Solutions, Self Defense and Best Practices

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Many mutual fund fines remain unpaid
The Chronicle Herald Halifax
By CLARE MELLOR Business Reporter
Fri. Oct 9 - 4:46 AM
Seven of 17 fines levied by the Mutual Fund Dealers Association of Canada during the latest fiscal year were not collected.

The national organization regulates mutual fund dealers and their representatives, who are licensed with provincial securities commissions.

The 17 fines that were imposed by the association between July 1, 2008, and June 30, 2009, amounted to $5.6 million, according to Hugh Corbett, director of litigation for the Toronto-based association.

Of that $5.6 million in fines, "$480,000 was actually paid," Mr. Corbett said in an interview.

One of the seven unpaid fines amounted to $2.6 million. In that case, a mutual fund dealer became insolvent, he said.

On Tuesday, former Halifax mutual fund salesman Bruce Schriver was disciplined by the association for infractions that included redeeming about $116,000 from a client’s account and not repaying it. Part of Mr. Schriver’s penalty included a $200,000 fine, even though a hearing panel acknowledged that the fine might not be collected.

Mr. Schriver’s lawyer, Peter Kidston, argued at the disciplinary hearing against levying a financial penalty as it would be "a paper fine" because Mr. Schriver has no means to pay.

The association does not have the legal authority to collect fines from those who have left the mutual fund industry.

Self-regulatory investment watchdog organizations like the Mutual Fund Dealers Association and the Investment Regulatory Organization of Canada "don’t have any judicial enforcement mechanism in our powers to be able to go to court and collect those fines," Mr. Corbett said.

"When someone remains in the (mutual fund) industry, obviously they have to pay their fine to stay in the industry. Where there is difficulty collecting fines is when people leave the industry," he said.

The self-regulatory organizations have asked the Canadian Securities Administrators to give it authority under law to collect fines.

"As of yet, those powers have not been granted to us," Mr. Corbett said.

If the Nova Scotia Securities Commission issues a penalty or fine against an individual or company for breaking securities laws, it has the ability under law to collect the fine.

Any order of the Nova Scotia Securities Commission can become an order of the Supreme Court, Scott Peacock, the commission’s director of enforcement, explained Wednesday.

Mr. Peacock was not able to provide figures on how often the securities commission has to seek a judgement through the courts against individuals or companies to collect fines or penalties it has issued.

A recent amendment to the Nova Scotia Securities Act will allow the commission to order an individual or company to pay restitution to its clients in certain cases where there have been breaches of securities laws. However, that amendment is yet to be proclaimed.

( cmellor@herald.ca)

On 9-Oct-09, at 4:32 AM, Ken wrote:

A better solution would be to fine the dealer ; that would get management's attention to root causes of problems.
The fines should also include restitution money for abused investors.

If this cannot be effected, than maybe the SRO model needs to be rethought.

Respectfully,

Ken Kivenko

http://thechronicleherald.ca/Business/1146678.html

Larry chimes in:

Ken, I could not agree more with your comments.............."fine the dealer"

This would solve all problems of the firms being able to "look the other way" while a few brokers and salespeople get caught.

Your second comment about restitution money is also perfect. If there were a "fund" or insurance program to fund this, which everyone in the business had to pay money into, in order to belong in the industry........it could create a culture of compliance, which is the opposite of the culture we now have.

I finally agree with "maybe the SRO model needs to be rethought"

all good

well done

[admin]

this post goes to a bit larger picture than the flogg, overall, but bear with me for one moment while I take you on a flight of fantasy.

Imagine sitting in a helicopter, in the hover, and pulling power without allowing any of the other controls to change.......up, up, up, but not away. Climb vertically several thousand feet (if you have the power) and gain some perspective on the overall landscape. If you have never done this, I urge you to pay $500 bucks to a flight instructor to give you a private spin in a helicopter before you die. You won't have experienced anything quite like it, but I digress. They say perspective is worth 50 IQ points and thus I need this from time to time.

The machine gets a lot harder to control in the hover as you rise from the ground, the reason is that you begin to lose visual references to judge your position by. The trees, the ground, fenceposts etc. All these become less useful at 3000 feet agl, but other things become clearer.

