. These commissions do not generate a cost to the user and do not impact any product reviews as we try to be as objective and fair as possible regardless of affiliate program status.

The information above is for general informational purposes only and does not in any way constitute an offer for the purchase or sale of any security and is not intended to be considered comprehensive or personalized financial or investment advice. assumes no responsibility for the use or application of this information. Always consult a tax, investment, or other appropriate professional before adopting any new financial strategies.

Graeme Hughes - The Money Geek
Graeme Hughes, PFP

I am an accredited Financial Planner with 23 years of experience in the financial services industry. During the course of my career I completed hundreds of financial plans and recommended and sold hundreds of millions of dollars of investment products. I believe that financial independence is a goal anyone can aspire to and I am passionate about helping others to live life on their own terms.
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Sun Aug 31, 2014 8:04 pm


Systemic Investment Industry deception on a scale of hundreds of billions each year, well hidden from public view.

The passing-off of commission sales agents, who are NOT legally licensed as "advisor" or even as "adviser" (with the SEC),…….. as professional "advisor's" is doing more harm "duping" North American society than a good portion of all other crimes in the country, combined….

I am a recovering broker, in Canada, who worked his career with the largest bank owned broker here (RBC) and perhaps 9th largest in the US (according to them at one time)

Myself and a few colleagues have worked over a decade toward honest accountability (making me a whistleblower….) in our areas of expertise. My area was in retail investment sales. I submit to you 88 words by SEC chair Mary Joe White in a 1.5 minute video and three short, but good national press articles about what we feel shine a light on the greatest systemic investment deception we have discovered. Tens of billions of dollars each year are cheated and shortchanged from investors here in Canada, and I can only imagine the magnitude of the damage to those in the US. Regulators are wilfully blind to the acts of deception: 1.5 minutes
88 words from SEC Chair Mary Jo White (describes the differences in duties to clients between those who legally call themselves "adviser" and those who call themselves "advisor" (no legality) (root of the deception) Wall Street Journal Blog Financial Times New York Times Former Hedge fund employee, Ph.D, blog

I thank you for your time, and your work on behalf of the public interest. If I can be of any help in this, I am at your service.


Larry Elford
Former CFP, CIM, FCSI, Associate Portfolio Manager, retired
Alberta, Canada T1J 1N3

keywords: deception grand
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Thu Aug 28, 2014 9:54 am

images.jpeg (5.46 KiB) Viewed 27349 times

It is sleazy.
It is abusive.
It is unprofessional.
It is illegal and against written industry rules.
It is allowed for big money.
It is done by our most "trusted" investment providers.
It is covered up by captured regulators.
It is suppressed by nearly all business media.
It is your money that gets taken.

Comment from Stan:
I believe the fundamental cause for investor loss is labeling the commission motivated sales force of sales persons as "Advisors" and "Vice Presidents". This gains the trust of Canadians. Canadians are not stupid. Most are more than busy with careers and families. We also trust ... maybe when we shouldn't but when the regulators, media and Government says the investment industry is well regulated, the regulators say they protect investors, and the top dogs make over $700,000 per annum, there is just reason to believe.

Children are taught to believe in Santa Claus and the Tooth Fairy by the parents they trust. Small investors are taught to believe in "Financial Advisors" by the Government and regulators they trust. The media also helps to perpetuate this deceit.

In my opinion Brisko's August letter makes it perfectly clear. The titles "Financial Advisor" and "Vice President" are simply that (titles) and have no (legal) meaning. Why then do Goverment and regulators allow this to happen when it facilitates the fleecing of Canadians. Do they not realize how many lives are destroyed?

Investor education, better disclosure, more rules and regulations, more studies and reports, may make some feel they are doing something but it will do little to change the investment environment. As long as we accept the deception, Canadians will continue to trust their so-titled "Advisor".

The four words I have found most chilling for many years when I have spoken with small investors is "I trust my Advisor". Every individual I have met who lost a major part of their life savings trusted their so-titled "Advisor".

Even Earl Jones who was not even registered was able to gain trust by using a title of "Advisor".

It seems perceptions are hard to dispel. How do we get the message to Canadians so they can see the light? It seems few other than those who have had significant loss really understand.

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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Sat Aug 02, 2014 1:20 pm

Advocate comment:
The purpose of this posting is to highlight a "tilting" of rules and enforcement procedures in favour of investment industry players, and at harm to the public.

