Financial Abuse by "Trusted Professionals"

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Postby admin » Sun Feb 26, 2006 9:04 am

Upon further thought, it (self regulatory rules) appears to work along these lines:

although there are endless rules within the industry, some are ignored and some are enforced. I find that this self regulatory, self policing industry ignores rules when they are being broken to "promote" the business, and thus often ignores rules when they should be enforced to protect investors.................and enforces rules when the industry can find ways to punish industry members who have stepped out of line, or earned the reputation of "not being a team player".

It is kind of like watching a mafia-like organization in operation. They both claim the highest standards of integrity among themselves, (honor among thieves) and yet they both go back and forth within or outside of the law at any and all times, depending upon how it suits thier wants.

see the following Toronto Star article about RBC Dominion Securities violating IDA club rules without concern for the rules when they are in the interests of the firm:
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Postby admin » Sat Feb 25, 2006 7:26 pm

January 29, 2006

'The Battle for the Soul of Capitalism,' by John C. Bogle
Mistrust Funds
If anyone still harbors the fantasy that the business scandals of the past few years were the handiwork of just a few bad apples, they should read John C. Bogle's "Battle for the Soul of Capitalism."

Bogle has been a Wall Street insider for 50 years, the founder and long the chief executive of Vanguard in Philadelphia, one of the three or four largest mutual fund management groups in the nation. At Vanguard, he refused to charge the high annual fees that his competitors did. He was also among the first to offer investors index funds, at a time when most mutual fund managers were still claiming they could easily beat the market averages. (Index funds essentially duplicate the market averages, and have typically outperformed most of the pros over time.)

In this book, Bogle abhors what he sees as rampant cheating among his peers - not only mutual fund managers but brokers, bankers, lawyers and accountants. It's not just a few bad apples, he says: "I believe that the barrel itself - the very structure that holds all those apples - is bad."

Consider Jack Grubman. He may have been the best paid of the analysts who made fortunes partly if not largely based on conflicts of interest. But he was not alone.

Grubman earned $20 million in a single year in part by urging brokerage customers to buy the stocks of the corporations that his parent company, Citigroup, had as investment banking clients. When Attorney General Eliot Spitzer of New York State charged a wide swath of investment banks with similar conflicts of interest, however, 8 of the 10 largest companies on Wall Street decided they had better settle the suit. Goldman Sachs, Morgan Stanley and Merrill Lynch, among others, gave back profits and paid penalties of $1.4 billion, and altered the inherent conflicts in their managerial policies as well.

Nor was it only a handful of notorious companies like Enron and WorldCom that, under the tutelage of the most prestigious lawyers, bankers and accountants in the business, overstated their profits. Bogle totes up about 60 major corporations that had to restate their earnings - and this was not an inclusive list. Their stock market value equaled $3 trillion. That is "an enormous part of the giant barrel of corporate capitalism," he writes.

Or take the mutual fund industry, which Bogle knows best and which angers him most. Leaders boasted how clean they were compared with their colleagues at the investment banks and brokerage firms. But the relentless Spitzer found that dozens of them were rewarding good customers with secret and highly lucrative trading favors. As for executive stock options, which tied compensation to the company's stock price and made so many businessmen extraordinarily rich, they encouraged managers to manipulate short-term earnings to prop up stock prices.

Many people are still reluctant to concede that abuse was so widespread, since what they fear most is an assault by government in the form of tougher regulations. Unsurprisingly, loud complaints are now being lodged by influential lobbyists in Washington about the Sarbanes-Oxley Act of 2002, the only serious measure passed in the wake of the scandals to control business excess. And the tough-minded chairman of the Securites and Exchange Commission, William Donaldson, recently stepped down in the face of opposition from the White House and business interests.

Unfortunately, Bogle is less good at telling us how to fix the problems than he is at telling us what went wrong. He wants to believe that if we put the owners - that is, the shareholders - back in charge, most of the fraud, deceit and greed would dissipate like the morning mist.

Genuine shareholder democracy, he argues, would require chief executives to worry about the long-term health of the company, not the short-term fluctuations of stock prices. They would be far less tempted to manipulate earnings. In particular, if shareholders had appropriate voting power, the abuses associated with executive stock options could be reduced. Because shareholders do not have adequate voting rights, Bogle says, reform continues to be stymied.

