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Postby admin » Sun Apr 04, 2021 4:42 pm

Bit of an unintended backhanded-use of privately filed criminal charges....

Private citizens sometimes seek charges against their accusers in secret courts
By Nicole Dungca and Jenn Abelson Globe Staff,December 16, 2018, 8:26 p.m.

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Priscilla Rodas showed a cellphone picture of her bruised eye taken days after a road rage incident now in dispute.PAT GREENHOUSE/GLOBE STAFF
Priscilla Rodas believed the worst was behind her after she reported a violent road rage case that left her with a black eye and a facial fracture.

After Brookline police arrived at the scene in September, they reviewed a security video of the altercation, and sought court approval for criminal charges against David Cataldo, a retired Boston police officer, for allegedly hitting Rodas in the face and assaulting her 15-year-old son.

But not long after, a call from her lawyer stunned her: Cataldo had used a little-known provision of the state’s court system to turn the tables and seek criminal charges against her and her son.

Massachusetts is one of the small number of states that allow private citizens — without the backing of police or prosecutors — to ask court officials to issue criminal complaints. These allegations are vetted, and sometimes settled, in a secretive system that has no parallel in any other state.

Some states that allow private citizens to initiate criminal cases limit the charges to those that have little to no jail time, such as personal disputes involving misdemeanor theft or trespassing. But in Massachusetts, citizens can also file for felony charges in the system, which largely handles cases initiated by police. Defenders of the citizens’ powers to file charges say it is a way for the accused to respond to what they see as unfair criminal charges.

But some of these citizen-initiated cases can also take on a troubling aspect, if people accused of crimes seek charges on their own to allegedly intimidate their victims into potentially dropping the original accusations, according to victims’ advocates and lawyers.

They say some defendants exploit the private clerk magistrate system through such counter-claims in an effort to avoid justice. Only nine states have a process for private citizens to initiate criminal cases, according to a 2015 survey by the National Crime Victim Law Institute.

In the Brookline case, Cataldo went to Brookline District Court, where he filed an application for a criminal complaint against Rodas, a 49-year-old mother of four, and her son, alleging that they assaulted him near Brookline Village. While she was alarmed to learn this, she said she refused to be intimidated into dropping her original charges.

Cataldo declined to comment through his attorney.

He was investigated several times by the Boston Police Department’s internal affairs division for complaints of alleged violence or excessive force, one of which was sustained while others were unfounded or not sustained upon review, according to records obtained by Rodas’s lawyer and reviewed by the Globe. He retired this year from the department, which did not respond to requests for comment on his internal affairs investigations.

Cataldo worked as an on-call campus security officer for the Massachusetts College of Pharmacy and Health Sciences but was suspended Thursday by the school after an inquiry by the Globe.

During a hearing in December — at which the Globe was barred access — Patrick Bulmer, an assistant clerk magistrate, approved the charges against the retired officer but also approved his counter-claim against the mother.

So she is facing the same misdemeanor assault charge as the man who she says punched her as she tried to keep him away from her son.

“I feel like less than nothing,” said Rodas, as she emerged from the clerk’s hearing. “Someone hurts you, and it’s still on you.”

Both will be arraigned on Jan. 30. The case against the son has been transferred to juvenile court and he has not been formally charged. Bulmer did not return requests for comment.

The Globe reviewed footage of the incident provided by Rodas’s lawyer and it appears to confirm the police report of the case: Officer Daniel Lalli cites MBTA bus security video as evidence that Cataldo was “the aggressor” and that the teenage boy got into a fight while protecting his mother. In the video, Priscilla Rodas appears to be trying to separate the boy and the former officer as they threw punches, then holding Cataldo.

Cataldo alleged injuries from his altercation with the teenage boy. In his application for counter-charges, he said the mother also grabbed his shirt, and “threw between 2 (to) 5 punches,” but her punches were not apparent in the videos reviewed by the Globe. In a 911 call reviewed by the Globe, Rodas — who was waiting for police to come — tells the dispatcher that she is holding onto Cataldo so he wouldn’t leave.

This confidential clerk magistrate system was the subject of a Boston Globe Spotlight report in September, “Inside Our Secret Courts.” The report exposed an unusually secretive part of the state’s district court system, where clerk magistrates — many of whom do not have law degrees — have vast powers to decide if there’s enough evidence for criminal charges to go to public arraignment, as well as to negotiate settlements in cases.

The closed-door hearings are typically held in private offices without public notice, most hearings are unrecorded, and thousands of substantiated cases die there every year. Clerks rejected nearly 62,000 cases over the past two years, including roughly 18,000 cases in which the clerks believed there was “probable cause,” or enough evidence to justify the charges, according to the Globe investigation.

The report uncovered several cases in which defendants, including prominent public officials, escaped serious charges, even when there was substantial evidence that the suspects had committed the crimes.

Criminal defense attorneys openly acknowledge using the clerk magistrate system to lodge strategic counter-claims, if there is valid reason.

David Yannetti, a Boston attorney, advised a client charged with domestic assault and battery to apply for a criminal complaint against his ex-girlfriend. At a hearing in Brockton, Yannetti said he persuaded a clerk to charge the ex-girlfriend, though police alleged that during the argument, his client had allegedly struck her in the face and then kicked her after she fell down, according to the lawyer’s website.

When the ex-girlfriend was scheduled to be arraigned, his client and the ex-girlfriend asserted their Fifth Amendment privilege not to testify, and the case was dismissed. Yannetti would not identify the client to the Globe but described this case as “a common scenario.”

“Often if you are representing someone charged with domestic assault and battery, the alleged victim could well have been the alleged defendant going into it,” Yannetti said. “It’s just the police made a judgment call and you’re entitled to say, ‘If my client is charged with domestic violence, the other party should be charged as well.’ ”

Criminal defense attorney Michael Erlich said filing complaints against alleged victims when there is “legitimate grounds” can give defense attorneys “some leverage in resolving the case.”