Of interest in this correspondence between SIPA (Small Investor Protection Association of Canada) and the CSA (Canadian Securities Administrators) is the following:

1. Persons who advertise themselves as investment "advisors" do not have to have that particular license or registration. Regulators will turn a blind eye to misrepresentation that favours the interests of the industry, (despite industry rules prohibiting misrepresentation by commission or by omission) while fooling the public into a false sense of security and trust in industry dealers. Only Quebec regulates and protects the public from title misrepresentation.

2. Investment dealers commonly give fake titles such as "vice president" to top producing commission salespeople, in further attempts to lure the public into a false sense of security and trust in what are mere commission sellers. (regulators also look the other way at this consumer misrepresentative practice)

3. The person (mis) representing his or herself to the public as an "advisor" has neither a fiduciary duty to care solely for the interests of customers, nor a "best customer interests" standard which to adhere to, despite this being sternly implied in the name, the actual license (advising rep) and in the marketing promises of the investment dealers who title their salespeople in this manner. (except in Quebec where they must place the best interests of the customer first)

4. The "suitability" standard is so vague, undefined and self-determined (by the selling dealer themselves) as to be shameful, and as such the email does not speak to it directly. It instead refers to separate bulletins which also do not speak, other than in legal jargon and obfuscating gobbledygook. Research and experience shows that such a vague term allows the VERY LEAST suitable choice, or the highest cost ( and commissions) investments to be sold to consumers, and yet still meet this consumer-cheating standard. Consumers who are not satisfied with that can always raise $500,000 in legal costs, and spend approximately ten years of their life in the courts, to prove otherwise, and the industry likes this fairness "hurdle" just fine.

Now to the email correspondence:

From: Besko, Chris (FINMSC) <>
Date: Fri, Aug 1, 2014 at 6:43 PM
Subject: Financial Advisor Registration
To: "" <>
Cc: CSA ACVM Secretariat <>

Thank you for your letter of March 28, 2014. It was referred to the Registrant Regulation Committee of the Canadian Securities Administrators (which I chair) for a response. We have tried to answer all your questions as fully as possible, but if you have any follow up questions, please feel free to contact me directly.

For ease of reference, we have included your question (in italics) before each response.

Limitation Periods –
(Advocate comment: For purposes of brevity, a section of this email exchange related to Time limitation periods for compliant or civil action was removed. Also to keep this post on the topic of systemic misrepresentation)

Registration Classifications

1. Advising Representative – Is this the current classification for Advisers?

2. Dealing Representative – Is this the current classification for previous Sales Representative?

3. Financial Advisor – This is a common title used but there appears to be no classification. Are

these persons registered as Dealing Representatives?

4. Vice President – Are all vice presidents deemed to be officers of their firms?

The registration categories under securities legislation are set out in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. They are: dealing representative, advising representative, associate advising representative, ultimate designated person and chief compliance officer. These are the descriptions that apply to individual registrants for the purposes of registration. An individual who is acting as an adviser on behalf of a portfolio manager will be registered as either an advising representative or an associate advising representative. An individual who is trading in securities on behalf of a dealer (such as an investment dealer, mutual fund dealer, exempt market dealer, restricted dealer or scholarship plan dealer) will be registered as a dealing representative.

We do not prescribe specific titles to be used by those persons who are either dealing or advising in securities. Most securities legislation requires that an individual who holds themselves out as being registered to in fact be registered and to indicate the actual category of registration.

(advocate comments: Sadly, 13 provincial and territorial commissions ignore what I believe to be fraudulent misrepresentation or false pretence offences when they turn a willfully blind eye to approximately 150,000 registered "dealing representatives" who for the most part, strongly imply and represent to the public that they are registered as "advisors" (advising representative category).

Financial Advisor, as you noted, is a common title which many persons use, whether they are registered under securities legislation or not. The use of this title is not generally prohibited, and may be used by anyone, including persons who are only licensed to deal in insurance products, mortgage brokers, deposit agents, or employees of financial institutions. Some jurisdictions regulate the use of some titles. For example, in Québec, no person may use the title Financial Planner without holding the appropriate certificate issued by the Autorité des marchés financiers. The title Financial Advisor may not be used by anyone as it is considered similar to the title Financial Planner. Having said that, most jurisdictions do not regulate the use of Financial Advisor, and as such it is widely used.

