Securities Commissions actions in breach of trust?

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Re: Securities Commissions "should" be investigated for breach

Postby admin » Sun Nov 07, 2010 12:30 am

Check out the new movie INSIDE JOB released late 2010. (USA based)

It's reviews appear to support the premise that bankers, regulators and the politicians who are in charge of the regulators have conspired to create the perfect money machine for themselves.........and the perfect storm for the public. The economy at the moment bears that out.

What is unable to come out through this film is that Canada is more deeply incestuous in the relationship between the bankers and the regulators. Politicians I know less about, but Alberta's finance minister should properly be called a finance monster in my opinion.

In fact I could see some like him charged with Breach of Trust for what damage he allows to happen to the public.
Someday perhaps.
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Re: Securities Commissions may be investigated for breach

Postby admin » Sun May 23, 2010 11:38 am

The perfect crime, in nine steps.

Step one
The plan

It is 2005. In a room somewhere in a tower in Toronto, sit the men, finance experts pondering how to profit from markets today. Where is the biggest kill?

“How about this? We create trusts, take investors money and put into the trusts telling them that they are secured investments.........”

In a game of financial “hot potato” substandard investments get artfully passed from sophisticated investors (financial dealers) down to unsophisticated buyers (retail investors). The game is to pass these investments down to the ultimate loser as fast as possible, earn your commission and move on the the next deal.

Along come sub prime mortgages, people betting against those sub prime mortgages, institutions hedging the sub prime notes they already have, people concerned about the upside or the downside of this Asset Backed Commercial Paper.

They cook up these trusts, with cute names such as “Apollo, Rocket, Opus, and Planet”, take money off ordinary Canadians, send it overseas to a German bank as collateral against the sub prime market failing. God only knows what will happen in the end, but we will have our millions in fees, so do we really care? This is dual agency (acting on both sides of the transaction, seller AND trusted advisor) in Canada. Nothing like that is allowed in real estate or other professions, but investments in Canada is still a game of self regulation, which in other words means, “anything goes”.

Step two
The con

These trusts do not qualify to be sold under most securities law in canada, so we need to put some lipstick on the pig with two items. First we need to have a better credit rating, and second, we need to get the securities commissions to look the other way for a little while. The credit rating agencies are for sale, so that one is easy. Luckily there is a loophole in the securities regulatory system that grants the regulators the “discretion” to hold sway over the law from time to time. So this too will be a breeze. These so-called “regulators” get to “sell” permission slips to violate the securities act. This happens every day in Canada, to practically every sales organization in the country, and the beauty is that “there is no provision in the act that says we have to notify the public” when we do this. (OSC quote) What a gift!

Step three
The insiders

We approach friends at one of 13 securities commissions.
We pay their salaries so we have an easy entrance. Thank god for self regulation.

One of the gifts of self regulations is that we appoint, pay and some would say “own” the regulators of financial products in Canada. That makes it a simple matter of paperwork and an exchange of money to get these same financial regulators to approve of something called a “legal exemption”. Simply put, we apply at the easiest or closest securities commission for permission to sell these “hot potato” investments which cannot otherwise be sold. They do not meet our laws without this exemptive relief. All 13 securities commissions grant the relief, since all of them depend on the millions of dollars of revenue that we pay them for just this kind of thing. Presto! An otherwise illegal investment is turned into a legal one, and we do not even have to notify the public that we took this hidden step.

The second gift given to those who “self regulate” is a little game in Canada called ther “passport” system, whereby if one securities commission approves of a legal exemption, typically (and for money) the other twelve will go along without question. We are told that the passport system enables a smoother flow of securities rules across thirteen jurisdictions but what it does best is assist in the flow of financial abuse across those jurisdictions.

Step four
The crime
We dump this product immediately onto other dealers like National Bank, Cannacord capital etc, knowing that they will “dispose” of the corpse by pushing it off onto unsuspecting retail investors. City treasury’s, mom and pop investors, university’s etc. Their “retail sales force” motivated by commissions and loyalty to the company, get into high gear, get on the phone and start calling the suckers, er customers that they hope to unload this product on. It must be noted and applauded that in Canada TD Bank was one of the only financial dealers who did not try to ride this gravy train. Thank you TD.

Step five
The lookouts

You always need to be on the lookout for the cops, even when you have “legal permission” to break the law. It just pays to cover all the bases.
In that respect our highly regarded regulators and self regulators have made their way into the RCMP and onto something called “joint management committee’s” inside the commercial crime division, the IMET. (Integrated Market Enforcement Team) With our own industry people, from our own industry associations so carefully placed, and above examination, we can “help” to ensure that the right people do not get criminally investigated.

Osc, iiroc, other industry groups working inside the RCMP. Sitting on joint management committees, to “help” the RCMP.