Michele Murphy, a Melrose woman, said she felt forced to drop charges against her allegedly abusive ex-husband after he used the clerks’ system to intimidate her.

When Murphy dropped off her sons at her ex-husband’s Kingston home in 2006, she said, he roughly tossed her out his front door, and she landed on her face.

James M. Smith told officers that he threw Murphy out of his house because she wouldn’t leave, according to police and court records. Officers took photographs of her bruised face, and, Smith was arrested that night and charged later with assault and battery.

Weeks later, Smith applied on his own for a criminal complaint against Murphy in Plymouth District Court. In a closed hearing, Smith accused her of hitting him, as well as his fiancee, that night — an allegation not mentioned in the police report. Smith said in his complaint that he had grabbed his ex-wife to lead her out of the house, and that they both fell over. An assistant clerk magistrate, John Fitzsimmons, decided there was probable cause to issue the charges.

“The whole thing was upside down,” Murphy recalled. “All of a sudden, I was being accused of scaring them and abusing them. It was a black-and-white situation: There were two fire engines, at least three cop cars, and not one of those people or any of those men thought that I was the perpetrator.”

Murphy was so worried about having a criminal record that she agreed to drop her charges against Smith, so that he would drop his charges.

In an e-mail, Smith reiterated that he was trying to get Murphy out of his home after she attacked his fiancee.

“I dropped my charges because I just wanted to move on and although I was not happy with [Michele], she was still the mother of my children,” Smith wrote in an e-mail. “I thought she dropped her charges for the same reason.”

Fitzsimmons and a spokesman for the Plymouth County District Attorney’s Office did not return requests for comment.

Trial Court Chief Justice Paula Carey and Court Administrator Jonathan S. Williams had previously expressed their confidence in the clerk magistrate system, but since the Globe’s investigation this fall, Carey has convened a panel to review the guidelines for the hearings. Governor Charlie Baker and top legislators also expressed a need for transparency.

Some people who support keeping the magistrate hearings secretive often cite the need to protect individual reputations, saying these citizen-against-citizen cases sometimes bring out baseless accusations and need to be kept private.

Daniel Hogan, the clerk magistrate of the Boston Municipal Court’s Central Division who heads one of the clerks’ associations in the state, said it’s important to preserve the rights of individuals to request criminal charges, instead of simply relying on police or district attorneys to initiate charges.

“I think the courts would be hard-pressed to prevent someone seeking any redress,” he said.

But other attorneys have argued that on the few occasions they encounter private complaints, they’re initiated as a way to intimidate victims. Anne Gillespie, a Newton family law attorney, also said she couldn’t think of a reason why the avenue should exist.

“How could it possibly protect a victim if it’s used as a sword and not a shield?” she said.

David Traub, a spokesman for the Norfolk district attorney’s office, declined to comment on the Brookline case because the office had not yet reviewed it.

He said prosecutors respect the right of citizens to seek redress but expressed disappointment for those abusing the complaints.

“As with any abuse of the criminal system,” he said, “we take a dim view of any party making counter-factual claims for the purpose of harassing any other party.”

Todd Wallack of the Globe staff contributed to this report.
Nicole Dungca can be reached at Follow her on Twitter @ndungca. Wallack can be reached at
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Postby admin » Sat Feb 13, 2021 7:14 am ... 1-billion/

Advice misconduct costs Aussie banks over $1 billion

Poor advice and fees for no advice prompt client compensation

By: James Langton February 12, 2021 12:57

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Australia’s big banks have now paid more than $1.0 billion in compensation to investors for advice-related misconduct, the Australian Securities and Investments Commission (ASIC) reports.

The ASIC said that, as of Dec. 31, 2020, Australia’s big six banks have paid A$1.24 billion ($1.22 billion) to clients that suffered harm, including non-compliant advice, paying fees for no service and other sorts of misconduct.

The latest tally includes an additional A$193.6 million in compensation payments paid in the second half of 2020.

The banks’ compensation programs were established following internal reviews by the country’s major banks in response to two industry-wide reviews by the ASIC.

The regulators’ systemic advice reviews looked at firms failing to provide ongoing advice to clients despite continuing to charge ongoing fees and their failure to deliver compliant advice, among other issues.
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Postby admin » Mon Nov 11, 2019 6:48 pm

The lawsuit alleges that the Financial Services Commission of Ontario – which was renamed the Financial Services Regulatory Authority of Ontario in June – and a number of its senior officials “carried out their duties on behalf of FSCO in a negligent manner.”

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"Perhaps the Ontario govt. should also be sued for allowing the sale of toxic DSC mutual funds over the objections of its own securities commission.” Ken K. comment
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Postby admin » Wed May 15, 2019 8:34 am

The false pretense that your Investment Dealer playing upon you was that you would be served by trustworthy and highly regulated financial advisors, when the truth is that they served you commission sales agents instead of what you were promised.

I have not met the client or case, that does not get their money back or a satisfactory settlement when they present this type of case to any financial giant. The financial giant simply cannot afford to allow the public to learn of their fraud, so they pay up. The payment often comes with a confidentiality agreement, but that is something that you can either accept or not, as you choose.

Here is my best understanding of the meaning of false pretenses: (it is a criminal, as well as a civil charge)

False or misleading representations
False or Misleading Representations and Deceptive Marketing Practices
The Competition Act provides criminal and civil regimes to address false or misleading representations.

Section 52 of the Act is a criminal provision. It prohibits knowingly or recklessly making, or permitting the making of, a representation to the public, in any form whatever, that is false or misleading in a material respect. Under this provision, it is not necessary to demonstrate that any person was deceived or misled; that any member of the public to whom the representation was made was within Canada; or that the representation was made in a place to which the public had access. Subsection 52(4) directs that the general impression conveyed by a representation, as well as its literal meaning, be taken into account when determining whether or not the representation is false or misleading in a material respect.