But are shareholders inherently more ethical than corporate managers? Did they complain about "short-termism" when stock prices were at their heights in the late 1990's, or only after their stunning fall? Wouldn't they tolerate a little manipulation for a higher stock price?

It seems as if Bogle prefers to avoid the more obvious issue: that government looked the other way. Bogle acknowledges this lack of effective regulation, but he considers it a side issue.

The fact is that Washington has relaxed financial regulations under both Democratic and Republican administrations, opening the doors to conflicts of interest between brokers and investment bankers. In 1998, government, despite concerns, refused to separate consulting and auditing business. Although the hedge fund Long-Term Capital Management nearly pushed the world's financial markets over the brink that same year, the government demanded no further disclosure of the well-concealed financing of the industry.

But the open and honest flow of information is the only true check on the manipulation of the markets. Government regulation and independent scrutiny are critical to the process. Such regulation is a public good, like education and the highway system. If it requires a little expense on the part of business now, it will make them more money in the long run.

Bogle should have pushed his fine analytical ability and strong moral sense farther. Still, we should be grateful that an insider like him is willing to elucidate the often murky and apparently deceptive workings of the Street. John Bogle has been making Wall Street a better place for decades. His book is yet another important contribution in an illustrious career.

Jeff Madrick is the editor of Challenge magazine and teaches at Cooper Union and The New School. His most recent book is "Why Economies Grow."
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Postby admin » Wed Feb 15, 2006 10:04 am

News Release

Canadians Want Restrictions on Bank Distribution of Insurance
Identify concerns over privacy of information and sales pressure

February 15, 2006, Toronto, ON – Survey results released today by Advocis, The Financial Advisors Association of Canada, suggest that Canadians are wary of removing restrictions on bank expansion into the area of marketing and selling life and health insurance from bank branches. According to the survey, conducted by POLLARA Inc., consumers said that they neither need nor want bank growth into an area in which they already feel well served, noting that they have serious concerns over the power banks could have if the current restrictions on life and health insurance networking are removed.

“The results were most telling on the issue of privacy,” noted Steve Howard, Advocis President and CEO. Ninety-one per cent of Canadians indicated that they believe banks already have enough, or more than enough, personal information about them.

Mr. Howard went on to say, “Canadians are concerned about the prospect of banks having their banking and personal and health information at the same bank branch. In particular they are concerned about health information in an insurance application being kept separate from banking information.”

“Consumers are uncomfortable with the prospect of having too much personal information in one place,” he said.

The survey results indicate that one in five Canadians who have been approved for a bank loan, mortgage or line of credit report feeling pressured to give the bank more business.

Gary McLeod, Chair of the Advocis Board of Directors, and a 30-year insurance industry veteran, confirmed, “This is a common complaint from our members’ clients. It’s alarming when you think about how much power the banks already hold over Canadians.”

Interestingly, the survey reveals that the vast majority of Canadians do not know about protections against coercive tied selling, even though the practice is illegal under the Bank Act. Coercive tied selling occurs when a customer is required to buy a product or service as a condition for obtaining another. The lack of awareness of the existence of consumer protection against such practices is an even more serious problem among elderly Canadians, as only 19 per cent of Canadians 65 or older and 15 per cent of women over the age of 55 know that restrictions even exist.

“To make matters worse”, says McLeod, “while the banks claim they have easy and accessible ways of resolving customer disputes, the survey tells us that among the general population an astounding one in three Canadians, and more than half of all Canadians 65 or older, either don’t know about their banks’ complaint resolution process or believe one does not exist.”

Mr. Howard points out, “According to the POLLARA report, more than six in ten Canadians believes that removing protections will lead to less choice, and fewer than one in five Canadians believes the price of insurance would decrease in the long term if the protections were removed.”

“The current regulatory structure was put in place specifically to ensure that consumer interests come first. Why would anyone want to jeopardize that?” Mr. McLeod concluded.

Advocis, a long-time contributor to the debate on bank marketing and the sale of insurance, is calling on the government of Canada to safeguard consumer protection, and in particular, the preservation of personal privacy protections and the separation of personal credit and health information, by maintaining the regulatory framework in effect under the Bank Act today.

Editors Note: Full survey category and regional breakdown are available on request.