(Common Sense comment from an investor who was misrepresented and then exploited by these so-called "regulated" investment practices:)
"We do not prescribe specific titles to be used by those persons who are either dealing or advising in securities." Wow! Well perhaps you should, since it is quite a deceptive game being played upon the unsuspecting investor.

As with Financial Advisor, the title of Vice President is increasingly a common title used in the financial services industry. While an officer of a firm may be designated to be a vice president, the use of the title is not reserved to actual officers of a corporation. As such, it is not safe to assume a person described as a vice president is in fact an officer of that corporation.

Suitability –

[i]Does suitability have a common definition for all provinces or territories, and what is the definition? To whom or which license categories does it apply.

CSA staff published on January 9, 2014 CSA Staff Notice 31-336 Guidance for Portfolio Managers, Exempt Market Dealers and Other Registrants on the Know-Your-Client, Know-Your-Product and Suitability Obligations. We believe this notice will assist in understanding the suitability requirement and our expectation of registrants.

Fiduciary –
[i]Does Fiduciary Duty apply to Portfolio Managers and other registrants? To whom or which license categories does it apply?
A common law fiduciary duty may apply to portfolio managers or other registrants, depending on the circumstances. Typically, Canadian courts have identified five interrelated factors to be considered when determining whether “financial advisors” stand in a fiduciary relationship to their clients: vulnerability of the client in the relationship, the trust and reliance that clients place in their advisor, the extent to which the advisor has power or discretion over the client’s account or investments, and the professional rules and codes of conduct of the advisor. In Québec, where a civil law regime applies, the fiduciary duty does not exist since it is specific to the common law. For further information, see Parts 3 and 4 of CSA Consultation Paper 33-403, including specifically the table in Part 4.

Best Interest –
[i]Is this standard in place in Canada? To whom or which license categories does it apply?[/i]

Four provinces (Alberta, Manitoba, Newfoundland and Labrador, and New Brunswick) have a statutory requirement that when advisers or dealers have discretionary authority over their clients’ investments, the adviser or dealers must act in the clients’ best interests. Investment fund managers are also subject to a statutory best interest standard all across Canada. In Québec, according to both the general civil law and the Securities Act (Québec), registered dealers and advisers are currently subject to a duty of loyalty and a duty of care and must act in the client’s best interest. The extent of these obligations under the Civil Code varies depending on the legal context and nature of the investment advisory relationship (e.g. discretionary account or non-discretionary account, executing broker only), taking into account the degree of trust, dependence and vulnerability of the client. For further information, see Part 4 of CSA Consultation Paper 33-403.

Hopefully this answers your questions. As mentioned above, please feel free to contact me directly with any follow up questions you might have.

Chris Besko
Acting General Counsel & Acting Director
tel. (204) 945-2561
fax (204) 945-0330

The Manitoba Securities Commission
500-400 St Mary Avenue
Winnipeg, Manitoba, R3C 4K5
Toll Free (Manitoba only) 1-800-655-5244

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keywords Manitoba, Besko, FINRA, Financial Designations

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

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

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

1 “Registered Representative” refers to the name of an individual IIROC approval category. An individual approved by IIROC to act as a Registered Representative is permitted to trade and provide advice to retail customers with respect to securities.
2 “Investment Representative” refers to the name of an individual IIROC approval category. An individual approved by IIROC to act as an Investment Representative is permitted to trade in securities for retail customers. An Investment Representative is not permitted, however, to provide investment advice.
3 The term “financial designation” is used generically throughout this notice to include credentials that are used to indicate that the individual has specialized knowledge or expertise in an area gained through education and/or experience. ... b67_en.pdf
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Sun May 18, 2014 9:26 am

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In Canada today it is current practice that most ”Financial Advisors” are registered as “Dealing Representative – A sales person – what they can sell depends on the firm they work for and their registration.”

(In the US, it is those licenced as "brokers" who usually call themselves as "advisors", check your US "advisors" licence here )

Over many years victims of loss of their savings believed their “Advisor” had a fiduciary responsibility, but that was not so. In some cases it was proven in court that the “Advisor” in a particular case, because of his actions and because of the client's lack of knowledge and dependence upon the “Advisor”, it was deemed that there was fiduciary duty in that particular case. However, fiduciary duty depended solely upon the "finding of fact" in the particular case.