Screen Shot 2019-05-15 at 1.22.59 PM.png ... 00513.html


Definition and Explanation of the Crimes of Fraud and False Pretenses

Bruce Engel of Engel and Associates, criminal lawyers in Ottawa, defines and explains the crimes of fraud and false pretenses.

To commit fraud means to deprive somebody of something by deceit or a falsehood and to induce a state of mind through a specific course of action.

False pretense is a representation either by words or a document that a person knows to be false and that is made with the fraudulent intent to induce that person to act upon it.

Sometimes these crimes can be viewed as a breach of trust when crimes are committed by those we expect to be able to trust. ... index.html

If it is handled properly then I feel that you hold the stronger and higher moral ground, and you have a strong case to make your dealer apologize to you and/or return your money to you.

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Postby admin » Thu Jul 19, 2018 7:13 am

Re: #ClassAction for financial advisor deception of the public


If you have one of the 120,000 falsified investment “advisors” in Canada, or one of 600,000 non-advisor-licensed “advisors” in the US, then you are in a financial relationship with someone who is hiding something essential from you. i.e., you are a victim of professional deception, and also likely being financially harmed as a result. That is the real game in nine out of ten investment relationships today.


This means that most investors seeking help with their life savings, are actually being blindfolded to the truth of whom they are dealing with. They are being kept in the dark...intentionally.


The tremendously sad thing about this is not just that it is a form of abuse against millions of people, but that more than ten thousand regulators are paid as handmaids to ensure that none of this darkness ever comes to light...This is called regulatory capture.
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Postby admin » Wed Jul 18, 2018 1:40 pm

#3 post on the topic today of CLASS ACTION for abused and victimized investors:

Below see two images of a typical statement of claim, followed by an image of the typical statement of defense. See of you can spot the fraud element which is left unstated by both sides...

Here is what a typical plaintiff’s (victim) lawyer states:

plaintiff legal.png

click on image to enlarge

And here is what a typical investment dealer counters with:

defendant legal.png

click on image to enlarge
The lawyer for the plaintiff (victim) is often unaware of the underlying illegality that is committed when a sales agent “fakes” or hides his sales agent license from the customer. Some call it fraud (in the engineering and medical industry, people are put in jail for just this kind of fraud), but the “F” word is not able to be utilized as yet against some of the wealthiest and most powerful corporate entities. Perhaps that will change in time, but for now call it unlawful and untruthful. Call it intentional deception if you like. Call it placing obstacles in front of the blind, to unjustly enrich the “guide”. It is wrong by any measure and it is a simple form of abuse by the powerful over the weak.

product_thumbnail.php-2.jpeg (41.42 KiB) Viewed 13040 times

find this book if you would like the whole story, at ... 02171.html
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Postby admin » Wed Jul 18, 2018 1:31 pm

Further to the topic of litigation and or CLASS ACTION I find that the draft statement of claim which is roughly outlined in the following, can be applied to a majority of financial/investment sales organizations in Canada and the US:

I force a day when financial abuse by financial professionals is revealed and curtailed in not only the court of public opinion, but the much slower courts of law.

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CLASS ACTION potential July, 2018: 2 pages

NON-LAWYER-DRAFTED statement of claim (principles), found relevant in systemic, Canada-wide, mutual fund sales firm case, for your consideration

1. Breaches by the defendant which caused serious harm to mental, emotional, financial and perhaps physical health, over a period of many years include, but are not limited to:

2. Negligent, untruthful and unlawful misrepresentation of the specific truthful and lawful license and/or registration category of the sales-agents of the defendant, contrary to the “representation” requirements of the Ontario Securities Act. Section 44 of the Act gives but one example of representation requirements.

3. Such misrepresentation is also contrary to the required principles of fairness, honesty and good faith dealings in investment regulatory bodies such as IIROC and Mutual Fund Dealers Association (MFDA), one or both of whom who have jurisdiction over the defendant.

4. Such misrepresentation is also contrary to the false and misleading advertising requirements found in the Competition Act.

5. The untrue and unlawful misrepresentation of the license/registration category of the agents of the defendant, did constitute a deceptive and unfair marketing practice, which but for this deception, the clients would not have placed their trust nor their money with the defendants.

6. It is believed that #5 above constitutes causation in a legal sense.

7. The untrue and unlawful deception is found to be widespread within the defendants corporate sales practices and practiced (as of July 17, 2018 CSA records) by the defendant, which advertises its investment “advisors” on it’s web site and other advertising found on the date above, while Canadian Securities Regulator (CSA) records show that only one (1) member of its the defendants firm holds this actual registration, whilst four thousand and thirty-six (4036) persons at the defendant’s firm are found to be registered in the sales capacity, which registration category is now referred to as a “Dealing representative”. The “dealing representative” category has existed since 2009 and prior to this date it was titled the “salesperson” category for greater clarity for the public.

8. With knowledge of the defendant, the registration categories for sales-licensed persons and advice-licensed persons have been significantly altered, the most recent alteration in January of 2018 when all remaining traces of the descriptive word “Salesperson”, were cleansed from documentation by securities regulators. This enabled a systemic cleansing of the most accurate description of what a sales agent does, and it was replaced with a term which confused and prevented the plaintiff(s) from obtaining fair, honest and good faith information. Information which would allow them to identify the marketing deceptions of the defendant.

9. “But for” the salesperson deception, and its subsequent systemic coverup through the removal of the word “salesperson”, the plaintiffs would never have knowingly invested their money and their trust. The defendants owed a duty of disclosure of these material facts to the plaintiffs, which they failed to deliver.

10. The net result of the concealment of the salesperson licenses and the subsequent promotion of non-adviser or (advisor) licensed persons as if they were licensed as advisors (or advisers), constitutes a nationwide systemic bait and switch, which is contrary to all industry rules, laws and principles of common law, decency and honesty.