About Advocis
Advocis, The Financial Advisors Association of Canada, is the oldest and largest voluntary professional membership association of financial advisors. With more than 12,000 advisors in 49 chapters across Canada, Advocis members provide financial and product advice to millions of Canadians across a variety of distinct areas, including: estate and retirement planning, wealth management, risk management, and tax planning. Members adhere to a strict professional Code of Professional Conduct, subscribe to standards of best practice, meet ongoing continuing education requirements, maintain appropriate levels of professional liability insurance and are committed to putting their client interests first. The Association’s website is

For Further Information Contact:

Caroline Spivak
Director, Corporate Communications and Media Relations
416.444.5251 ext. 315 Ron Ross
Communications Officer
416.444.5251 ext. 214
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Postby admin » Wed Feb 15, 2006 10:02 am

During my time in the industry, I felt that Advocis was another "trade association" attempting to masquerade as something else. I appreciate their views but learned to take them with a grain of self serving salt, like I have learned to with the IDA or others.

The following press release by them could be interpreted either as a useful survey showing dissatisfaction with the amount of power and market share the banks hold............or a self serving appeal to limit competition against their members. I will let you decide for yourself.
Last edited by admin on Wed Feb 15, 2006 10:07 am, edited 1 time in total.
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Postby admin » Wed Feb 15, 2006 9:35 am

Break the brokers' monopoly

John Turley-Ewart
Financial Post

Wednesday, February 15, 2006

Today brings extraordinary news courtesy of your local insurance broker: Canadians are determined to continue paying more for insurance than anyone else in the Western world. Advocis, the bizarrely named association of Canadian insurance brokers and financial planners, released its survey of 1,900 Canadians today to prove to Canada's new Finance Minister, Jim Flaherty, that insurance buyers are not interested in the best market-driven prices and services.

Mr. Flaherty would do well to consider the facts before leaping to the conclusions of self-interested brokers who helped persuade Conservatives to put brokers' interests before that of consumers in the party's election platform, which promises to keep banks out of insurance distribution.

In Advocis's survey, Canadians are asked if they want Canada's banks to sell them property and casualty insurance through their branches to new and existing bank customers. Advocis reports that the overwhelming majority don't, thus reinforcing brokers' demands to maintain their monopoly on distributing property and casualty insurance to Canadians (except in Quebec, where the sun still shines despite caisses populaires (credit unions) that retail insurance to their existing and new customers through their branches).

The brokers' survey offers conclusions that are the polar opposite to a survey done last year by the Canadian Bankers Association, which shows 85% of bank customers want to be able to obtain information about insurance from their bank's branches. Speaking to the Globe, a spokeswoman for Advocis explained the contradiction, saying: "I think it probably does boil down to how questions are presented, how they are asked, who it is that you speak to." Phew, at least we know we don't need to take the Advocis survey seriously.

Yet Canadians should take seriously the whole question of the monopoly brokers have in much of Canada over the distribution of property and casualty insurance. A little competition from local banks might just save insurance buyers some money, despite what broker advocates say. Competition would also benefit the entire insurance industry in Canada.

The debate about banks selling insurance through their branches is now a decade old and has not progressed. We learned in 1997 from economist and Canadian financial historian Edward P. Neufeld, in his submission to the federal Task Force on the Future of the Financial Services Sector, that in every market where consumers can turn to competing vendors of insurance, the price paid for insurance went down.

That fact has not changed since then, nor has the Competition Bureau's position supporting full competition in insurance sales, but the profits insurance agencies and brokers have garnered through their monopoly has.

Looking at return on equity, insurance agencies and brokers have seen an increase from 12.8% in 2000 to 23.3% in 2003. This has helped drive up the number of profitable agencies throughout Canada to more than 80% over the same period, making the sale of insurance an almost sure windfall for brokers.

Consumers are the source of this windfall, as they are the ones gouged by higher sales commissions than they need pay. But paying more than is necessary is not the only price consumers pay. There is also the social cost as Canadians who make less than $30,000 a year are less likely to have property and casualty insurance compared with their confreres in Quebec, where caisses populaires distribute insurance that high commissioned insurance brokers elsewhere would not touch.