Many persons do not see any difference between “Adviser” and “Advisor”. Dictionaries may give both spellings. On the other hand the industry literature by regulators and organizations is quite careful in the use of the two terms, but also fail to advise consumers and clarify the situation. The CSA in Canada and the SEC in the USA use “Adviser” to refer to those who give financial advice. The industry uses “Advisor” for those persons registered as “Dealing Representative – A sales person.” This practice is at best misleading for Canadian investors.

For several years there have been discussions about the duties of “Financial Advisors” and whether there should be a fiduciary duty or a requirement to look after a client's best interests. Ermanno Pascutto was instrumental in bringing this issue forward. It will likely be discussed for years.

Now that is not to say that all “Financial Advisors” act in the same way. Some do a good job for their clients, but they may in fact be portfolio managers and have a fiduciary obligation as defined in provincial Securities Acts. I have a broker registered as a Portfolio Manager although he is also called a “Financial Advisor”.

The CSA has clarified the situation with their document Understanding Registration. This document lists all registration categories. There is no “Financial Advisor” category but it is fact that most persons using the ”Financial Advisor” title are registered as “Dealing Representative – A sales person.”

The three main classifications (in Canada) that concern investors with “Financial Advisors” are:

- Portfolio Manager

- Advising Representative

- Dealing Representative - A sales person

(In the USA the license classifications to look for are "broker", and "registered investment adviser".)

SIPA recommends that every investor check the registration, qualifications, and discipline history of their “Financial Advisor” whatever their experience has been to date. Investors need to become aware of the facts. Many Canadians do not become aware until it is too late. Losing your life savings is traumatic and is a life-altering event. Many never recover and some do not even survive.

Please take the time to check with the Canadian Securities Administrators "Understanding Registration". ... ion_EN.pdf

Small Investor Protection Association
tel: 416-614-9128
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Wed Apr 23, 2014 3:46 pm

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The ASIC report reveals that the advice provided by financial planners is tainted with conflicts of interest. The regulator concluded that nearly 90% of licensee (i.e. dealer group) remuneration is paid by product providers in the form of ongoing commissions, up-front commissions, and volume rebates or manager fee rebates.

Only 10% is received in the form of client fees. ISN believes that reforming the financial advice industry should, at the very least, reverse this ratio: 90% of income generated by client fees and 10% by neutral product payments.

The ASIC report also demonstrated the critical need for consumers to be protected from being charged ongoing fees when no ongoing financial advice is being received, and that this should be accomplished by requiring consumers to regularly ‘opt-in’ to such fees (if asset-based fees are not banned altogether).

The ASIC report found that 3.1 million Australians, or two thirds of all of the clients of the largest 20 financial planning firms, are not ‘active’ clients. The inference is that these clients are continuing to pay ongoing advice fees but are not actively engaged with their planner.

link to report here:
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Wed Apr 23, 2014 3:31 pm

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Would you hire a lawyer who also represented the other side?

Why are you doing this with your investment "advisor"?

A great 11 minute explanation of the perils of having a broker/advisor with divided loyaty, or having a fiduciary adviser with an UN-DIVIDED LOYALTY to the client. Difference could be literally millions for the serious investor. ... ultsPage=1

(I found that this link requires a "log in" and not many can do this. If you can, I originally found the podcast on iTunes, in the CFA audio: "What Fiduciary Duty Means to Your Practice" 11:42 2010-01-29 Steve Horan, CFA, interviews Blaine Aikin, CFA

Sorry for not knowing the web link would require a log in......please find it on

This presentation is a very good look at the DUAL loyalties of the average, non-fiduciary, investment advisor, as compared to having an UNDIVIDED loyalty professional.

Ironic thing is, that for those who can afford it, the undivided loyalty is far less costly than being sold retail products, and far less likely you will be double and triple sold (double dip etc).

This group is Canadian and gives some further info about what undivided loyalty looks like, who they are and what they do. ... L_WEB1.pdf

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best of luck with your investing.
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Tue Apr 22, 2014 9:16 pm

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Out dated legal arguments re fiduciary obligations!
Posted on February 26, 2013
Canadian industry submissions on the CSA Best Interests Standards are relying on out dated legal arguments, which were themselves based on no longer relevant service relationships, for determining whether fiduciary duties apply to advisory relationships.