Step six
The cleanup man

To put additional insurance on making sure that the right people do not get charged for this perfect crime, we need a “cleanup man”. The mafia-like guy who can dispose of any traces of the crime, any bodies (figuratively speaking, this crime involved no loss of life). In the United states when the sub prime crime reared its head, there was involvement by the president, FBI, Treasury secretary, Federal reserve as well as congressional hearings and senate hearings to question the culprits. Here in Canada, all those people turned away for some reason. Also turning away were the self regulators, the securities commissions (who granted the permission to violate our laws). Perhaps they should be afraid of being investigated themselves?

No, the person chosen to clean up the mess, and try to make sure the right people do not get hurt was a private lawyer, chosen for his ability and his connections in doing this kind of thing. Previously he had involvement in tobacco smuggling operations, called the largest fraud in Canada by the RCMP) and he was able to get himself and senior exec’s free of criminal matters in this case. A fine of one billion against the company, (Imperial Tobacco) while he was the president of the parent company. So there is your experienced cleanup man.
The fist thing he does is to try and negotiate immunity from civil and criminal prosecution for the “boys” in the back-room. He succeeds in getting civil immunity for the boys but criminal immunity is not allowed. Not to worry, as the odds of any police in Canada investigating this one are slim to none. Remember that we have some of “our boys” on the inside at the RCMP.

Step seven
The penalty

One half of one cent for every dollar missing. Not bad.
After the cleanup, after the damage control, after negotiations for immunity, and a great deal of government money to pay back investors, the securities commissions awake from their slumber, feel that it might be safe to poke theirs heads up, and take some perceived action. They know that 99% of Canada still does not know that they granted permission in the first place to allow this product to be sold, so they feel pretty smug in stepping up and imposing “pretend” penalties on the culprits. Little dow we know of the incestuous relationship between the culprits and the “regulators”. Susan Wolbergh Jenah was the vice chair of the OSC when she was busy signing her name to legal exemptions to allow these dubious products to be sold without meeting our laws. Then a few years later she moves to the head of the IIROC (gang of investment dealers) and lo and behold she comes out and says that the dealers did not know what they were selling?? I wonder if she had a clue when she allowed them to be sold, or if she was just happy doing what she was told in order to collect a $400,000 salary at the time. Her new salary at IIROC went to $700,000. It is amazing what you can buy with a six figure salary. Do not go to jail. Collect $32 billion.

Step eight
The profit

99.5 cents profit on every dollar taken. “Shoot, I was hoping for 99.9%”, you could almost hear the investment dealers say. “We will have to give the securities commission people a $100,000 raise in salary so they get it “right” next time”.

The fines imposed amount to a huge number in the newspapers, but in actual fact amount to less than one half of one penny for each and every dollar missing. $32 billion missing. Hundreds of millions of dollars in fees to the manufacturers, sellers, lawyers, regulators, receivers, mafia-type cleanup man, and so on. And nobody can be sued, nobody going to jail.

$32 billion is not quite equal to the cost of each and every other crime in the country, combined. Just about. Also just about the cost of running the province of Alberta every year. From one crime. One set of legal exemptions.

It is hoped that Canada gets an improved securities regulatory system soon, as it is unlikely that the country can afford to let the most cunning, clever financial people people police themselves any longer on the honor system.

Step Nine. Updated November 2011 after hearing from the RCMP.

When some of the investors who lost money make official complaint to the RCMP IMET financial police, the RCMP does a quick dismissal of the case, without interview of experts who volunteer info and expertise. Guess who helps them with the decision to dismiss and with writing the final report? An official on loan to the RCMP and on the joint management committee of the RCMP from the Ontario Securities Commission. The very same OSC that gave investment dealers permission to exempt themselves from the law. SOooooo, despite the RCMP receiving a criminal complaint that securities commissions were in breach of the public trust, for selling out the public interest protections of the law.......the RCMP allowed the organization that was involved in committing the crime, to participate in closing the file on the crime. It just does not get any more "organized" than that, and it does not get more perfect than that.

We learn during this process that the budget for the entire RCMP IMET force Canada wide (yes for all of Canada major economic crimes), is $16 million dollars per year, which is HALF the budget for my police force in a city of 78,000 people. Do we really want to catch our most trusted criminals, or is this just a pretense?
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Re: Securities Commissions may be investigated for breach

Postby admin » Sat Apr 24, 2010 4:06 pm

With news about Goldman coming faster and faster, illustrating how the firm conned its way to riches at the expense of the entire world...........

And a great article in Maisonneuve Mag about CIBC attempts to abuse an elderly couple out of their savings.......... ... Yzhi&hl=en

It is becoming painfully clear to myself that the public will someday soon no longer need to be "sold" on the idea that the investment industry is corrupt. Sure we have the strongest banks here in Canada, but has it ever occured to you that this is because:
a) they have a near monopoly
b) they police themselves (self regulating)
c) we trusting Canadians place them "above examination"

What I predict will come along (but only at a speed the public can handle) next will be a startling realization that the investment folks could not have gotten away with their various frauds were it not for the assistance of their "pocket regulators", those reputable folks who claim to regulate the financial industry. they are usually bought, paid for and annointed by the very industry they purport to police.