11. But for this widespread systemic practice of misrepresentation, the plaintiffs would not have entrusted their money to non-licensed, or falsely represented, so-called financial advisory professionals.

12. It is well understood that the qualifications, roles and obligations of a sales agent are distinctly and dramatically different from those of a registered professional fiduciary adviser, and the defendant did all they could to misdirect the plaintiffs, confuse them as to those roles and lead them to making false assumptions about the relationship they were in.

13. The deception of the defendants was done with knowledge of laws, rules and codes of conduct of the defendants. Hence it appears that the defendants deliberately and with intent to unjustly enrich themselves, violated many of these principles, rules, laws and promised honesty to the plaintiffs.

14. The end result of the acts of the defendants amount to an intentional effort by the defendants and industry-paid regulators to place a blindfold upon hundreds of thousands of clients, and using that ‘advantage’ or “information asymmetry”, to unjustly enrich themselves, at the expense of the plaintiffs.

15. Hundreds of millions can be demonstrated as the harm to a very broad spectrum of investors, of which this class represents.

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Click to enlarge image of this section of one typical Securities Act
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Postby admin » Wed Jul 18, 2018 1:23 pm

CLASS ACTION possibilities of getting your money back from abusive financial industry relationships:

A class action lawyer sent me the following recently and I am sharing it here for those who are caught in a professionally designed financial services trap...for those for whom, “placing obstacles in front of the blind”, has been the self serving business practice of your financial “advice’ giver.

Follow me at Investment System Fraud Group on Facebook to keep more up to date, and to engage in the court of public opinion.

Hi Larry

You may have noticed that some of the proposed reforms to NI 31-103 fortify the statutory prohibition on confusing presentation of qualifications.

There is no doubt about the bad industry practice and the need for reform.

The problem would be causation in any legal case.

See the new #13.18 in the new Division 7 re misleading titles.

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(If the above Securities Commission link should no longer direct you to the correct document, then a PDF version can be found here:

Here are the terms found in Section 13:18, which I find applying in most, if not all investment sales (sometimes called advice) relationships:

Division 7 Misleading communications

13.18 Misleading communications

Misleading business titles and designations

Section 13.18 prohibits registrants from, among other things, using titles or designations that could reasonably be expected to deceive or mislead existing and prospective clients.
Certain titles can be confusing to the average investor or imply that a registered individual performs a particular function at a firm or has particular expertise. Similarly, titles can give rise to certain client expectations or help to create an unfounded feeling of trust, reassurance or prestige. Registered firms should keep these considerations in mind before authorizing their registered individuals to use specific titles. Particular scrutiny should be given to the use of titles that convey an expertise in seniors' issues or retirement planning to confirm that any registered individual using such a title is appropriately qualified and competent in that area.

When considering whether a designation is misleading, registered firms should consider whether the designation has:

• a rigorous curriculum and examination process (i.e. type and length of exam)

• experience requirements, and

• been issued by a reputable or accredited organization.

Registered firms should recognize that some types of clients, such as seniors, may be particularly vulnerable to misleading designations. If a registered firm permits their registered individuals to use designations of any kind, including those that suggest an expertise in retirement planning, registered firms must have procedures in place to confirm that those designations are not misleading.

The nature of the relationship with clients and the products and services provided

If a registered firm uses advertising that exaggerates the products and services available to clients, this could reasonably be expected to mislead a client as to the products and services to be provided as well as to the nature of the relationship that may exist between the registrant and the client.

If a registered firm holds itself out as independent but offers proprietary products, this could reasonably be expected to mislead a client as to the products to be provided and as to the nature of the relationship.

If a registered firm or its registered individuals hold themselves out as being in a fiduciary-like relationship with their clients but the registrants do not actually conduct themselves to the standard of a fiduciary then this could reasonably be expected to deceive or mislead a client as to the nature of the relationship between themselves and their registrant.

Titles, designations, awards, or recognitions based on sales activity or revenue generation

A registered individual's sales activity or revenue generation are distinct from their proficiency, experience, and qualifications. If a prestigious sounding title, designation, award, or recognition is tied to a registered individual's sales activity or revenue generation, this could reasonably be expected to deceive or mislead a client as to the proficiency, experience, or qualifications of that registered individual.

For example, if membership in a registered firm's "President's Club" is based partly or entirely on a registered individual's sales activity or revenue generation, the registered individual must not use that recognition or award.

Corporate officer titles

A registered individual must not use a corporate officer title, such as president or vice-president, unless their sponsoring firm has duly appointed that registered individual to that corporate office pursuant to the corporate law applicable to their sponsoring firm. The use of a corporate officer title is also still subject to the general rule set out under subsection 13.18(1) and firms must consider whether the use of a corporate officer title would be misleading prior to approving their use.
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Postby admin » Thu Mar 23, 2017 9:45 am

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This letter is a draft which an investor victim may wish to consider giving to their bank or investment dealer..(I would suggest obtaining legal help to write and send this)..IF you have determined that the bank or dealer has used non-lawful titles as a form of false pretence to deceive you into a false trust. (see 1.5 min YouTube video at end of this post to help determine if this is the case)

The use of false titles is considered to be misrepresentation and is illegal under most Securities Acts in Canada and the US. It is also contrary to the laws and rules of the Competition Act of Canada and criminal codes.

None of these rules or laws have been enforced in Canada, to my knowledge, which raises much larger questions for another time, but for the matter of getting your money back I suggest a strong poker face, and a some proof or finding of fraud may get your bank/dealers attention.

I have seen clients attempts this only to be faced with ferocious financial industry lying, delaying and denying, so be prepared that getting money out of a bank is not easy, even when you have been deceived or defrauded, but you can be the judge of what lengths you are willing to go to in order to obtain justice and redress. Privately filed criminal charges may also be a last resort if all else fails.