I have argued that the complexity of the process underpinning the relationship imbues the relationship with fiduciary type duties because of the considerable discretion the advisor has over the processes that comprise portfolio construction, planning and management (advice) irrespective of whether the client has the final decision.

A recent 2010 article by Arthur Laby, Professor of Law at Rutgers Schools of Law (US), argues, inter alia, that in the US brokers were only allowed to evade a fiduciary type responsibility in the 1940 Act because their advice was incidental to the transaction. This is no longer the case. As is the case with Canada, advice has become the predominant service activity and the transaction incidental.

“The decision to exclude brokers that provide advice from the Advisers Act may have been appropriate in 1940 when advice was a minor ingredient in the services provided. Today, however, brokers’ functions have changed and advice is more central……

….When a customer turns to a broker for advice, the customer reposes discretion in the broker to provide appropriate guidance and direction. Moreover, the broker has the ability to affect the customer’s legal position, either directly, in the case of a discretionary account, or indirectly, in the case of a non-discretionary account, assuming the customer accepts the advice. The furnishing of advice therefore calls for the imposition of fiduciary duties…..

….These titles imply that the individual is not acting at arm’s length. They are meant to induce a customer to repose trust in the professional as a neutral source of research and recommendations. Because advice is such an important part of a broker’s activity, and because dispensing advice calls for the imposition of fiduciary duties, brokers that give advice should be subject to fiduciary obligations…..

…..Though at one point it may have been appropriate to allow brokers to provide advice incidental to brokerage without the obligations imposed on advisers, the exclusion is no longer applicable because providing investment advice looms as the more significant aspect of a broker’s activity

I have taken some considerable excerpts from the article itself (some noted above) and reproduced them below, but I would recommend reading the entire document.



Nature of the Relationship:

Although the differences may be exaggerated, the fiduciary obligation imposed by the Advisers Act appears broader than the duties imposed on brokers through application of the Exchange Act’s antifraud rules and FINRA requirements.

The primary reason for this stems from the way courts and regulators view the scope of activity undertaken by each when administering non-discretionary accounts. As discussed, the duty imposed on an agent depends on the scope of his or her activity.

Although the scope of activity can be altered by contract, in the case of non-discretionary accounts, a broker’s activity generally is limited to conduct surrounding a particular transaction, whereas the scope of an adviser’s activity extends beyond a particular trade. The different scope of activity yields different duties.

Consider the scope of activity undertaken by advisers. In some cases, an adviser might limit its advice to providing a financial plan, or it might restrict its advice to a particularly type of security, such as municipal bonds, or a particular sector, like technology.163 In those cases, the adviser’s fiduciary duty would be commensurate with the scope of the relationship.

Most advisers, according to the Rand Report, however, agree to provide portfolio management services. The phrase “management services” connotes an ongoing relationship, which extends beyond the time a particular trade is made. Moreover, the scope of activity for federally registered advisers is usually to provide ongoing, continuous services, even for a non-discretionary account.

If an adviser has agreed to provide continuous supervisory services, the scope of the adviser’s fiduciary duty entails a continuous, ongoing duty to supervise the client’s account, regardless of whether any trading occurs. This feature of the adviser’s duty, even in a non-discretionary account, contrasts sharply with the duty of a broker administering a non-discretionary account, where no duty to monitor is required. The two accounts in this example are similar in nature—both the broker and the adviser hold themselves out as providing non-discretionary investment advice—yet the adviser’s duty entails ongoing diligence while the broker’s duty is episodic.

……..For non-discretionary accounts, however, brokers’ duties tend to be intermittent, while advisers’ duties tend to be ongoing—extending to dormant periods of inactivity in the customer’s account. During these periods, a typical stockbroker owes no duty to the customer while an adviser acts more like a protective guardian and has a positive duty to act should market conditions or the client’s circumstances call for a change.

…….whether fiduciary duties should be imposed on brokers that provide advice. In 2005, the SEC recognized the importance of this issue, calling for a study regarding whether brokers that provide advice should be subject to fiduciary obligations normally imposed on
advisers. This is precisely the question taken up in the Obama Administration’s 2009 White Paper and in the Dodd-Frank Wall Street Reform Act. Although brokers have always provided advice, that component of their services did not predominate at the time the Advisers Act was passed.

