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Auditor General Audit of OSC

Postby urquhart » Tue Jun 21, 2005 1:11 pm

----- Original Message -----
From: larry elford
Sent: Tuesday, May 24, 2005 9:54 AM
Subject: public inquiry into assante

I write, with a copy of letter from a former Assante client who has not received satisfactory treatment from the company, nor have government regulators found it in their interests to pursue the numerous allegations of wrongdoing. It is in the interests of the Canadian public to remove any and all doubts as to the safety and effectiveness of our financial system. I urge you, Mr. Phillips to seek and support a full open inquiry into the activities of this firm. One person has already died as a result of the pressures of trying to speak the truth as he knew it, and who knows how many average Canadians have been financially abused. Everyone with responsibility to act appears to be afraid and intimidated of the money and/or power of the financial industry, and as a result, none appear to be doing their jobs from the perspective of abused clients. I can assure you, from my own experience that some of these allegations actually take place in today's world and when added up, results in billions of dollars flowing from clients to bad investment advisors.
Best regards,

Larry Elford, CFP, CIM, FSCI, Associate Portfolio Manager (retired 2004)
letter cc'd below
Jocelyne Robidoux
9-2210 Walnut St.
Thunder Bay, Ontario
P7C 1L1 (807)623-0160

May 18, 2005

Mr. David Brown
Chairman, OSC
Suite 800, Box 55
20 Queen Street West
Toronto, Ontario M5H 3S8

Dear Mr. Brown:

I wish to express my sincere disgust with your department’s dismissal of serious allegations against Assante. Based on my experience with the Mutual Fund Dealers Association (“MFDA”) and its conflict of interest issues, and the fact that the Saskatchewan Financial Services Commission has limited resources, I’m assuming these regulators will not proceed further. I know that there exists overwhelming evidence against this company for its widespread practice of converting third party funds to its more profitable proprietary product. Did you comb through all those boxes of evidence? Did you question witnesses who also worked at Assante and were familiar with its practices? I didn’t think so. You conducted your investigation much like the Manitoba Securities Commission (“MSC”) handled my case in 2002.

I am a former Assante client who was a victim of the company’s fund conversion, in my situation without my consent which is illegal and yet appears to be ignored by regulators. I represented myself in a civil suit against my advisor and Assante through the Court of Queen’s Bench of Manitoba in 2003 after the MSC closed my file. I believe I was successful in proving my claims while the MSC seemed unable to find sufficient proof to charge Assante. My case also involved unregistered trades, confirmed by the Ontario Securities Commission (“OSC”) and again ignored by the MSC.

The trades in my case occurred at the same time as the trades in cases by the OSC, the Alberta Securities Commission (“ASC”) and the British Columbia Securities Commission against Assante/Summit Aurum, when the company was promoting and selling its in-house funds. The OSC settled with Assante in November 2003 for unregistered trading by over 152 advisors. No penalties were assessed. Were in-house funds involved? Were the trades authorized? What were the resulting client losses? If these issues were not investigated, is it fair to conclude that your department is negligent or incompetent or maybe more likely, that certain companies are immune to legal action? Regulators appear to have unwritten agreements with their corporate cohorts to ignore complaints possibly to protect each others interests.

Despite a history of allegations from former advisors, journalists, investor advocates and investors, Assante has never been severely disciplined. The apparent enforcement problems at the OSC sound eerily similar to those reported by whistle-blowers at the ASC. A brave young man who was very aware of Assante’s tactics died trying to expose the truth.

Shame on you for allowing his efforts and his death to be in vain. It’s not surprising that you once said, “We don’t give awards to whistle-blowers.” You treated this “truth-teller” much like you treated a Hollinger whistle-blower a few years ago. The OSC has a tendency to act when forced to do so by its American counterpart. Unfortunately, investors cannot rely on the U.S. Securities Exchange Commission to take action against Assante as it did with Hollinger.

I did not sign a gag order when I settled with Assante. I’m not done speaking out against Assante and our regulatory bodies who continue to allow corruption to grow in the Canadian financial markets. A foreign journalist once commented that, “the Canadian stock markets are the most manipulated and controlled in the civilized world and that the only reason any experienced foreign investor puts money into Canada is to launder it.” You people are doing more damage to our financial system by protecting instead of disciplining the perpetrators just as poor parents would foolishly let their children do as they please and make society pay for their unruly behavior. In his book, The Naked Investor, John Reynolds refers to a “highly respected academic” who described the OSC as “probably the most poorly governed securities regulator among those of the OECD… countries.”

The OSC announced in the Toronto Star on May 13, 2005 that it was encouraging consumers to report wrongdoing in the industry. I find it interesting and timely that the article was released within days of the OSC announcing an end to its Assante investigation. Please explain how you plan to prosecute corporate crooks based on tips from anonymous sources while you disregard cases with heaps of incriminating documents and testimony from credible witnesses who you never bother to contact during your so-called investigations.