Here is what I intended to say to start with, and it relates to a "repair" of capitalism. There is a "bug" in the system and it should be worked out. And also, it is one public response to Mike Moore's plea for action in the wake of his good film, CAPITALISM, A LOVE STORY. Now if a guy could only contact mike moore?

Humanism. A new form of capitalism
The name is HUMANISM.
The game is how to improve Capitalism so that it can function as it should, without resorting to so much financial cannibalism of each other. So much greed, and so much financial abuse.

We have seen Communism. We have seen Socialism. We have seen Capitalism. They could all be defined this way:
In the first one, man is allowed to exploit his fellow man. In the other two it is just the opposite.

Humanism, on the other hand, is where human beings and human lives are given a place of importance. A priority if you will. How?
Humanism is Capitalism with accountability. With responsibility for ones actions. Not simply the kind we have now were the man with the most lawyers beats up the other man with the least. But real, societal support for fairness, and accountability. Where when one man is beaten or abused by another by capitalistic means, the entire society acts in a manner to correct this. Where predators are not simply allowed to prey on the weakest members of society at will.
Milton Freidman, the Nobel winning economist, with his "FREE TO CHOOSE" motto, left only one small item out. That item is the fact that with freedom comes responsibility. As we all tell our 16 year old son when we first give him the keys to the family car, "son, with this freedom, comes responsibility to behave and to act in a manner so as to not hurt anyone. You have a big responsibility and if you do not live up to it, you WILL lose this freedom". We need to put together a world where every one of us is told the same thing; "with economic freedom, comes a responsibility to behave in a manner appropriate". If you do not, you will be held to account.

Greed is good.......but not it if is used to hurt others. It all too often is allowed to.

Accountability means an entire new industry being introduced. An industry to ensure responsible humane behavior. To curtail the financially insane. To hold them to account for the damage done to other humans, or to the planet. It is an attempt to make our economy sustainable, and sustainable for more than just the top 1% of the population.

Who will pay for this industry? How will it function? See second thoughts on the topic at http://improvecapitalism.blogspot.com/
POSTED BY LARRY AT 5:23 PM 0 COMMENTS

[admin]

as one of the solutions that is being applied in other jurisdictions, see a Bill introduced into congress in April of this year.

It has been referred to in the bill as the "CONFLICTED INVESTMENT ADVICE PROHIBITION ACT OF 2009"

I describes how the current environment allows for investment account owners to have access to investment advisors who have self interests or conflicts of interest, and it goes about changing the rules and codes to compensate or protect the public interest from these conflicts of interest.

We could expect something similar in Canada, were it not for the fact that we only have five or six really large financial players, and they seem to be as effectively in control of our legislative process as the legislators are. Canada is the poster child for conflicts of interest and for not bothering to correct same.

search 111th congress, 1st session H.R. 1899 bill introduced by Mr. Andrews April 21, 2009

[admin]

from http://www.investmentnews.com
INVESTMENT NEWS is the USA's LEADING NEWS SOURCE FOR FINANCIAL ADVISORS


Dodd's financial reform bill would eliminate the ‘broker-dealer exemption'
Legislation would give SEC authority to allow principal trades
By Sara Hansard
November 10, 2009
Brokers who provide investment advice would no longer be exempt from registering as investment advisers under draft legislation unveiled today by Senate Banking Committee Chairman Christopher Dodd, D-Conn.
The 1,136-page discussion draft of financial reform legislation circulated by Mr. Dodd would eliminate the so-called “broker-dealer exemption” from the Investment Advisers Act of 1940. The exemption spares brokers from registering as advisers if the advice they provide to clients is “solely incidental” to selling products.

Under the draft, the Securities and Exchange Commission would be given rulemaking authority to allow brokers who provide advice to conduct principal trades that otherwise would be restricted under the Investment Advisers Act. Investors would have to be protected against conflicts of interest, and the SEC would have to determine allowing brokers to conduct such “prohibited transactions” is in the public interest.