In recent years, however, advice has displaced transaction execution as a chief activity carried out by brokers. It comes as no surprise that today brokers market themselves as financial advisers rather than stockbrokers. This change in emphasis from execution to advice as a primary feature of a broker’s business represents a change in circumstances for the brokerage industry and justifies the imposition of fiduciary duties.

Although brokers historically provided advice to their customers, advice rendered in the past was relatively less significant in the context of the overall relationship than it is today. The Security Market study referenced above explained that in the 1930s, a brokerage firm’s relationship with a customer had four aspects. First, it acted as a broker in the purchase and sale of securities and in borrowing and lending stocks. Second, it acted as a pledgee, lending its own capital to the customer or advancing capital borrowed from banks. Third, it was the custodian of the customer’s cash and securities. Fourth, it exercised, “to some extent,” the function of investment counsel.

The advice component is last on the list and qualified in scope. A history of the Merrill Lynch firm explains that, in the early part of the twentieth century, many brokerage firms did not do much more than execution—their sales forces were primarily intermediaries arranging trades on secondary markets—and the information available to investors seeking advice was rather meager. Open a modern description of the activities of broker-dealers and advice often is paramount.

….primary reason for this shift is technology.209 In the early part of the twentieth century, transaction execution was difficult to accomplish. Today, advances in technology have reduced the time and cost to process trades.210 As a result, the advice component of brokerage business has eclipsed transaction execution in importance. When asked which professional services matter most, survey responders chose retirement planning, investment advising, financial planning, and estate planning over executing stock or mutual fund transactions and other possible responses

Although brokers provided some advice when the Advisers Act was passed, as long as advice was not the primary service offered to investors— that is, as long as the advice was “solely incidental” to brokerage services performed—the broker was excluded from the definition of adviser and the Advisers Act’s fiduciary standard was not imposed.213

The decision to exclude brokers that provide advice from the Advisers Act may have been appropriate in 1940 when advice was a minor ingredient in the services provided. Today, however, brokers’ functions have changed and advice is more central

When a customer turns to a broker for advice, the customer reposes discretion in the broker to provide appropriate guidance and direction. Moreover, the broker has the ability to affect the customer’s legal position, either directly, in the case of a discretionary account, or indirectly, in the case of a non-discretionary account, assuming the customer accepts the advice. The furnishing of advice therefore calls for the imposition of fiduciary duties.

….Because advice has eclipsed execution as the primary service performed by broker-dealers, advice can no longer be considered “solely incidental” to brokerage. Indeed, it is brokerage that appears to be solely incidental to advice. In the 1980s, to better compete with investment advisers, many brokerage firms began to offer financial planning services and shun the title of stockbroker.224 Instead, broker-dealer registered representatives began to label themselves as financial advisors, financial consultants, financial representatives, and investment specialists.

These titles imply that the individual is not acting at arm’s length. They are meant to induce a customer to repose trust in the professional as a neutral source of research and recommendations. Because advice is such an important part of a broker’s activity, and because dispensing advice calls for the imposition of fiduciary duties, brokers that give advice should be subject to fiduciary obligations.

The provision of advice is the type of activity where agency costs are high and, therefore, fiduciary protections are needed most. It can be difficult ex post to determine the wisdom of an investment recommendation at the time it was made. A decision to recommend one investment over another is based on many factors; one can seldom know if self-interest was a motivating force. The imposition of the fiduciary duty of loyalty and the regulation of conflicts are ways to control the risk that an investment recommendation will not be objective.

………….. A fiduciary duty should be imposed on a broker providing advice regardless of the method of compensation employed. Customers who pay commissions need fiduciary protections to guard against opportunism that may arise in any commission-based business.

In the world of securities brokerage, a common risk in a commission-based account is the risk of churning, where a broker makes excessive recommendations.240 Customers who pay an asset-based fee are equally in need of protection.

An asset based fee, although reducing the likelihood of churning, increases the chance that a broker-dealer will ignore a customer’s account—aptly called “reverse churning”—because the firm will be paid regardless of whether a transaction occurs.241 In a fee-based account, regulators are concerned about “opportunism by neglect”—inattention and indifference to the account. Payment of a fixed asset-based fee provides disincentives to monitor, which results in neglected customers who receive little or no advice and seldom trade even when transactions are called for.