The OSC mandate is to “provide protection to investors from unfair, improper and fraudulent practices.” Your department has not only failed to protect investors but has actually promoted “fraudulent practices.” In April 1999, the OSC approved Assante’s request to convert clients’ third party funds to its proprietary funds and then neglected to monitor and enforce compliance. If mass class action suits are ever filed by investors and huge losses are uncovered, who should be liable? What will the OSC’s defense be after shirking its responsibilities and ignoring repeated warnings of corruption at Assante. What if numerous “truth-tellers” finally come forward having been inspired by the ASC whistle-blowers? The OSC claims it “recognizes the importance of setting an example in the areas of transparency and effective governance.”

A fine example you turned out to be!

Very sincerely,

Jocelyne Robidoux
- 3 -
James McCarter
Joanne Fallone
Hon. Gerry Phillips
Michael Hornbrook
CBC Fifth Estate
Hon. Coulter Osborne
Linda Leatherdale
Gerald Lafreniere, LL.B.
Michael Watson
Hon. Michael Bryant
Larry Waite
Douglas Brown
David Wild
Amanda Downs
Joe Canavan
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Auditor General Audit of OSC

Postby urquhart » Tue Jun 21, 2005 1:04 pm

From: patricia cosgrove []
Sent: Monday, June 06, 2005 8:42 AM
Subject: Audit of OSC Enforcement and its Subsidiary SROs


Mr. McCarter:

I wish to add my voice to those who are calling for your Office to audit the OSC's enforcement practices, together with those of the IDA.

If you review the attached article, which profiles what happened to my 93 year-old Mother, who placed her trust in the Ottawa office of RBC Dominion Securities, and the manner in which the IDA and the OSC dismissed her complaint, you will understand my concern. The comments about my Mother's age made by a senior officer in the IDA's Enforcement operation were despicable. The OSC was informed and ignored this situation.

I would be pleased to provide your staff with more information about how the IDA and OSC handled this complaint.

Patricia Cosgrove
Toronto, Ontario
(416) 236-4364
Posts: 125
Joined: Tue Jun 14, 2005 3:43 pm
Location: Mississauga

Auditor General Audit of OSC

Postby urquhart » Tue Jun 21, 2005 1:03 pm

Diane A. Urquhart,
1486 Marshwood Place,
Mississauga, ON, L5J 4J6
Phone: (905) 822-7618
FAX: (905) 822-0041

May 13, 2005

Mr. James McCarter,
Office of the Auditor General of Ontario, 20 Dundas Street West,
Suite 1530, Box 105, Toronto, ON, M5G 2C2

Re: Request that the Auditor General of Ontario conduct a Value for Money Audit of the Ontario Securities Commission’s enforcement of the Ontario Securities Act.
Dear Mr. McCarter:
I am writing to support the request for the Auditor General of Ontario to conduct a Value for Money Audit of the Ontario Securities Commission’s enforcement of the Ontario Securities Act, which was made in the letter from James F. Roache dated May 5, 2005. I agree with James Roache’s premise that the public cannot have confidence in the thoroughness, consistency and fairness of OSC enforcement, when the enforcement decisions are made by OSC senior management, without any public accountability or independent auditing. To fulfill its Value-for-Money Audit mandate, your office annually conducts audits of selected ministry or agency programs. The Auditor General’s website says major programs and activities are generally audited every five years or so. The Auditor General of Ontario should be auditing OSC enforcement now and every five years. There is significant Ontario public interest in there being honest capital markets, where offences of the Ontario Securities Act have a high probability of being detected and prosecuted in a consistent and fair manner. I would expect that the Auditor General of Ontario would retain external forensic investigation expertise as necessary from independent specialists, such as Kroll Worldwide.

In order to demonstrate the urgency for the Auditor General of Ontario to conduct an audit of OSC enforcement, I would like to share with you my evidence of problems in OSC enforcement. I acquired this evidence as a director of Technovision Systems Inc, a B.C. public company. Technovision was funded by a $10 million RBC Financial loan and it had signed a $100 million networking contract with Telus Corporation, the largest supplier contract Telus had signed in its history. Technovision was to become the sixth largest internet service supplier in Canada, having announced the acquisition of 20 internet service providers throughout Canada. The market capitalization, with these
acquisitions executed, would have been $48 million, with Ontario shareowners representing about half of this amount. As it turns out, the CEO was sanctioned in October 2002 by the British Columbia Securities Commission (“BCSC”) for continuous disclosure misrepresentation, since he had not executed the acquisitions he said he had, and for stock trading manipulation. Unauthorized management compensation and stock trading manipulation at Technovision had been identified by the TSX Venture Exchange in an investigation initiated on March 26, 2001. The problems in OSC enforcement are associated with this commission’s handling of illegal share sales by six Ontario control persons of Technovision, who had knowledge that the announced acquisitions were not executed and that investigations were initiated on the various securities offences. I have organized the OSC enforcement problems into four categories below:

1) unfair and inconsistent treatment of this public company and six Ontario insiders by ignoring the evidence of Ontario securities violations and other misconduct:
a) illegal issuer bids executed under the Ontario Securities Act
b) failure to file insider trading reports
c) misrepresentation of material facts to OSC enforcement staff and commissioners by the lawyers involved and their legal counsel, determined from late filed insider trading reports enforced by the BCSC now showing the six share sellers were indeed insiders and cash received per share was above the market and not well below the market as reported to the OSC;
d) failure of the lawyer to co-operate with the BCSC on the filing of his insider trading report and his misrepresention to the OSC of cash received per share, while he was legal counsel to the insider group accepting the illegal issuer bid and a control person in this public company.
e) admissions by this public company that payments were made for confidentiality agreements, so that the six insiders, including the lawyers, a director and a senior officer, would not be instigating Securities Commission or CDNX investigations
f) insiders sold shares while in possession of material negative information not known to the public, including publicly announced acquisitions not being executed and the TSX Venture Exchange investigating unauthorized management compensation and stock trading manipulation
g) OSC Executive Director advises former director that his discussion with OSC Corporate Finance Issuer Bid Specialist has found no illegality, whereas this OSC official had already deemed the subject share sales to be illegal issuer bids and had sent the matter to OSC enforcement and the BCSC Corporate Finance Issuer Bid Specialist had reached the same conclusion and had referred the matter back to the OSC
h) OSC Chairman interferes with OSC Commissioners’ independent hearing of the Bruce Asquith et al application for a compliance order or enforcement action, by sending a letter to the former director saying no enforcement action is being taken, which is referred to in the hearing decision

i) no public notice of OSC hearing on the Bruce Asquith et al application for a compliance order and enforcement action on the illegal issuer bids under the Ontario Securities Act

2) negligent case assessment and investigation
a) sent director’s complaint received at the time of improper share sales by insiders to the BCSC for assessment, when these were illegal issuer bids in Ontario and under exclusive OSC enforcement jurisdiction
b) OSC Vice-Chairman approves the Ontario Reporting Issuer status of the B.C. public company, being satisfied that to do so would not be prejudicial to the public interest. This OSC officer had been informed by the director of the TSX Venture Exchange investigation and about several securities violations occurring at this public company
c) did not collect any evidence on cash received per share, and refused to enforce the filing of insider trading reports for the six Ontario senior lawyers, chartered accountants and executives, which was requested on ten occasions by the former director and minority shareowners
d) not proceeding with the investigation after learning from the late filed insider trading reports enforced by the BCSC that the cash received per share was at above the market and not well below the market, which was a material fact relied upon for closing the investigation file

3) OSC claim of insufficient public interest to warrant use of their scarce enforcement resources not justifiable
a) hundreds of hours spent to protect this public company and the six Ontario insiders from enforcement actions
b) no effort to obtain efficiency through collaboration with BCSC investigation and settlement, which resulted in CEO being sanctioned for the securities violations in its provincial jurisdiction of continuous disclosure misrepresentation and stock trading manipulation
c) refused to disclose public interest criteria OSC enforcement staff believed were deficient, except for the implication at the OSC hearing that there were no damages to the public, since the “Borgmann Group got out well below the market.”
4) aggressive adverse treatment of a director performing fiduciary duties and reporting illegal securities activities
a) Assistant Director of Enforcement attempts to stop former director from informing him about the BCSC investigation of the CEO’s continuous disclosure misrepresentation and stock trading manipulation, despite her evidence collected as a director pertaining to the illegal purchase by the company of the six Ontario insiders’ shares, and their knowledge of negative material information not available to the public

b) OSC litigator collaborates with defense counsel and this public company and six insiders in teleconferences and personal consultations on legal procedures and evidence in combined efforts to not have the Bruce Asquith et al application heard on its merits, without the presence or similar consultations with the former director, who is agent for the minority shareowners in the Bruce Asquith et al application
c) refused to meet with the former director on several occasions
d) OSC decision on the Bruce Asquith et al application sends minority shareowners to court (0.6 million in the Bruce Asquith et application and 6.4 million minority shares in total), since they are deemed to be silent partners of the former director, with no acknowledgement that the minority shareowners were the silent victims of several securities offences at the company, including the continuous disclosure misrepresentation, stock trading manipulation and the illegal issuer bids accepted by insiders who had inside information, while there were no offers of identical consideration or management information circulars sent to them
e) former director/shareowner and minority shareowners charged $7,500(later reduced to $3,750) for the Bruce Asquith et al application, which was never heard on its merits, despite OSC enforcement staff acknowledgement that the illegal issuer bids occurred
f) rejected application to volunteer on the Continuous Disclosure Advisory Committee despite twenty years direct experience in the field and having dealt with a continuous disclosure offence at Technovision, while aggressively protecting the identity of two of the six insiders executing the illegal issuer bids that wrote negative reference letters to the OSC