The so-called “broker-dealer exemption” in the Investment Advisers Act of 1940 has long been contentious for investment advisers. In 2007, the Financial Planning Association won a major lawsuit against the SEC based on the provision. The U.S. Court of Appeals for the District of Columbia Circuit ruled that the SEC had incorrectly applied the exemption by allowing brokers who collect asset-based fees to escape from registering as advisers.

Adviser and consumer groups welcomed the Dodd approach to harmonizing adviser regulations.

“It would be a dramatic change,” said Mercer Bullard, president and founder of Fund Democracy Inc., a mutual fund shareholder advocacy group. “Virtually every broker-dealer would have to register as an investment adviser.”

Mr. Bullard said that eliminating the broker-dealer exemption would allow the SEC to increase scrutiny of firms that have escaped adviser registration. One such firm, such as Bernard L. Madoff Investment Securities LLC, perpetrated a massive Ponzi scheme over two decades.

“We think this is a sound approach,” said Neil Simon, vice president for government relations of the Investment Advisers Association, which represents federally registered advisory firms. “This would be a way to give brokers relief from provisions of the Advisers Act” that interfere with the business model of brokerage firms, Mr. Simon said.

Conducting principal transactions, in which brokers sell products to clients from their firm's inventory, is a major part of the brokerage business. Restrictions on principal transactions in the Investment Advisers Act have been a major stumbling block for brokers who want to provide investment advice to clients.

Like the proposed Investor Protection Act approved Oct. 28 by the House Financial Services Committee, the Dodd bill would require any financial service professional providing personal advice to act as a fiduciary.

However, the Dodd bill takes a different approach from the House bill. The House bill would require the SEC to write regulations defining the fiduciary standard for advisers. The Senate bill extends the fiduciary duty to broker-dealers by eliminating the broker-dealer exclusion, and otherwise leaves the Investment Advisers Act unchanged.

“It's the best and simplest approach,” said Dan Barry, director of government relations for the Financial Planning Association. “It makes it clear that the standard that applies to advisers and brokers is the same exact standard, the same exact remedies,” he said.

But the Securities Industry and Financial Markets Association continued to call for rewriting the fiduciary standard to harmonize standards for brokers and advisers. SIFMA supports “the creation of a new, federal fiduciary standard for broker-dealers and investment advisers when they provide personalized investment advice,” Kenneth Bentsen, executive vice president, public policy and advocacy, said in a release.

Adviser groups oppose creating a new fiduciary standard, which they fear would be weakened.

Unlike the House bill, Dodd's draft would allow the SEC to keep fees it collects to fund its operations. SEC Chairman Mary Schapiro has called for such a self-funding mechanism.

That would allow the agency to bypass the congressional appropriations process and it would increase the agency's funding considerably. The agency expects to collect $1.5 billion in fees for the fiscal year that began Oct. 1, SEC spokesman John Nester wrote in an e-mail. The Obama administration has proposed an SEC budget of just over $1 billion for the same fiscal year.

Under the proposed legislation, an Office of the Investor Advocate would also be created within the Securities and Exchange Commission.

The Office of the Investor Advocate would report directly to Congress annually on the 20 most serious problems encountered by investors in dealing with the SEC and the Financial Industry Regulatory Authority Inc., the length of time that each item has remained on the list, actions taken by the SEC or SROs to resolve the problems, and/or why actions have not been taken.

The head of the office would be the Investor Advocate. The Investor Advocate would be appointed by and report to the commission, but the officer would have the power to employ independent counsel, research and service staff that the officer would deem necessary to carry out the functions of the office.

“It creates a position with an enormous amount of clout,” said Mr. Bullard.

The Investor Advocate’s Office “would wield a very large club within the commission,” he said.

No such provision is contained in the Investor Protection Act approved Oct. 28 by the House Financial Services Committee.

[admin]

I received some feedback recently after a speech I gave on, “How To Make Financial Crime Pay”. It prompted me to write the following for the investing public, based on what I learned working over twenty years inside the investment industry.