Brokers argue that Canadians don't want bankers selling them insurance. It's a convenient argument and one that ignores Canada's financial history and the experience of all other OECD countries where banks retail insurance. From 1867 to 1923, Canadian bank managers were allowed to sell insurance. They acted as agents for insurance companies, giving consumers, particularly in small and rural communities, one-stop financial service shopping. Allowing managers to sell insurance helped banks build national branch networks and insurance companies reach Canadians who would otherwise have limited access to insurance products. With concerns about rural bank branch closings growing in many parts of the country, allowing banks to sell insurance would be one way to move forward by taking a page from the past.

The great fear brokers have, and it is the unspoken reason for their efforts to persuade Canadians to reject competition from banks, is that if banks and credit unions start distributing insurance through their branches, brokers will lose jobs.

Again, Quebec's experience tells us this isn't so.

Consider this. Since 1987, Quebec-based Mouvement Desjardins has been advertising and distributing property and casualty insurance through its credit union branches and moved into the sale of life insurance in 2000. The result? Not massive unemployment for Quebec's insurance brokers; Quebec maintains one of the highest ratios per capita in Canada of brokers and insurance agents. In fact, between 2000 and 2004, Quebec saw a 13.25% increase in the number of property and casualty insurance brokers.

If another example is needed, look south to the United States, which lifted the final restrictions on banks distributing insurance in 1999. In its aftermath, job growth in the U.S. insurance brokerage business has steadily grown at 2% a year on average and the revenue being generated by these brokerages has increased annually by an average of 19%.

The fear of brokers walking the streets unable to find work is bogus. Some years ago Ross Johnson, former president of Prudential Insurance Canada, confessed that banks will "make a much bigger market for us in the same way they created huge markets for RRSPs and mutual funds." He was right then and is right now.

Canada's new Finance Minister can ignore the brokers' union survey. He need consider only one factor in this battle to distribute property and casualty insurance: consumer impact. All the evidence shows consumers will benefit.

John Turley-Ewart is the National Post’s deputy comment editor.

© National Post 2006
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Postby admin » Fri Feb 10, 2006 12:33 pm

Please come clean and admit that the industry self regulation has been fined tuned into industry "self-serving-regulation".

Admit finally that the Investment Dealers Association was misrepresenting itself as a self regulatory body when in fact it was an industry trade association masquerading as a regulatory body.

Recent decisions by the IDA to split these two roles apart confirms that the IDA themselves was long aware of the deception.

(Is posing as a quasi government agency without statuatory authority a criminal offense?)

Recent decisions by the Sask Financial Services Commission also point out the glaring lack of statuatory authority held by the IDA.

Why then do most Provincial Securities Commissions delegate matters relating the IDA firms, over to this industry trade association?
If you ask them, they will not answer. They will hire lawyers. They will hide. They will avoid release of information under Freedom of Information Act. Remember, the provincial securities commissions feel they are above the law. No one can challenge them. Even the RCMP cannot understand the issues involved and does not have the manpower to deal with this.

The entire self regulatory system has to be scrapped in Canada. It is not working. It is not serving the public. It is serving the industry. It is serving fraud artists, criminals and sophisticated financial predators.
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Postby admin » Sat Jan 21, 2006 2:14 am

Industry rules say that each and every transaction must be in the best interests of the client.

Industry practices are quite the opposite. For one example, did you know that about 80% of mutual funds sold are sold using the "highest commission" paying load schedule to the advisor, the Deferred Sales Charge (DSC).
Why, if there are identical funds available without these deferred sales charges are advisors allowed to push these higher paying funds on clients.

Because the advisor and the firm split a 5% up front commission if they manage to put clients into this type.

See investor alert on class B shares for the legal ramifications of this kind of dealing in the United States.
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Two sets of rules........and one is for fools

Postby admin » Sat Jan 21, 2006 2:10 am

In my experience inside the investment industry, there are two distinct types of rules. One type of rule is that intented to protect the interests of the public. The second type is intended to protect the interests of the industry.

This forum is here to jot down those obvious examples I (and others) have seen where the rules intended to protect clients and the public are routinely ignored, while rules to protect the interests of the industry are rigidly enforced.

With a self appointed, self regulatory industry it is expected that we will find some examples.