Yours sincerely,

Diane A. Urquhart

Hon. Gerry Phillips
Chair, Ontario Management Board of Cabinet
12th Floor, Ferguson Block
77 Wellesley St. West
Toronto, ON, M7A 1N3;
Posts: 125
Joined: Tue Jun 14, 2005 3:43 pm
Location: Mississauga

Postby urquhart » Tue Jun 21, 2005 12:58 pm

May 3, 2005 by e-mail;

Hon. Gerry Phillips
Queen's Park
Management Board Secretariat
77 Wellesley St W, 12th Flr, Ferguson Block
Toronto ON M7A 1N3

Dear Sir:
In our last letter to you dated October 8th, 2004, we said “Consumer protection is a national issue and must be taken up by the federal Government since provincial governments have failed to provide investor protection.”

We acknowledge that you said “I think we need to provide the best possible investor protection … So consumer protection, simple common consumer protection, I think is best handled by a single, national, common regulator.” We absolutely agree.

However we are becoming alarmed by recent revelations and developments.
· In December 2004 it was revealed that eight of our largest investment institutions were found to engage in mutual fund market timing that took from small investors and lined the pockets of industry. This reveals the investment industry’s widespread wrongdoing and a cavalier attitude towards the small investor.
· Earlier this year the Gomery Commission testimony began to reveal that
corruption is rife and extends into our Government. The former prime minister tried to stifle Justice Gomery and make a mockery of the inquiry.
· Recently the Alberta Minister of Finance, the Hon. Shirley McClellan, has ordered an independent inquiry to investigate allegations of Alberta Securities Commission wrongdoing brought forward by ASC staff. The ASC has fired Grahame Newton, and he is believed to be one of those who dared to come forward.
· Last year the Ontario government quietly reduced the Statute of Limitation from six years to two years. We are continuing to seek clarification on this issue.

We fully agree with you that our financial services industry regulatory system should focus on investor protection and that a national regulator can best serve all Canadians. We also believe that investor protection can only be provided by an independent investor protection agency, as recommended in the CARP/SIPA Report of September

However, we are concerned that investor protection is being eroded by an industry that lacks honesty and integrity and seems to have no sense of what is right and what is wrong.

Regulators confide that industry tries to justify all of their actions by saying “show me a rule that says it is wrong.” The industry maintains that market timing is legal. They do not see that robbing the poor to pay the rich is fundamentally wrong.

We are also concerned that the government is failing to realize that white collar crime is not a victimless crime. The seniors, widows and others, who spent a lifetime accumulating savings that are destroyed in a heartbeat by a callous investment industry, suffer in untold ways without hope of recovery.

On February 14th 2005, we made a submission to the Senate committee. Our submission concludes:
Government must take action to enable Canadians to trust.
Canadians need:
· One national Financial Services Regulator
· A national Investor Protection Agency
· A national register of representatives accessible to the public

SIPA asks that the Senate call for an inquiry into this problem of
investors losing their life savings due to investment industry
widespread practices of wrongdoing.

A copy of our submission is appended for your reference.
In light of the market-timing scandal, Adscam, and the ASC scandal, Ontario should lead the way by ordering an independent inquiry into the provincial financial services regulatory system. A simple review of the findings of the regulators themselves would confirm the need for an inquiry.

The ASC scandal illustrates that there must be independent oversight of the activities of the regulators and that government must legislate TruthTeller protection immediately. We have already witnessed the death of Kent Shirley who came forward with allegations of wrongdoing yet the regulators are strangely silent on this issue. Now Grahame Newton has been fired. Government must act to provide protection.

With regard to the limitations period, most victims of financial predators take several years to realize that the reasons for their loss are more related to industry wrongdoing than market risks. Canadians tend to believe they can trust the investment industry and believe the hype they hear, and that they can trust our government to provide a
regulatory system that provides investor protection. Indeed the hype suggests that investor protection is central to regulation. With the fractured and complex regulatory system that exists today it takes small
investors time to determine what the procedures are. Industry is slow to respond and most victims spend several years following industry and regulatory advised procedures before realizing that civil litigation is the only recourse. To reduce the limitation period to two years is prejudicial to the investor’s rights and this must be corrected.

Why then do so many widows lose their life savings when it seems so apparent that capital preservation is of paramount importance?
Why does the industry spend more on legal fees than the stated loss in a complaint?