Fraud against Goldman first, then negligence and breach of public trust charges against captured regulators who were morally blind.

After than will come the even harder to swallow realization that above the captured regulators, and also participating in the feeding frenzy for money that spun from bad investments, were politicians who also became morally blind. They gave (sold) their souls for political power and loyalty to the highest bidders, and the highest bidders were in the financial industry.

I am a little guy in Western Canada, so I can only point to local people like Alberta Finance minister Ted Morton, and 12 other provincial and territorial ministers each in charge of a captured securities commission. I suspect you will see people like this criminally charged in some jurisdictions, although do not hold your breath for such justice in Canada. We may have to sit back and watch justice happen in the USA, while we take the British approach of stiff upper lip and look the other way.

If you are reading this and you are not quite ready to accept and understand, that is OK. It is a lot to swallow and hard to believe. It has now taken me nearly thirty years of true life experience to get to this level of understanding. I thank ou for reading along and hope you will keep and open mind as you work to protect and preserve your lifes savings.
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Re: Securities Commissions may be investigated for breach

Postby admin » Wed Mar 17, 2010 9:12 am

most recent correspondence with ted morton
On 8-Mar-10, at 3:27 PM, Finance and Enterprise wrote:

Subject: Questions on Billions of Dollars in the Public Interest
Date: March 8, 2010 3:27:36 PM MST
Thank you for your January 23, 2010 e-mail and February 8, 2010 letter regarding the sale of asset-backed commercial paper (ABCP) to Alberta investors. I appreciate your congratulations on my recent appointment as Minister of Finance and Enterprise and appreciate the opportunity to provide the following information.

I am aware that your complaint was brought to the attention of Premier Ed Stelmach and the Honourable Iris Evans, previous Minister of Finance and Enterprise, several times last year. You have been provided with a detailed explanation of why provincial securities regulators, including the Alberta Securities Commission, thought it was appropriate to issue the discretionary exemption orders about which you have expressed concern.

As Minister Evans indicated in her September 14, 2009 letter to you, the provincial government has closely monitored worldwide reviews of regulatory requirements to find solutions that can be adopted across Canada to prevent events like the ABCP crisis from happening again. Provincial governments and their securities regulators continue to work together to implement measures to enhance disclosure requirements and restrict the availability of prospectus exemptions for the benefit of all Canadian retail investors. Under the circumstances, I believe that the Alberta government has taken appropriate steps to resolve your concerns.

Thank you for your e-mail. I trust this response addresses your concerns and brings this matter to a close.


Ted Morton
Minister of Finance and Enterprise

March 17, 2010 reply to Mr. Morton for copies:
Dear Mr. Morton.

I thank you for responding to my requests for answers as to why provincial securities commissions allow investment firms to violate our securities laws thousands of times and especially when appears to be harmful to the public interest. I must ask you to please send me a copy of the "detailed explanation" which you refer to as answering this question, as I am not aware of any such answer being ever provided by your agency. It may have been something which I am simply not in receipt of, and I thank you for providing a copy of this detailed explanation to myself to try and bring this matter to a close.

Thank you for your time.

Best regards,

Larry Elford

latest response (brush off?, coverup?) from Ted Morton. Ted, why in the world are you helping to hide what could be criminal behavior? You are in a public service position are you not?
You still seem unable to answer what public interest is served by allowing financial firms to violate securities laws when selling illegal investment products, nor can you provide public interest reasons for some 5000 such exemptions. Finally you cannot tell the public why such dirty tricks are done in secret, without notice to the very consumers who will be buyers of these investments. Are you on the job Mr. Morton, or on the take?

Dear Mr. Elford:

Thank you for your March 9, 2010 e-mail requesting that I resend the detailed explanation previously sent to you by Mr. Robert Bhatia, former Deputy Minister of Finance and Enterprise, in January 2009.

As requested, I am attaching a copy of Mr. Bhatia’s January 5, 2009 letter, which provides the detailed explanation for why provincial securities regulators across Canada felt it was appropriate to issue the discretionary exemption orders in which you expressed concern.

I believe the Alberta government has taken all the appropriate steps to address your concerns. As this matter has been dealt with several times over the past year, I consider this matter to be closed and will not be responding to further correspondence on this subject.


Ted Morton
Minister of Finance and Enterprise

alberta finance 20 exemptions jpeg pg 2.jpg
alberta finance 20 exemptions jpeg pg 1.jpg
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Securities Commissions actions in breach of trust?