Do I think that anyone in an official capacity will be rounded up and arrested for looking the other way at rules intended to protect clients, while fully enforcing all rules that protected the industry? Not soon, but someday yes. Look at the forum titled Breach of Trust to find what laws are being violated by some "officials" in the industry.
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Postby admin » Sun Jan 15, 2006 10:42 pm

"TAMRIS" - ... 0abuse.htm

Financial abuse is not limited to theft, burglary, illicit misappropriation or any other obvious criminal act!

Financial abuse in the financial services industry can be much more subtle, cynical and, at times no less significant than the more obvious forms noted above.

Financial abuse is any act arising from the abuse of a position of trust that either unreasonably benefits the advisor and unreasonably and negatively affects, or has the potential to negatively affect the financial wellbeing of the client.

But, it is more than just the act itself. All abuse violates basic human rights. Unfortunately, without a full understanding of the needs of the investor, the important first step of defining basic investment rights and upholding them becomes impossible.

Yes, there are sharks out there who would commit abuse irrespective, but, much abuse results from ignorance and the neglect that arises from ignorance.

An abuse of a position of trust occurs when a recommendation or action is made which is neither properly explained nor thought out and, which, if properly explained and thought out would either not be recommended in the first place or would not be agreed to by the client without some adjustment.

Importantly, the act must clearly and obviously transgress a number of clear lines.

Is the recommendation appropriate to the client’s financial position and financial needs? Is the advisor taking the client’s financial position into consideration before determining the strategy, allocation and security selection?

Is the client given the opportunity and the means to understand and assess whether the recommendations and rationale are indeed acceptable?

Is the recommendation appropriate to the client’s risk preference? Are all risks likely to affect the client being properly assessed? Is the client being educated or is just their current level of knowledge being document?

Are all costs and charges and remuneration associated with the investment clearly and properly disclosed? Is the advisor justifying their fees given the work involved

Has the most cost effective option been taken given the nature of the recommendation?

Is the client receiving clear and easily justified value from their wealth management and the consideration in fees and costs they are paying and is this justification part of the longer term relationship?

What the above means is that in order to clearly and effectively ensure that advice is appropriate to the client, the advisor must have a clear process that not only relates portfolio structure to financial needs to protect against both short and long term financial risks but must clearly explain how they work, how the portfolio manages these risks and meets the clients needs and the client needs to have access to a level of communication and education that will allow them to understand and assess what is being recommended and why it is being recommended.

All this requires greater communication, better education, higher standards of risk assessment, comprehensive reporting, justification of portfolio construction, planning and management and accountability of performance and costs.

All of the above requirements are way above the minimum standards policed by Ontario’s main regulatory and self regulatory bodies; the Ontario Securities Commission, the Independent Dealers Association (IDA) and the Mutual Fund Dealers Association (MFDA).

If standards are not raised, endemic financial abuse will continue.

At present, all an advisor is required to know by law are basic minimum standards of information about the client, which are recorded in the “know your client” form. The information recorded on this form is actually insufficient to perform a thorough analysis of the client’s financial needs and risk preferences, let alone a full assessment of the client’s existing asset position. Importantly there is no obligation to give the client a copy of this document. There is in fact no regulation which states that any document justifying recommendations be sent to the client.

Additionally, apart from a basic valuation of investments and statements of transactions, there is no other requirement to report performance, nor to even measure whether their performance has been good, bad or indifferent.

Worse still, many investors do not know how much they are being charged and many expenses, commissions and costs paid by the client do not need to be disclosed to the client.

If the above three factors are not conditions which perpetuate ignorance, which prevent the investor from finding out whether they are getting value for money and how much they are being charged, then they are conditions which perpetuate financial abuse.

Trailer fees

Trailer fees are annual fees paid by a mutual fund company to an investment advisor for recommending the mutual fund. The investor does not need to be told about this even though the money is paid from the investor’s own funds. Likewise the advisor has no obligation to do anything for the client to earn these fees.

Trailer fees and other referral type fees are an abuse of the client advisor relationship and, unless these fees are disclosed and used to offset valid and identifiable services performed by the advisor, they increase costs and are detrimental to an individual’s financial position.

The greed of the industry has seriously affected the ability of mutual funds to meet the objectives and needs of the individual. Indeed, the benefits of one of the most efficient investment vehicles ever invented have been submerged under the self interests and costs of an industry that has lost sight of its reason for being

Regulation and protection

If you study the rules and regulations of the Ontario Securities Commission and the Independent Dealers Association you will not find a single regulation defining the quality of advice or the parameters in which that advice should be delivered, monitored and reported.