Why does the industry cover up the extent of losses?

Why is the industry allowed to continue to mislead the public?

If it is indeed Investor Beware, why doesn’t the government educate the public to this fact?

If the public is supposed to place their trust in the industry, why doesn’t the government take appropriate action to ensure that trust is not betrayed?

We are particularly concerned that investors are not receiving fair treatment and that enforcement is either unwilling or unable to act to provide appropriate protection. SROs should not carry the mandate for investor protection.

We ask what is being done about:
· Providing non-industry sponsored dispute resolution mechanisms that are timely and fair
· Determining the extent of complaints and investor losses to enable this issue to be placed in proper perspective
· Establishing a regular audit of the enforcement regime
· Extending the limitation period for abused investors

It would be appreciated if you would provide your response prior to the Town Hall Meeting scheduled for May 31st in Toronto.

Yours very truly

Stan I. Buell

Stan I. Buell, P.Eng.
Minister of Finance, Hon. Greg Sorbara, –
Attorney General Michael J. Bryant -
Premier Dalton McGuinty -
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Auditor General Audit of OSC

Postby urquhart » Tue Jun 21, 2005 12:52 pm

Jason Cowan,
9012-184th Street,
Edmonton, Alberta, T5T 1R2
Telephone: 780-487-0118
FAX: 780-486-5532

May 31, 2005

Mr. James McCarter,
Office of the Auditor General of Ontario,
20 Dundas Street West,
Suite 1530, Box 105,
Toronto, ON, M5G 2C2
Telephone: 416-327-2381

Re: Request that the Auditor General of Ontario conduct an Audit of the Ontario Securities Commission’s enforcement and use of its authority to examine the TSX Venture Exchange
Dear Mr. McCarter:

I am writing to request that the Auditor General of Ontario conduct an audit of the Ontario Securities Commission’s enforcement activities and in particular an audit of the OSC’s use of its authority to examine the TSX Venture Exchange as set out it in the September 13 2002 Memorandum of Understanding Regarding the Oversight of the TSX Venture Exchange and the September 18, 2000 Memorandum of Understanding Regarding Oversight of the Canadian Venture Exchange. I am an aggrieved investor in Northside Minerals Inc., a company that was originally listed on the Alberta Stock Exchange, that became the Canadian Venture Exchange and subsequently the TSX Venture Exchange when acquired by the TSX Exchange.

The Ontario shareowners of Northside that I know are disturbed by the dysfunctional nature of Canada’s securities enforcement system, where neither the Alberta Securities Commission, nor the Ontario Securities Commission with secondary oversight of the TSX Venture Exchange, have taken any enforcement action on the evidence of illegal securities activities at Northside and the illegal Northside share sales of a TSX Venture Exchange listing officer.

Alberta Finance Minister Shirley McClellan has ordered the Auditor General of Alberta to conduct an audit of ASC enforcement in response to the Northside evidence and allegations of other ASC enforcement improprieties by up to 35 whistleblowing ASC employees. I have attached for your review the following documents that should compel you to conduct an audit of OSC enforcement involving illegal securities activities of TSX Venture Exchange companies where there is significant Ontario shareownership and where there is evidence of illegal share sales by TSX Venture Exchange personnel.

1. September 18, 2000 and September 13, 2002 Memoranda of Understanding Regarding the Oversight of the Canadian Venture Exchange and the TSX Venture Exchange
2. March 18, 2005 letter to Jason Cowan from the Ontario Securities Commission
3. March 31, 2005 letter to Jason Cowan from the Ontario Securities Commission
4. May 23, 2005 Letter from Jason Cowan To Whom It May Concern describing the Northside Minerals Inc. illegal securities activities
5. May 23, 2005 Letter from Barbara Trosin to Whom It May Concern describing her evidence that Richard Haderer, Alberta Stock Exchange listing officer sold Northside shares belonging to her with forged authorization
6. April 7, 2005 Letter to Alberta Finance Minister Shirley McClellan from Moe Siemeniuk, Thunder Bay, Ontario
7. May 9, 2005 Response from Alberta Finance Minister Shirley McClellan to Moe Siemeniuk, Thunder Bay, Ontario
8. Letter to Alberta Finance Minister Shirley McClellan from Bert Badanai, Thunder Bay, Ontario
9. April 19, 2005 Letter to Alberta Finance Minister Shirley McClellan from Marlene Williams, St. Albert, Alberta
10. April 19, 2005 Letter to Alberta Finance Minister Shirley McClellan from Jason Cowan, Edmonton, Alberta
11. April 25, 2005 Letter from Alberta Finance Minister Shirley McClellan to Jason Cowan, Edmonton, Alberta