Send any questions or suggestions about this issue/letter to


“Dear ABC Bank,

I would like to ask ABC Bank if it is true that most ’advisors’ of ABC Bank, and in specific, the ‘advisors’ that ABC Bank allowed to give me financial advice on my investment accounts are/were then legally registered or licensed in the category of “advisor” as they represented to me and in ABC Bank advertising?

Or, are they legally registered as “dealing representatives”, which is further clarified as ‘salesperson’ under that registration category, with the Canadian Securities Administrators?

I feel that if this question can be answered by you, I will be saved the trouble of having to retain legal counsel and ABC Bank may be saved the trouble of having to do similar.

Failing a prompt response to this question I feel that ABC Bank may leave me with no other alternative than to continue my search for “fair, honest and good faith” services and answers to my question through legal counsel.

I once again, thank you for making my account “whole”, returning me to a financial position as if I had never stepped foot into a ABC Bank ‘advisor’ relationship, to prevent much ado over not very much money. This is more a matter of principle than a matter of the dollar value of my account. I would like my initial investment value returned to me, with a nominal and reasonable amount of interest for the years that I feel I have wasted due to the misrepresentation from the concealment of your "dealing representatives” (Salespersons) titles.

Thank you for your prompt attention to this concern, which will allow me to put this matter to rest.  


Source to search you own so-called ‘advisor’ in order to determine of you have been deceived:

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Misrepresentation is found in the following laws: (as well as any other Provincial Securities Act)
Ontario Securities Act Section 44,
Alberta Securities Act Section 100,
BC Securities Act Section 34,
Manitoba Securities Act Sections 74 and 74.1
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Postby admin » Wed Jul 02, 2014 9:46 am

Back and forth between family of senior abused by investment system:

"One of the things brought up at the MFDA Hearing regarding my dad was of course the inappropriateness of the DSC fees with my dad being in his 80's.

Legal counsel from the MFDA also went into questioning this 10% free units which I am not sure I fully understand so correct me if I am wrong. The advisor sells on a DSC basis and gets a 5% commission up front and thereafter a 0.5% trailer. But if each year he moves the allowable 10% to an FEL his trailer is now 1%. Am I getting the game they play correct?"

(CORRECT!! The game from start to finish is a shell game to move the customer towards things which pay the salesperson more, and move them away from things that pay less…..)

OSC Fair Dealing Model appendix F titled "Compensation Bias" has some very candid comments about the DSC option, namely that in no case it is an advantage to the consumer, and in all cases an advantage to the seller and dealer…….something to that effect. If you are interested in the exact verbiage, see pages 12 to 15 with this quote on 15 "Under none of the scenarios, including the relatively extreme case of a 5% front-end load for Fund A and a market return of 18%, does the investor benefit from investing in Fund C rather than Fund A. However, while Fund C grew by $118 million from December 31, 1999 to August 31, 2002, Fund A decreased in size during that period by $90 million. The beneficiary of higher sales of Fund C is the dealer, who receives a trailer fee of 0.5% instead of 0.3%." ... sp=sharing

(the lawyer for the OSC told me that he felt the DSC was essentially a "bribe" to salespeople to get them to push certain mutual funds:)
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Postby admin » Sat Feb 15, 2014 10:54 am

fair, honest good faith rule.jpeg

about six official places where Misrepresentation is prohibited (relating to the misrepresentation of "advisor")
(sadly, those professionals and regulators who are paid to protect the public are turning a blind eye to all of these......the financial pressure from the industry who pays all salaries is more than they can stand up against.......)

--Competition Act of Canada
Marginal note: Misrepresentations to public
1 74.01 (1) A person engages in reviewable conduct who, for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever,
1 (a) makes a representation to the public that is false or misleading in a material respect; 2 ... ns#s-74.01


--What is a false pretence under the Criminal Code?
Under Section 361., (1), a false pretence is a representation of a matter of fact either present or past, made by words or otherwise, that is known by the person who makes it to be false and that is made with a fraudulent intent to induce the person to whom it is made to act on it. Subsection (2) states that exaggerated commendation or depreciation of the quality of anything is not a false pretence unless it is carried to such an extent that it amounts to a fraudulent misrepresentation of fact. For the purposes of subsection (2), it is a question of fact whether commendation or depreciation amounts to a fraudulent misrepresentation of fact.
Under the Criminal Code, every one who commits an offence under paragraph (1)(a) (a) is guilty of an indictable offence and liable to a term of imprisonment not exceeding ten years,


IIROC Rule 3100 - Definitions "Misrepresentation", i), ii)
"misrepresentation" means:
i) an untrue statement of fact; or
ii) an omission to state a fact that is required to be stated or that is necessary to make a statement not
misleading in light of the circumstances in which it was made.

From the BCSC Securities Act (link 1) comes this;
Persons who must be registered
34 A person must not
(a) trade in a security or exchange contract,
(b) act as an adviser,
(c) act as an investment fund manager, or
(8) Misleading Trade Name
No Dealer Member or Approved Person shall use any business or trade or style name that is deceptive, misleading or likely to deceive or mislead the public.
(d) act as an underwriter,
unless the person is registered in accordance with the regulations and in the category prescribed for the purpose of the activity.


A misrepresentation is defined by the Securities Act as “an untrue statement of a material fact or an omission to state a material fact that is required to be stated or necessary to prevent a statement ... from being false or misleading in the circumstances in which it was made.”7


Fraud section 380 of the Criminal Code of Canada
380. Fraud

380. (1) Every one who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretence within the meaning of this Act, defrauds the public or any person, whether ascertained or not, of any property, money or valuable security or any service,


media quotes about violations of the public by so-called-professionals.

The quotes following, are from respected experts and refer to industry misrepresentation, deceit, false pretense or outright fraud:
1. “ advisors, wealth managers, senior financial planners, financial analysts, and investment managers are just a short list of titles that salespeople like to adopt, in an effort to steer clear of the “salesperson” stigma........”