All regulations relate mainly to issuance of securities and the rules and regulations governing their transactions and the rules and regulations governing the sale and purchase of securities for individuals.

Look at all the disciplinary proceedings taken by the IDA against its investment advisors and not one really deals with bad advice. All relate to clear violations of IDA and OSC rules and regulations. This means your advisor will have had to have either run off with your money or traded egregiously on your account without your permission and to your detriment.

Look at the court cases where it is said that common law can look at the wider client/advisor relationship and is not constrained by OSC and IDA rules and regulations to determine restitution. Even here, there are as yet no real cases dealing with bad financial advice. All relate to certain specific securities transactions which clearly transgress the letter and the spirit of existing regulation.

The message for investors

Until advice is actually regulated in some shape or form, financial standards are raised and financial advisors have a real professional body to define the rules and regulations governing the provision of advice and to discipline and punish those who ignore them, you the individual investor will need to be responsible for policing your own financial position. ... 0abuse.htm
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Postby Dell » Tue Jan 10, 2006 7:44 pm

Daniel Calugar, the president and majority owner of the firm, will pay a $50 million civil penalty and $103 million in disgorgement of improperly earned profits. The civil penalty is the largest yet levied against an individual in a series of settlements that have grown out of the market timing and late trading cases that have emerged since September 2003.

Calugar also accepted a permanent ban on working for a brokerage firm as part of his settlement with the Securities and Exchange Commission. The settlement still faces court approval. Calugar reached the agreement with regulators without admitting or denying wrongdoing.

"Daniel Calugar's late trading was phenomenally profitable to him and came at the expense of long-term mutual fund shareholders," SEC enforcement director Linda Thomsen said in a statement.

Calugar primarily market-timed funds run by Alliance Capital Management and Massachusetts Financial Services; he was the largest market timer in the Alliance funds, the SEC said. He had agreed to make "long-term" investments in Alliance hedge funds in exchange for permission to time its mutual funds, the SEC said.

MFS (SunLife) in 2004 agreed to pay $225 million to settle SEC charges that it had allowed widespread market timing. Alliance agreed to pay $250 million to settle with the SEC. Both mutual-fund groups settled without admitting or denying wrongdoing. An MFS spokesman declined to comment. An Alliance representative didn't return a phone call. ... .html?.v=4
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Postby admin » Fri Dec 30, 2005 2:00 pm

SOS - Save our Seniors
Each year Canadian investors lose in excess of $1 billion due to wrongdoing by a financial services industry that breaches rules and regulations with impunity. Bre-X, Nortel, mutual fund market timing, Portus, Crocus, Norbourg, Argentum, income trusts, principal protected notes are only a few of the scams and scandals that have robbed Canadians.
Seniors and widows are particularly acceptable.
How many perpetrators of white-collar crime have served jail time in Canada?

The regulatory system has failed small investors and there is no national authority that provides remedial investor protection. Investor protection had been delegated to industry sponsored agencies. Does this make sense?

Although a few of the perpetrators of these financial crimes are disciplined, the penalties are not significant and often the fines imposed are not collected. Ask the regulators for details.

For those who fail to realize the magnitude of this problem of white collar crime and corruption in the financial services industry an alphabetical list of disciplined persons from the British Columbia Securities Commission is provided below.

Why don't other regulators provide an alphabetical list of disciplined persons to enable small investors to do their due diligence?

Why isn't there a comprehensive national list?

Why are representatives who are banned in one province allowed to operate in another province?

Who is responsible for protecting Canadian investors?

Corruption and wrongdoing are widespread and the magnitude is covered up.

Why don't the regulators provide information on the magnitude of this problem?

Why doesn't Government ask for this information?

Are the regulators controlled by the investment industry?

Canadians are fed up with Canada's feeble approach to protecting citizens against crime and corruption.

Guns in the streets of Toronto and the investment industry robbing seniors are both symptoms of a society gone wrong.

No wonder David Dodge admits Canada has the reputation of the Wild West amongst other civilized nations.

No wonder RCMP Commission Zaccardelli says we must root out corruption and states "Trust is the bedrock of a civilized society."