Yours sincerely,

Jason Cowan


Hon. Gerry Phillips
Chair, Ontario Management Board of Cabinet
12th Floor, Ferguson Block, 77 Wellesley St. West
Toronto, ON, M7A 1N3
Telephone: 416-327-2333
Posts: 125
Joined: Tue Jun 14, 2005 3:43 pm
Location: Mississauga

Auditor General Audit of OSC

Postby urquhart » Tue Jun 21, 2005 12:47 pm

James F. Roache, M.B.A.
1106-545 St. Laurent Blvd.
Ottawa, ON K1K 4H9

May 5, 2005

Mr. James McCarter,
Office of the Auditor General of Ontario,
20 Dundas Street West, Suite 1530, Box 105,
Toronto, ON M5G 2C2

Re: Request that the Auditor General of Ontario conduct a Value for Money Audit of the Ontario Securities Commission’s enforcement of the Ontario Securities Act.

Dear Mr. McCarter:

The Chair of the Ontario Management Board of Cabinet, the Honourable Gerry Phillips and the Ontario Standing Committee on Finance and Economic Affairs (“SCFEA”) listened, understood and acted on the issues investor advocates set before them at the August 2004 Hearing on the Ontario Securities Act and the Ontario Securities Commission (“OSC”). We appreciate the fourteen recommendations made by SCFEA, which were presented by Minister Gerry Phillips to the Ontario Legislative Assembly in February 2005.

The SCFEA Report acknowledged our deep-seated skepticism about the integrity of enforcement at the OSC and its subsidiary self-regulatory organizations (“SROs”), but it was silent on our requests for an independent audit of the Commission.

I am writing to you to formally request that as Auditor General of Ontario you consider conducting such an audit. Investors and other concerned parties in Ontario, across the country and abroad have lost confidence in the thoroughness, consistency and fairness of the OSC‘s handling of investor complaints, investigations and allegations of wrongdoing.

You merely have to consult the Business Section of any major newspaper to satisfy yourself that this is the case. One of the major reasons for the widely held perception that the Commission’s enforcement is incompetent or worse is that, to date, there has been no public accountability or independent audit of OSC enforcement by the Auditor General of Ontario or any other representative of the Ontario Legislature. A five-year review is NOT an enforcement audit.

We believe the Auditor General might even consider retaining external forensic investigation expertise from international specialists, such as Kroll Worldwide, to add credibility to the exercise. In the event that you concur with this suggestion, I have
attached the curriculum vitae of forensic investigation specialist, Hazel deBurgh of Kroll Canada. Retaining Ms. deBurgh, would strengthen and give added credibility to your audit team, since she has extensive experience in monitoring the audits of the Los Angeles and Detroit police departments and she has prepared an auditing manual for the Federal Auditor General’s office. Kroll Canada has been a significant source of forensic evidence used by several parties before the Gomery Commission

Both domestic and international investors have expressed great concern about enforcement of white collar crime in Canada. Richard Breen, a former SEC Chairman and Chair of the Hollinger International Special Committee, recently raised his concerns about the OSC staff recommendation that shareholders conduct a vote on Conrad Black taking Hollinger Inc. private, despite the fact that no recent financial statements existed and that several investigations of criminal and civil misconduct by Black in both Canada and the U.S. were underway.

The August 2004 Osborne Report laid bare problems and strongly recommended the restructuring of the OSC to create an adjudication tribunal distinct from the OSC’s enforcement function. The December 2004 OSC decision to have five mutual fund companies pay restitution to their unit holders, while 15 other fund companies suffered no sanctions is so illogical as to defy understanding.

There has been an arbitrary decision by the Investment Dealers Association (“IDA”) to return $7.2 million to investors at 17 mutual fund companies out of $41.4 in fines collected from three investment dealers in the market timing scandal. John Reynolds has just published his book: The Naked Investor, which presents a disturbing picture of securities regulation and enforcement. In January 2005, the OSC released a highly-critical 25-page audit of the IDA, after five years of stonewalling and an effort to appeal an order for its release from the Ontario Information Privacy Commission.

Now, the Alberta Deputy Premier and Finance Minister has called in the Auditor General of Alberta to audit the Alberta Securities Commission (“ASC”) due to reports of misconduct received by the Minister from thirty-five whistleblowing employees and members of the public. Investors are left numb by these developments.

The Federal Wise Persons’ Committee and SCFEA’s Five Year Review of the OSC sounded the death knell for the status quo. David Brown, Chairman at the OSC, Stephen Sibold, Chairman at the ASC and Mike Lauber, the Ombudsman for Banking Services and Investments (“OBSI”), are retiring. The "old guard" has proven itself unwilling or unable to achieve capital market efficiency or protection of the investing public and Canada's reputation abroad.