From “Understanding Misleading Financial Advisor Titles – Your Right to Know” Bryon C. Binkholder
2. "Anything else is fraud, because the seller is delivering a service different from what the consumer thinks he or she is buying. " Edward Waitzer article, Financial Post · Tuesday, Feb. 15, 2011) (Mr. Waitzer is a Bay Street Lawyer and former Securities Commission chair, and this quote ( by another person) appeared in his article.

3. “The greatest risk the average investor runs is the risk of being misled into thinking that the broker is acting in the best interest of the client, as opposed to acting in the firm’s interest,” Professor Laby said. New York Times (Arthur Laby, a professor at Rutgers School of Law-Camden, and a former assistant general counsel at the S.E.C.) ... html?_r=1&
4. This misrepresentation allows persons with a “phony title” to financially violate trusting and vulnerable Canadian investors (and similar across the USA) is one comment from Quebec Superior Court Justice The Honorable Jean-Pierre Senécal, J.S.C., Quebec Superior Court , District of Montreal
The Honorable Jean-Pierre Senécal, J.S.C.

¶ 263 The defendant attributed to Migirdic fake titles, i.e. "vice-president" and "vice-president and director", in addition to letting him use the title "specialist in retirement investments". Those titles were false representations that misled the plaintiffs, hid reality from them, disinformed them, comforted them in their confidence in Migirdic, reduced their distrust, and contributed to Migirdic's fraud. The defendant committed a fault in terms of its obligation to inform and advise, in addition to misleading the plaintiffs.

Further and link to full court documents here: [url] f=1&t=10&p=3454&hilit=markarian#p3454

Screen Shot 2012-11-29 at 11.26.36 AM.png
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Postby admin » Fri Jan 24, 2014 11:13 am

Some images, links and steps to perhaps better explain how the broker "bait and switch" works and how you might use the info to get your money back when your investment dealers plays it on you:

Screen Shot 2013-12-28 at 1.52.31 PM.png
click to enlarge image, click twice to zoom in

First, you might start by searching out the name and license of your "advisor", and comparing it to what "title" they have represented themselves to you with. It is against the Securities Act in many provinces (section 34 BCSC) to misrepresent their title, and it also offends several self regulatory rules against title "inflation" (puffery:).
Finally to misrepresent ones title to lure customers also offends all industry codes of conduct, codes of honesty, fairness and so on. It is a bad thing. [url] ... spx?id=850

Screen Shot 2014-01-24 at 10.48.02 AM.png
click to enlarge image, click twice to zoom in

Second is the "are they registered" question which is mostly a ruse. Of course they are registered.....unless they work for a firm you should not be dealing with anyway. However, the more important question is HOW are they registered and what license category are they registered as. (think fraudulent misrepresentation remember..........)

Screen Shot 2014-01-24 at 10.45.27 AM.png
click to enlarge image, click twice to zoom in

This (above) gets you to beginning to understand the "What each registration category means" question. Here you will see that for example a "dealing representative" is not really licensed as an "advisor", as they may have implied to you, but that this license is considered to be a "salesperson", by the Canadian Securities Administrators. Oddly, the CSA has just recently removed the "historical" licenses for those who were in the business prior to 2009, as this would have required them to show that ALL persons (99.99% of registrants in Canada) who were selling investments to the retail public, were at that time officially licensed in a category titled "salesperson". This title was deleted by the CSA in 13 provinces and territories and replaced with the more confusing title of "dealing representative". Cynics like myself point out that at no time have salespersons called themselves by their title of "salesperson" even when the law requires it, and virtually none today use the title "dealing representative". One exception to this might be for "exempt market" dealers. For the Securities Commission to help hide these misrepresentations from the public opens them up to (and rightly so) allegations that they are willfully blind in order to earn salaries over $700,000 in some provinces.

Screen Shot 2012-10-25 at 8.59.14 PM.png
click to enlarge image, click twice to zoom in

Then, if one truly wishes to understand the hidden tricks o the industry, you can read this (above) document by the CSA about "perhaps" looking into the "possibility" of a standard which would require "advisors" (yes, those folks who do not have an advisor license:) to give their unsuspecting customers "advice" that would be in the customer's best interests. (hmmm, imagine requiring someone posing as an investment professional with some of the most trusted financial institutions in the world, being forced to act in a professional and trustworthy manner:)

If you wish to skip over all this homework, or perhaps you live in the USA where they do this bait and switch with slightly different staff (securities regulators) then view this video for the first five minutes....... you will get the concept.
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Postby admin » Thu Jan 09, 2014 10:21 am

Keywords, suitability, KYC, KYP CSA

This notice dated jan 9th, 2014 from the Canadian Securities Administrators speaks loudly to a regulatory regime which is captured and loyal to the industry, while wilfully blind to industry harms to the public. By way of example, while reading thousands of words in this release, applicable to the interests and treatment of investment customers, nowhere is it found any discussion of fees, costs or expenses as being one criteria in the "suitability" requirement.

For an industry which relies heavily on pushing the most expensive, most harmful to the customer, product, the ability to capture and corrupt the regulators into such wilfully blind enabling, is evidence of a failed regulatory regime. Please read if it might pertain to your own case, and pay particular attention to the areas that discuss "suitability" requirements.

While the CSA image below speaks proudly of PROTECTING INVESTORS, sadly the claim does not bear weight.

Screen Shot 2014-01-09 at 10.07.49 AM.png

Find the release at one securities commission site here ... y3/31-336_[CSA_Staff_Notice].pdf

Highlighted sections of interest to failing to protect the public:

"KYC, KYP and suitability obligations are extensions of each registrant’s general duty to deal fairly, honestly and in good faith with its clients. In Quebec, this duty is framed as the registrant’s duty to deal fairly, honestly, loyally and in good faith with its clients." (page 2)

"Adequate documentation of the suitability process (including KYC) is critical to ensuring that a registrant is meeting its securities law obligations." (page 2)
(This is rare. I have yet to see an "advisor" who can adequately document the choice to sell the highest paying (commission wise) product, and of course this must be the hidden or obfuscated portion. Combined with up to 90% of certain products sold in this manner, it provides an opportunity to hold the seller to the proper standards.)