The feedback referred to the Certified Financial Planning designation as if it were a license or a profession when sadly it is not.  Not yet at least. It is a correspondence course that anyone can take, with no minimum requirements.  It does not replace, improve, or over-rule the fact that nearly every single person calling themselves a CFP, CIM, or CF “anything” is being paid by sales commissions. An “eat what you kill” incentive plan. It might serve to mislead the public, however into believing otherwise and that unfortunately is the intent of some sellers. To mislead. To sell.

When I worked in the investment industry approximately 100% of persons selling financial products were legally licensed and registered in a category called “salesperson”.  However this name was always cleverly hidden from the public using the many other names financial salesmen call themselves. Some call themselves planners, some advisors, some consultants. Zero called themselves what they were licensed as. Zero referred to themselves by how they were paid. The public should be asking government why this is allowed. All licensed salespersons found methods to avoid using the “saleperson” word. In some circles that is called misrepresentation. In my financial industry this is called “standard industry practice”. Call your MP and MLA and tell them if this is no longer acceptable to your financial health.

The fact that many industry people might have taken a course, titled Certified Financial Planning, or any one of a thousand such courses anyone can take, has little to do with their license, their practice or their behavior.  I provided industry sales statistics in my speaking presentation that showed how most mutual funds are sold with the highest reward to the salesperson and the greatest penalty to the customer. This is not “advice”, nor is it financial planning. It is not even professional. This is predatory selling under the clever disguise of giving advice. It is also against the law and every code of conduct and industry rule. Again, sadly, this is the standard industry practice so people who should protect end up looking the other way. Having a Certified Financial “anything” course does not change this reality. It just makes misleading the public into parting with their money a bit easier. Many courses are simply used for marketing, to allow a salesman to proclaim a “sort of professional” status while operating totally as a commission product seller. 

To mistake the name of a “course” for a “profession” and to begin calling oneself a “certified financial planner” when ones license with the government says something else, and ones compensation comes from commissions, is just one of many sleight of hand misrepresentations that my speech included that permits financial crime to pay so well.  Using the same logic, should I be calling myself a Doctor, since I took a first aid course? The logic would be yes if we were talking about the investment industry. It would sell better.

Until members of the investment industry display an actual license on the wall in their office, the public will never know whether they are dealing with a salesperson, or a trusted professional advisor, or the brand new name given to nearly all 130,000 formerly licensed “salespersons” in Canada; “dealing representative”. Yes, the securities commission in your province cleverly and quietly just removed all reference to the word “salesperson” on Sept 29 of this year, and replaced it with “dealing representative”. I will let you think through the possible motivations of doing this, and while you are thinking this through, keep in mind that the salaries of each person at the provincial regulator are paid by fees charged to the industry they regulate, the investment industry.

Other developed countries have learned that one cannot both be a trusted professional advisor and a commission salesperson at the same time. Canada is a bit behind and is struggling to have it both ways as long as it possibly can. We have five major banks here who do over 90% of the investment business in the country and they very much enjoy the Canadian way of having your cake and eating it too.

Further info and background to this can be found at http://www.breachoftrust.ca as well as full video of the Southern Alberta Council speech titled “Making Financial Crime Pay” A How to Guide by a former industry insider.

Signed Larry Elford   (formerly a Chartered Financial Planner, Certified Investment Manager, Fellow of the Canadian Securities Institute and Associate Portfolio Manager, now retired)

[admin]

Investor protection is Priority No. 1

INVESTMENT EXECUTIVE, Canada's Newspaper for Financial Advisors
http://www.investmentexecutive.com/clie ... m=&nbNews=
The head of FAIR Canada says the new investor rights advocacy group is filling a necessary role


By Rudy Mezzetta

Ermanno Pascutto tends to be blunt when talking about Canada’s regulatory regime, especially when it comes to effecting change to protect individual investors and shareholders.

“Glaciers move faster than the pace of reform [in Canada],” says the executive director of the Canadian Foundation for Ad-vancement of Investor Rights, a Toronto-based investor and shareholder rights advocacy group launched last year.

As an example, Pascutto cites the efforts taken by regulators and investor advocates to get the financial services industry to adopt point-of-sale disclosure for mutual funds and segregated funds. “To produce a two-page fund disclosure document has taken a decade,” Pascutto says. “Is that reform?”