David Dodge, governor of the Bank of Canada, in a December 2004 speech, told the Empire and Canadian Clubs in Toronto that Canadian authorities are not tough enough in punishing fraud and enforcing the rules. He said: "A common refrain that we hear when we visit New York, Boston, London or Europe is that Canada is the Wild West in terms of how rules and regulations are enforced, and that perception doesn't help when we try to raise money on foreign markets.” He urged the government to speed up improvements to the financial system. “We have to get on with the job - the future health of our economy and prosperity of all Canadians depend on it", he said.

What is so frustrating is that everyone knows what needs doing; these steps include:
• Building an effective enforcement culture, like the one enjoyed by the SEC and the State Attorney Generals in the U.S.
• Auditing the integrity of OSC enforcement by the Auditor General of Ontario…with independent forensic investigation expertise from the private sector, if required. • Proceeding with the SCFEA recommendation for the task force to review the role of self-regulatory organizations.
• Splitting the OSC into two bodies - one to monitor white collar offences and the other to adjudicate them.
• Finding out why the OSC does not use its existing powers to obtain restitution for investors’ losses caused by rogue advisors and public company insiders.

A truly independent audit of the type we would like to see would turn up considerable evidence of securities offences not being investigated properly and of complainants and wrongdoers being treated inconsistently and capriciously. I am sending copies of this letter to many abused investors and asking them to share with you directly their own personal evidence on long, frustrating and closeted dealings with the securities regulators in Ontario.

It is time to do what needs doing – a Value for Money Audit of OSC enforcement, retaining the external private-sector expertise that this type of audit requires. We must advance a program of accountability and responsibility for Ontario’s management of white collar crime enforcement and for the restitution of investors’ losses caused by malfeasance.

The attached letter from Mr. Phillips shows that he is attempting to put some strategies in place. What he proposes will require legislation and he will need support. An Audit by your department – clearly identifying specific examples of cases which cry out for the type of changes he is proposing may well be required to give his recommendations the weight to carry them through to implementation.

Yours sincerely,

James F. Roache, MBA
CC: Hon. Gerry Phillips
Chair, Management Board of Cabinet
12th Floor, Ferguson Block
77 Wellesley St. West
Toronto, ON M7A 1N3

Mr. Frederick Dunn,
Auditor General of Alberta
Edmonton (Head Office)
8th Floor, 9925 - 109 Street
Edmonton, Alberta T5K 2J8
Posts: 125
Joined: Tue Jun 14, 2005 3:43 pm
Location: Mississauga

Postby Guest » Tue Jun 21, 2005 12:43 pm

great idea, thanks for the contribution

we all should be making the shortcomings known at this point, while david brown is so busy taking bows for his "work"

Auditor General Audit of OSC

Postby Guest » Tue Jun 21, 2005 12:38 pm

I am going to post under this topic letters that have been sent to James McCarter, Auditor General of Ontario, or Minister Gerry Phillips, Ontario Managment Board of Cabinet, which are requesting an audit of OSC enforcement. Many letters have been submitted from attendees at the OSC Town Meeting on a private and confidential basis, so these will not be posted here.

I invite other investors to share their evidence of incompetence, bad faith, negligence, or corruption in OSC enforcement in letters, faxes or e-mails to James McCarter, Auditor General of Ontario. Post your letters here if confidentiality is not required. His contact information is:

Mr. James McCarter
Office of the Auditor General of Ontario,
Suite 1530, Box 105
20 Dundas Street West
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Postby admin » Tue Jun 21, 2005 12:27 pm

is it true that this govt agency refuses to submit to a govt ordered audit?

It is said that those with nothing to hide, hide nothing.

What neglignce is the ASC guilty of?
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Where are Canada's ethical heros??