CSA Staff Notice 33-315 Suitability Obligations and Know-Your-Product (page 3)

CSA staff reminds EMDs that it is a breach of their obligations, including their fair dealing obligations to prefer an issuer, seller or their own interests over an investor’s interests. (page 18) USE THIS IF YOUR SELLER HAS SOLD YOU THE HIGHEST COMMISSION CHOICE OF PRODUCT

IIROC’s suitability requirement is set out in IIROC Rule 1300.1, which requires dealer members to use due diligence to ensure that recommendations to clients regarding the purchase, sale, exchange, or holding or any security is suitable for the client based on factors including investment objectives, time horizon, risk tolerance and the account’s current investment portfolio composition and risk level. IIROC Notice 12-0109 expands the suitability obligation and requires dealer members to ensure that the order type, trading strategy and method of financing the trade recommended are also suitable for the client. (page 18) (HAVE YOU EVER MET THE CLIENT WHOSE OBJECTIVES INCLUDE PAYING THE HIGHEST COMMISSION OR FEE POSSIBLE? MOST SALESPEOPLE GO THIS WAY IN VIOLATION OF THEIR DUTY TO THE CLIENT)

25 pages of information related to suitability. 100 mentions of the word "suitability", and virtually nothing to speak to, or interfere with the industry practice of maximizing revenue, or the conflict between maximizing investment performance to the client, and maximizing revenue for the dealer. All discussion walks around this explanation, buries it is "subjective" terms, which cannot be nailed down. All discussion relies on principles of each registrant’s general duty to deal fairly, honestly and in good faith with its clients, which of course is up to the discretion of the industry itself to enforce or ignore.

This clients can be abused on a "cost" basis, which coincidentally is where the money for themselves comes from, with impunity.

I feel that for any regulator to be so cleverly vague about the issue of investment fees and costs, where they relate so heavily to any discussion of "suitability" is to show that they are deliberately trying to obfuscate. It speaks to a lack of professionalism by the regulatory bodies involved.

Screen Shot 2014-01-09 at 10.48.10 AM.png ... y3/31-336_[CSA_Staff_Notice].pdf
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Postby admin » Wed Jan 01, 2014 10:42 pm

Screen Shot 2014-01-01 at 10.41.21 PM.png

From IIROC files ... 437d-a3cc- 24f21e3ad5bd_en.pdf

In this case most of the clients were at or approaching retirement age. They were often high net worth individuals but were in the low range of investment knowledge. One IIROC Hearing Panel17 described the duty as follows:
"People who work in the investment industry have occasion to control other people’s money. The most fundamental expectation is that they do so honestly." (quote from the enclosed IIROC document)


Advocate comment: Although the industry does have some well written codes and promises, the troubling thing is that the industry relies on the industry to enforce them, and as a result, the client is left unprotected, while the industry makes off with the money, 99 times out of one hundred.

The industry standards that promise, "honesty, fairness and good faith" are but one case in point. They (the IIROC registered investment dealers) promise it to the public, they just do not have to deliver it, unless there is that one-in-one-thousand, client who has the emotional and financial strength to take the dealer to court. Then, and only then will those three items be brought into play by a judge, and that is only a one-off chance, since the dealer will bring in "experts" to spin the judge in several directions, all of which lead to confusion and not conviction.

End result, is that the odds get into the "lottery-level" that an investment customer will actually obtain delivery of the "promise" of "honesty, fairness and good faith". Sorry for the pessimism. Just the messenger.
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Postby admin » Sat Dec 28, 2013 2:15 pm

Here is another trick the investment dealer will pull over on you when you complain about them:

Screen Shot 2013-12-28 at 2.10.35 PM.png

Non-discretionary Accounts

August 06, 2007


by Lawrence C. Melton,

THE HAYES LAW FIRM,, 1-866-332-3567 (toll free)

There are two general types of investments accounts: non-discretionary and discretionary. A non-discretionary account requires the broker to obtain authorization before it makes any investment decisions. A discretionary account allows an investment broker to make account transactions without the client’s prior approval. The problem is twofold: (1) brokers often treat non-discretionary accounts as if they were discretionary, and (2) brokers do not adequately explain the difference between the two accounts to the customer.

Suppose you, the average investor, open an account with a brokerage firm. Chances are you will do so without knowing whether the account is discretionary or non-discretionary. Down the road, the broker messes up, defrauds you, and makes grossly unsuitable investments. You want to take legal action, but you are uncertain. What will be the broker’s defense? He will say the account was non-discretionary and deny responsibility. In other words, he will blame you. He will say you were in control of the account, not him. No doubt, this is news to you. After all, the broker acted like he was in control. There was implicit understanding that he was in control. The only basis the broker has for saying that he was not in control is the non-discretionary status of the account.

How do you overcome this defense? How do you prove that the broker was in control, even though the account was non-discretionary? Answer: You have to prove the broker “assumed” or “usurped” control of your account.

A broker is not insulated from a charge of unsuitable trading merely because the customer did not vest the broker with formal written discretionary authority. Rather, where it can be shown that the customer-broker relationship is such that the broker in fact manages the trading in the account, control will be found. (In re Thomas McKinnon Secs., CCH Fed Secur L Rep ¶ 99104 (1996, SDNY)).

Typically, this occurs when the customer evinces such trust and confidence in his or her broker that the customer invariably follows the broker's advice and recommendations. (See Newburger, Loeb & Co. v. Gross, 563 F.2d 1057 (2nd Cir. 1977); Mihara v. Dean Witter & Co., 619 F.2d 814 (9th Cir. 1980)).