Pascutto wants FAIR Canada to grab the financial services industry’s attention and to help regulators shake off what he feels is complacency when it comes to protecting small investors. He is specifically critical of the Ontario Securities Commission.

“The people who run the OSC are all from the financial markets, which is not to say that they’re not well intentioned — I’m sure they’re trying to do a good job — but they don’t have a passion for protecting investors,” Pascutto says. “I think [the OSC] has ceased to be the investors’ advocate, and because it seems to have given up a lot of that role, I thought that created a gap that needed to be filled.”

But in testimony before the Ontario government’s standing committee on government agencies in February, OSC chairman David Wilson defended the OSC: “Everything we do at the OSC has, at its core, investor protection of one sort or another; not necessarily just retail investors [but] all investors — institutional investors, global investors and small individual investors. They all form the universe of investors. We think that our commissioners and our goals are all focused in the right direction.”

In responding to stakeholder presentations made to the standing committee, the OSC said it would be establishing an investor secretariat, a body within the OSC, to “better identify and address issues of concern to investors.”

Pascutto says he welcomes the OSC’s initiative and is pleased the OSC continues to engage in dialogue regarding retail investor issues. That said, the OSC is one of the regulatory bodies that has become a target for FAIR Canada’s criticism as the advocacy group tries to establish itself as a legitimate and effective voice for investor and shareholder rights.

FAIR Canada is very much a product of Pascutto’s efforts, an advocacy group he first envisioned while he was serving as an independent director with Market Regulation Services Inc., which later merged with the regulatory arm of the Investment Dealers Association of Canada to create the Investment Industry Regulatory Organization of Canada. Pascutto received a one-time, $3.25-million grant from IIROC, taken from the money collected in fines, to fund the new organization.

Pascutto is a lawyer and a veteran in the world of financial services regulation. After starting his career with Toronto law firm Osler Hoskin & Harcourt LLP, he joined the Toronto Stock Exchange in 1981, at which he served as director of market policy. He moved to the OSC in 1984, as executive director and head of staff. In 1989, he moved to Hong Kong to become the vice chairman of the securities and futures commission there, and, in the mid-1990s, he joined the Hong Kong office of Toronto-based law firm Goodman Phillips & Vineberg LLP before returning to Toronto in 1998. Prior to taking on the role at FAIR Canada, Pascutto worked as a senior advisor, first for Montreal-based Stikeman Elliott LLP and, most recently, with U.S.-based law firm Troutman Sanders LLP.

In the 16 months since FAIR Canada launched, it has tackled several shareholder concerns, such as advocating for shareholder approval on major transactions or criticizing TMX Group Inc.’s role as a regulator of listed companies now that TMX is a “for-profit” firm. But, Pascutto says, the bulk of FAIR Canada’s work has been on the retail inves-tor side, including pressing for more efforts at boosting financial literacy among Canadians and advocating for POS disclosure materials for funds.

Earlier this year, FAIR Canada gained much attention when it publicly criticized firms that sold leveraged exchange-traded funds for what FAIR Canada feels is inadequate disclosure given to potential inves-tors about the risks of investing in ETFs. The financial services industry has responded that the charges were unfair, saying that investors were being provided with adequate information about how the underlying portfolios of the ETFs worked and the potential risk and rewards of investing in the product.

Pascutto says that at the moment, FAIR Canada has two overriding goals: to advocate for more investor representation at the various regulators and to find ways of providing compensation and redress to victims of fraud and other forms of financial misconduct.

Pascutto says his organization is in favour of efforts to create a national securities regulator, but believes it would be of benefit to retail investors only if it adopts the investor protection recommendations made in the Expert Panel on Securities Regulation’s report, which was released this year. These include the creation of an investor panel at the national regulator and implementing improvements on how investors are compensated in cases of fraud.

FAIR Canada is also concerned about commissions-based advisor compensation, which creates a conflict of interest that doesn’t serve investors well, Pascutto says: “The interests of advisors and their clients are generally not aligned. That concerns us. Firms put pressure on advisors to sell products that generate high fees. And, often, that’s not in the best interest of the client.”