Postby admin » Mon Jun 20, 2005 4:16 pm

US SEC enforcement chief Thomsen vows no let-up

Friday, June 17, 2005 4:56:24 PM (GMT-04:00)
Provided by: Reuters News

WASHINGTON, June 17 (Reuters) - No ratcheting back of enforcement should
be expected at the U.S. Securities and Exchange Commission, despite business
pleas for relief, said SEC enforcement chief Linda Thomsen on Friday.
After two-and-a-half years of record-setting enforcement activity amid a
wave of corporate and Wall Street scandals, Thomsen said in a speech: "We're
not going to leave you alone ... We cannot declare victory and go home."
Thomsen took over last month as director of the SEC's enforcement
division, replacing Stephen Cutler who left to return to the private sector
after overseeing a massive crackdown that has recently prompted a backlash.
Speaking to a group of compliance lawyers, Thomsen said corporate
America is making clear that it is more aware today of the need for
vigilance on legal compliance.
But she said the underlying conditions that cause problems in the
securities field -- frequent conflicts of interest and lots of opportunity
to make money -- have changed little.
She urged lawyers to treat legal compliance like "sunscreen and dental
floss," namely to push for it all the time, not just periodically and not
just "to keep me out of your face."
She urged companies to embrace "a true climate of compliance and a
belief that investors' interests come first."
Since Thomsen was appointed, SEC Chairman William Donaldson has
announced he will step down and the White House has said it will nominate
Rep. Christopher Cox to replace Donaldson.
Cox's nomination has won praise from business lobbyists seeking changes
to recent SEC reforms and eased enforcement.
Some investor activists have expressed concern that the California
Republican might try to rein in the SEC, while others have withheld judgment
for now. The Bush administration still has not sent Cox's nomination to the
Senate for review.
Last year, the SEC imposed more than $3.5 billion in fines and other
payouts on securities law defendants, topping a record-setting $2.8 billion
in 2003. So far this year, it has reached agreements calling for over $1.6
billion in payments.
((Reporting by Kevin Drawbaugh; editing by Deborah Cohen; Reuters
Messaging: 202-898-8313,
202-310-5490 (fax),
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Postby Guest » Mon Jun 20, 2005 12:07 am

Screen shot 2010-08-20 at 7.40.31 PM.png
I asked a question of the OSC after the recent town hall

it related to how they allow misrepresentation, outside of the rules of the security act, among the salespeople registered in Canada, and here is how they responded:
18. Why are investment salespeople who are officially registered as either "registered representatives", or as "salespeople", at the Securities Commission, allowed to represent themselves to the public as "investment advisors", indicating a different level of fiduciary duty to the public, when the Securities Act is clear on which titles are allowed and which are not?

OSC answer:
The OSC registers individuals in the categories of salesperson, officer, director or partner. These categories are then further designated as trading or advising. The firm can be registered as either a mutual fund dealer, an investment dealer, or as investment counsel or portfolio manager (ICPM). The latter ICPM category is what we refer to as an adviser (spelled “er”). While advisor (spelled “or”) is widely used in the industry to represent a salesperson or representative, it is not a registration category. The OSC does not register job titles.

(is this an answer to the legality of allowing this to occur, or did I just get a brush off answer) I feel that allowing use of titles that are NOT allowed or not earned is a violation of the Securities Act, as well as misleading and misdirecting the public. Is this not the job the OSC is in, that of enforcing the securities Act?


After posing the same question again to the OSC in 2009, below in red is the answer given to me this time:

There are specific prohibitions in sections 44 and 46 of the Act that may be relevant to representations made by registrants. For your ease of reference, they are reproduced below:

44. (1) No person or company shall represent that he, she or it is registered under this Act unless the representation is true and, when making the representation, the person or company specifies his, her or its category of registration.


Jeffrey Fennell
Senior Inquiries Officer
Ontario Securities Commission

full letter posted in topic "salesperson or advisor" (these guys are just making shit up is my conclusion)


Postby admin » Thu Jun 16, 2005 1:47 pm


Posted: 16 Jun 2005 12:38 am Post subject: Nominations for OSC Chair


I think one reason besides corruption the Ontario government is likely going to continue to ignore small investor interests is that we haven't put forward candidates for key investor positions in government. Who do you think has the skill and charisma to represent our interests?
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Postby admin » Thu Jun 16, 2005 1:45 pm


Posted: 16 Jun 2005 07:59 pm Post subject: OSC consumer advisory panel


Apparently the IDA and MFDA want control?


Posted: 16 Jun 2005 08:38 pm Post subject: OSC consumer panel


I am encouraged but I am afraid I would have little faith in anything set up by the OSC. My opinion, and I could be entirely wrong, is that the OSC would be setting up something like this for the wrong reasons, that of appearance, and not actually because they have suddenly found a passion for investor protection. Once again, it smacks of self protection rather than investor protection.

As Albert Einstein said once, " the problems of today are rarely soved by the same level of thinking that created them". In my opinion the OCS is part of the problem, and not part of the solution.

To expand on that statement, another quote. This one by investment advisor guru Nick Murray. "When forced to choose between serving its constituents and preserving its position (or reputation) an entrenched bureaucracy will always let the problem compound and the public be damned."

If either the IDA or the MFDA are involved, it will prove beyond a doubt that the motives are self protection rather than investor protection.

I do hope, however that I am wrong.
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Postby advocate » Wed Jun 15, 2005 4:12 pm

see forum on class actions for some thoughts on how to get the provincial securities commissions to come clean

I feel they are misleading the public into belief that they are protecting them

terrance corcoran did a good article about this mislrepresentation in the post recently

it is online at

Ontario Securities Commission

Postby admin » Mon May 16, 2005 8:28 pm

what say you about Ontario? Are they as bad as they say?

tell us your thoughts or your ideas on how to fix things. this forum is private for a select group of investor advocates only and not for public view unless we (as a group) say otherwise
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