Postby admin » Tue Feb 16, 2010 5:26 pm

images.jpeg (3.02 KiB) Viewed 29592 times
Feb 15, 2010

A.P. (Anthony) FOZARD, Staff Sergeant
RCMP Integrated Market Enforcement Team  (Vancouver) 
2200-401 West Georgia Street, Vancouver
British Columbia, Canada  V6B 5A1
Telephone: (604) 602-4455
Facsimile: (604) 331-1222

From: Larry Elford, former CFP, CIM, FCSI, Associate Portfolio Manager, retired

Re: Vancouver IMET file 2010-771

Dear Mr. Fozard,

I write to you with supplemental information regarding the complaint made by Canadians into the sale of Non Bank Asset Backed Commercial Paper (ABCP).  I appreciate that the RCMP have confirmed the opening of a criminal investigative file into the sale of ABCP, as have law enforcement agencies in other countries.  

Public documents are available which indicate that our provincial securities regulatory agencies provided essential help to sellers of this ABCP, to the financial benefit of the securities commissions as well as the investment sellers, and to the detriment of the public interest.   I feel that the RCMP should also be made aware of these documents and of the propensity of securities commissions to act in a complicit manner with investment firms who are abusing the public.  If these allegations are found to have merit, then we are talking about breach of the public trust by our provincial securities commissions.

None of the public securities commissions have been willing to answer questions on what process was followed and what public interest is served by letting substandard investments (those which did not met our laws) be sold without notice to Canadians.  Of the approximately 5000 instances where securities commissions have let investment firms skirt our securities laws, I find no examples of public input or public notice of these deals.  This may put them in a category of secrecy which further reflects poorly on the process and of those who allow our laws to be skirted.

It appears indicitive of a captured regulatory system and one with incestuous relationships with the investment industry which appear to preclude proper duties of care being delivered to the public. 

I write with slight reservation, knowing that not only have the securities industry claimed the right to self-police on matters such as this, but that the RCMP IMET has allowed securities regulators and self regualtory members to work on its force and advise from the position of an RCMP “insider”.  These regulators, which are all paid a salary by the investment industry simply should not be on your joint management committees when investigating the investment industry. This could be construed as a conflict of interest were it neccessary to investigate the industry or regulators who are paid by this industry.
I urge you to take public steps to show that your force is willing and capable of separating from the investigation, regulators or self regulators who are in fact paid and supported by the very industry you are investigating.

I further ask that the regulators themselves be investigated for breaches of the public trust.

Specific example include, but are not limited to:

The granting  (to investment dealers) of permissions to violate Securities laws in order to help facilitate the sale of known defective investment products, and the simultaneous failure to ensure that the public were notified of this “exemptive relief” process before they invested in the products.

Failure to disclose market risks that were known to the regulators (as evidenced by the need for legal relief application) and intentionally veiled from public view by the industry.

Self-Preservation of regulatory agencies positions through moral disengagement and motivated forgetting towards a securities industry that funds the salaries of all investment regulators in Canada.  Dishonest deed by agents of the crown.  Failure to provide the duty of care promised to the public by a crown agent.

Regulatory and self regulatory board governance failure. Using boards composed of industry members and very little to none who represent the public interest. 

Regulators knew or ought to have known that legal exemptions were detrimental to the protections intended by laws, and that by skirting them, the public was and is being placed at risk. 

Granting of legal exemptions to the financial industry without notice or due process with the public is indicitive of an “abuse of discretion” by an agent of the crown.  Hiding the process from the public adds fuel to the argument of an abusive act.

Consistant record of favoritism toward the investment industry, with literally thousands of such behaviors (permissions granted to violate securities laws) that favor the industry and damange the public.  Never a public notice was given.  No public input was allowed.

Criminal allegations may include but not limited to the following against the provincial securities regulators and self regulatory agencies:

-Failure to provide the public with honest services
-Breach of duty to protect the public

-Regulators knew or should have known enough about their stated protective role in matters that affect the public interest to avoid allowing thousands of exemptions to be granted to those who sell investment products and advice.
-Breach of the public trust.
-Negligently and intentionally failing to protect the public interest through a conflicted securities regulatory system.
-Breaching securities laws and practices that were intended to protect the investing public. Professional complicities with the investment industry that constitute a conflict of interest.

These matters have caused billions of dollars to be siphoned out of our economy, into the hands of investment sellers.  Some of the matters may involve civil recourse from the agencies involved, and some may be criminal in nature.  I trust that the RCMP will take these matters as seriously as the damage to our Canadian economy.  I also trust that the RCMP IMET will take professional steps to separate all aspects of this investigation, from the regulators and self regulatory persons who are on IMET joint management committee’s, and whose regulatory agencies may be suspected of criminal code offenses against Canadians.


Larry Elford, former CFP, CIM, FCSI, Associate Portfolio Manager, retired
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