The question is whether the customer has sufficient understanding and financial acumen to evaluate the broker's recommendations and reject them when the customer thinks it inappropriate. (See Newburger, Loeb & Co. v. Gross, 563 F.2d 1057 (2nd Cir. 1977); Carras v. Burns, 516 F.2d 251 (4th Cir. 1975); Newburger, Loeb & Co. v. Gross, 563 F.2d 1057 (2nd Cir. 1977)).

Where the customer is relatively naive and unsophisticated, and the customer routinely follows the broker's advice, control will generally be found. (Mihara v. Dean Witter & Co., 619 F.2d 814 (9th Cir. 1980); Hecht v. Harris, Upham & Co., 283 F.Supp. 417 (9th Cir. 1980)).

While an otherwise intelligent customer will not be allowed to hide behind a mask of ignorance, the customer's sophistication and success in one area of life will not necessarily mean that he or she will be found sophisticated enough to understand all the risks of a particular investment or trading strategy, so as to protect the broker from a finding that the broker controlled an account. Clark v. John Lamula Investors, Inc., 583 F.2d 594 (2nd Cir. 1978); Cruse v. Equitable Sec. of New York, Inc. 678 F.Supp.1023 (SDNY 1987).

Whether or not a broker controls the trading in his or her customer's account is a question of fact. Control may exist as a result of an express written agreement between the broker and the customer, or may be inferred from their particular relationship. (Fey v Walston & Co. 493 F2d 1036, CCH Fed Secur L Rep ¶94437, 18 FR Serv 2d 835 (7th Cir. 1974); Newburger, Loeb & Co. v Gross (1977, CA2 NY) 563 F2d 1057, CCH Fed Secur L Rep ¶96148, 1977-2 CCH Trade Cases ¶61604, 24 FR Serv 2d 42 (2nd Cir. 1977), cert denied 434 US 1035, 54 L Ed 2d 782, 98 S Ct 769, appeal after remand (CA2 NY) 611 F2d 423, 28 FR Serv 2d 602).

To determine whether a broker exercised de facto control over trading in a non-discretionary account, courts look to several factors. Zaretsky v. E.F. Hutton & Co., 509 F.Supp. 68 (SDNY 1981); In re Thomas McKinnon Secs., CCH Fed Secur L Rep 99104 (SDNY 1996).

Of critical importance are the personal characteristics of the customer, such as his or her age, education, general intelligence, and business and investment experience. Control is likely to be found where the customer is particularly old, young, lacking in education, or was inexperienced in the stock market or lacked financial sophistication. Hecht v. Harris, Upham & Co., 283 F.Supp. 417 (9th Cir. 1980) (finding control when customer was particularly old); Kravitz v Pressman, Frohlich & Frost, Inc., 447 F.Supp.203 (Mass. Dist. Ct. 1978) (finding control when customer was particularly young); Leib v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (E.D. Mich. 1978) (finding control when customer lacks education); Carras v. Burns, 516 F.2d. 251 (4th Cir. 1975) (finding control when customer lacks education or is inexperienced in the stock market or is lacking financial sophistication).

Another factor closely examined by the courts is the relationship between the broker and customer, whether it was an arm's length business relationship or a combination of business and friendship.

Also significant are the reliance placed on the broker by the customer. Fey v. Walston & Co., 493 F.2d 1036 (7th Cir. 1974); Petrites v. J.C. Bradford & Co., 646 F.2d 1033 (Fla. 5th DCA); Marshak v. Blyth Eastman Dillon & Co., 413 F.Supp. 377 (ND Okla 1975).[flash=] If a broker has acted as an investment adviser, and particularly if the customer has almost invariably followed the broker's advice, the fact finder may consider this as evidence that the relationship is discretionary and that the broker owes a fiduciary duty to the customer[/flash]. Patsos v. First Albany Corp., 433 Mass. 323, 741 N.E.2d 841 (Mass. 2001).

A course of dealing in which a broker executes trades without client's prior approval suggests that the account is discretionary for purposes of broker's fiduciary duties; similarly, if a broker has acted as an investment adviser and client has frequently relied on that advice, there is a strong indication that the account is discretionary. In re Murphy, 297 B.R. 332, 41 Bankr. Ct. Dec. (CRR) 226 (Bankr. D. Mass. 2003).

Past evidence of following broker's advice will establish control. If a broker has acted as an investment adviser, and particularly if the customer has almost invariably followed the broker's advice, the fact finder may consider this as evidence that the relationship is discretionary and that the broker owes a fiduciary duty to the customer. Patsos v. First Albany Corp., 433 Mass. 323, 741 N.E.2d 841 (Mass. 2001).

As noted by the Second Circuit, a broader duty may be recognized in a non-discretionary account in the following circumstances:

(1) if the broker has engaged in unauthorized transactions or has otherwise effectively taken over the handling of an account even though it is labeled as a self-directed account;

(2) if the client is prevented by "impaired faculties" or extreme lack of sophistication from understanding the basics of trading and thus simply lacks the capacity to handle such an account;

(3) if the broker "has a closer than arm's length relationship" with the client;

(4) if the broker violates legal or industry requirements concerning risk disclosure when opening an account; or

(5) if the broker offers advice on a specific transaction that was "unsound, reckless, ill-formed, or otherwise defective."

Stewert v. J.P. Morgan Chase & Co., 2004 WL 1823902, 2004 U.S. LEXIS 16114 (NYSD 2004) (citing Kwiatkowski v. Bear Stearns & Co., 306 F.3d 1293, 1302-03, 1307-08 (2d Cir. 2002)).

If you can establish the above elements, the broker will not be able to hide behind the non-discretionary account defense.

THE HAYES LAW FIRM,, 1-866-332-3567 (toll free) ... _accounts/

Search for the name COSGROVE on this same web site ( to see what this dealer "defence" looks like.
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