Though at one point it may have been appropriate to allow brokers to provide advice incidental to brokerage without the obligations imposed on advisers, the exclusion is no longer applicable because providing investment advice looms as the more significant aspect of a broker’s activity. Moreover, both types of remuneration brokers receive—commissions and asset-based fees—call for the introduction of fiduciary duties
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Tue Apr 22, 2014 5:59 pm

The top 3 hidden risks facing all investors today:

(a) fraudulent license misrepresentation by commission salespersons (financial and insurance) as licensed "professionals" with a "professional duty" to protect the customer. By salespeople and investment dealers who falsely imply that they have an undivided loyalty to the customer. This is the biggest risk today.

(b) The capture, or weakening of every regulator or protective agency, when compared to the strength of the financial industry, means that there are virtually none today who can stand, or speak out, about the cheating of the public. The would quickly be unemployed:)

(c) The financial capture of media, to the point where some cannot sustain themselves in business, without pandering to the marketing needs of the financial industry.

The result in Canada, is a river of money, approximately $50 billion a year, or one billion per week, flowing from the hands of all unsuspecting, saving, and investing Canadians, into the hands of giant financial institutions who are fooling and misleading them……"you are richer than...."

I can only imagine what the dollar value of harm might be to American consumers.

It is the greatest social and economic issue that I can see in my field of view today.
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Tue Apr 22, 2014 5:49 pm

From: "\"Help\" <>" <>
Subject: Re: SEC Response HO::~00389250~::HO
Date: 22 April, 2014 4:52:28 PM MDT
To: "" <>

Let's see if this is more helpful.

An individual may be licensed as a broker (a registered representative), as an investment adviser/or (a investment adviser/or representative) or both. They are often licensed both ways. There are a myriad of "special designations" that require additional and different licensing, and most of those titles include the word "adviser/or" in some capacity. If an investment professional refers to him or herself as an "Advisor" (regardless of the spelling), s/he should be licensed and performing services through a firm that is SEC registered as an investment advisery firm. You may find the explanation on our website a bit clearer. Here's the link to get you started:

I hope that helps. If you still have questions, please feel free to call me at (202) 551-6324.


Beckie Marquigny

--------------- Original Message ---------------
From: larry elford []
Sent: 4/22/2014 4:36 PM
Subject: Re: SEC Response HO::~00389250~::HO

Thank you for your reply. I am afraid I am a bit dense, and still confused. About: Advisor/adviser/broker names, I am trying to understand, how can brokers call themselves "advisor" without holding the proper advisor or adviser license.

Are they "interchangeable" as stated by SEC Attorney-Advisor" Rebecca Ament Marquigny below in red?

Or are they separate and distinct, words, titles or license's with separate duties and obligations? (the latter is suggested by SEC Chair Mary Jo White in a recent speech that touched on Investor protection. (March 21, 2014 speech to Consumers Federation of America, titled Protecting the Retail Investor)

There is much confusion and enough loopholes in the missing, or varied interpretations, to allow billions of dollars to flow from the hands of retial investors, into the hands of dealers who interpret the words to their favour.

Thanks in advance for helping to clarify the confusion

larry Elford

On 2014-04-22, at 7:00 AM, "\"Help\" <>" <> wrote:

Dear Mr. Elford:

Thank you for contacting the U.S. Securities and Exchange Commission (SEC) to ask whether there is a difference between financial professionals who use the title "advisor" and those who use "adviser," and whether the titles carry different qualifications or responsibilities. I appreciate the opportunity to respond to your question.

In general, the two terms are used interchangeably, and the choice to use one or the other is simply a matter of preference. However, with some titles, the small differences do carry a distinction. For example, the acronym RIA and the term "Registered Investment Adviser" (or "Advisor") refer to the investment advisery firm or company. The title "Investment Advisor/er Representative" or "Registered Representative" usually refers to the individual person. You can find additional information regarding professional designations on the Financial Industry Regulatory Authority (FINRA) website at ... tions.aspx.

I should add one caveat to the response above: I believe the alternative spellings for advisor are not universally synonymous. It is my understanding that British and American financial lexicon differs depending on the formality of the situation. Both terms are acceptable on both continents, but "advisor" is often referred to as "the American spelling."

Thank you for inquiring; please contact us again if we can be of assistance in the future.


Rebecca Ament Marquigny
Attorney - Advisor
Office of Investor Education and Advocacy
U.S. Securities and Exchange Commission
(800) 732-0330
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