Some of our leaders recognize the problem. Why isn't something done about it?

It's time that our elected representatives recognize Canadian discontent with rampant crime and corruption. Canadian citizens are regularly being victimized and there needs to be accountability.

It's time that action is taken to enable Canadians to trust again?

Can we depend upon the RCMP to rescue Canadians as they have traditionally?

Will our Government provide funding to enable the "Mounties to get their man"?
What will your party do to address this issue of crime and corruption and provide protection for Canadian citizens?
Stan I. Buell
Small Investor Protection Association
P.O.Box 325, Markham, ON, L3P 3J8
Tel: 905-471-2911
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Postby admin » Wed Dec 07, 2005 6:44 pm

Breaking News from The Globe and MailFund companies face lawsuit
Wednesday, December 07, 2005

Canadian Press

Hide advertisement
TORONTO — Mutual fund companies that allowed “market timing” trades face a class-action lawsuit organized by a Toronto law firm specializing in such litigation.

Rochon Genova LLP said Wednesday the claim filed in Ontario Superior Court names IG Investment Management Ltd., CI Fund Management Inc., Franklin Templeton Investments Corp. and AGF Funds Inc.

IG, CI and AGF reached settlements last December with the Ontario Securities Commission under which $97.7-million was distributed to fund investors hurt by market timing. Franklin Templeton followed with a $49.1-million OSC settlement in March.

The Rochon Genova claim alleges those amounts drastically understate the losses to long-term unitholders caused by market-timed trading — high-speed in-and-out buying and selling of mutual fund units to take advantage of transient price staleness on foreign holdings in other time zones.

The lawsuit states that the management companies breached their fiduciary duties and were negligent in allowing market timing between September 1998 and September 2003.

Joel Rochon, a partner at Rochon Genova, said AIC Inc., which settled with the OSC last December for $58.8-million, and other fund operators may be added to the action.

He said 17 Canadian mutual fund companies were implicated in the market-timing scandal.

Mr. Rochon did not specify the amount of damages being sought, but said it would be in the “hundreds of-millions of dollars.”

© The Globe and Mail
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Regulatory Reform

Postby Stan » Sun Dec 04, 2005 9:31 pm

Regulatory Revision – December 2005

It seems most investor advocates and investors agree that regulatory reform is needed. Whether it is national or provincial will not make much difference if the regulators fail to function properly.

The regulators must be forced to fulfill their responsibilities. Urquhart’s call for a regulatory audit is on the money.

What is needed is a paradigm shift from regulation by prescriptive rules, which results in industry developing schemes to circumvent regulation. Unregulated products and regulatory exemptions result in victims. It is time that our regulatory system focuses on meaningful investor protection.

That means the regulators approach (preventative investor protection) must be replaced by remedial investor protection. The white-collar criminals need to be punished severely to act as a deterrent. Jail sentences must be mandatory for fraud and other intentional robbing of victims. Industry must be forced to make clients whole again.

Making clients whole was an objective expressed by Mike Lauber when he first began his role as Ombudsman for Banking Services and Investments. Sadly he was unable to fulfill that objective and settled for industry attitudes of denying fiduciary responsibility, holding investors responsible for failing to protect themselves, and offering minimum settlements. A real lesson in Investor Beware that we believe is unfair and unacceptable.

Protecting the savings of seniors should be of paramount importance.

How can anyone support the robbing of our elderly and senior citizens?

How many widows and seniors have lost their savings when they trusted the financial services industry?

Have we forgotten the Wise Person Committee Report of December 2003?

Stan Buell
Small Investor Protection Association

Postby admin » Fri Dec 02, 2005 11:04 am

Now is the time to talk to your MP, or the candidate for their job.

I met mine today, and made an appointment to sit down and talk privately about what you and other posts mention. It is likely that they are the very last people in the country to know all the wrongs that are going on, but there is simply no reason to not take a few minutes and try and let them know.

With corruption ala Gomery on the mind, maybe corporate and regulator corruption/collusion can be imagined.
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Postby Guest » Fri Dec 02, 2005 7:55 am

There was nothing new in Carrick's column, the maze of confusion continues. I agree with Buell, an independent regulatory body should have the power to seek redress for investors who have been cheated.


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