Pascutto says FAIR Canada wants to work with the financial services industry and regulators to look at different ways advisors can be compensated, including examining the ideas of banning commissions, something being considered in Australia and Britain (see story on page 1), and imposing a fiduciary duty on advisors, which is being considered in the U.S. Next spring, FAIR Canada will be participating in a conference to be held at the Toronto-based Hennick Centre for Business and Law, to look at how best to align the interests of advisors and clients.

“There are a lot of advisors out there who would like to sell products that are in their clients’ interests,” Pascutto says, “because they want to be in the business for the long run. They want to feel good about what they do.”

Pascutto has staffed FAIR Canada with two associate directors to assist him in designing policy and making submissions to relevant bodies, a research analyst and an office manager. The original funding for the organization is expected to run out at the end of 2012, but Pascutto hopes FAIR Canada will attract new funding to continue its efforts before then. For now, the top priority is becoming an effective body. “If we can show we’re having some impact,” he says, “that we’re providing bang for the buck, that means next year we’ll [be in a good position] to start looking for funding.”

Pascutto says he hopes to have FAIR Canada on more established footing, and to prepare a successor to take over from him, by next summer, at which time he hopes take a more limited role: retaining his position on the board and perhaps taking over as chairman. He hopes then to take a breather in order to pursue personal interests. IE

[admin]

White House pushes investor protection

Obama administration seeks new powers for the SEC to regulate compensation for investment advisors and other measures.

July 10, 2009: 3:47 PM ET
WASHINGTON (Reuters) -- The Obama administration on Friday proposed legislation to strengthen the Securities and Exchange Commission's investor protection authority, including the power to ban certain forms of compensation for brokers and investment advisers.

The SEC would get authority under the bill to establish consistent fiduciary standards for broker dealers and investment advisers and could ban bonuses or other forms of compensation for financial intermediaries that encourage them to steer investors into products that are not in the investors' best interests.

The bill, one of several financial regulatory reform bills sent by the U.S. Treasury to Congress this summer, also aims to improve disclosures to investors, close gaps in standards and pay whistleblowers for information that can be used in enforcement actions.

The bill comes just days after the administration proposed a new agency that would get sweeping powers to protect consumers on many financial products that fall outside of the SEC's jurisdiction.

The bill would give the SEC authority to require delivery of disclosures and prospectuses before investors buy into mutual funds, not after as is typically the case currently. The SEC could require a concise summary prospectuses and a simple disclosure form showing fund costs.

The SEC also would gain authority to establish a fund to pay whistleblowers for information leading to enforcement actions that result in significant financial awards. The money would come from penalties paid that are not distributed to investors.

"This authority will encourage insiders and others with strong evidence of securities law violations to bring that evidence to the SEC and improve its ability to enforce the securities laws," The Treasury said in a summary sheet on the legislation.

A new SEC investor advisory committee, which examines new products, trading strategies, fee structures and disclosures, would be made permanent under the legislation.

[admin]

Stromberg: Champion of change

Canadian Investment Awards: Career Achievement Award

Wednesday, December 2, 2009

By Megan Harman

Canadian Investment Guide 2010

In a world in which many people resist change, Glorianne Stromberg embraces it. A securities lawyer and former commissioner with the Ontario Securities Commission, Stromberg has been chosen for the Career Achievement Award because of her outstanding contributions to securities regulation and oversight of the investment funds industry.

Along the way, Stromberg has become known for her tenacity and dedication to identifying problems in the industry and her work to resolve them.

“I’ve always been ready and willing to do whatever I could to make things happen,” says Stromberg, now chairwoman of the Toronto-based Public Accountants Council for the Province of Ontario. “That’s just part of my nature.”

Stromberg, 70, became known for this strong-willed attitude during her stint as an OSC commissioner from 1991 to 1998 — a role she took on after decades of practising corporate and securities law at Cassels Brock & Blackwell LLP in Toronto. Midway through the 1990s, a time when mutual funds were rapidly gaining popularity, Stromberg was commissioned by Edward Waitzer, then chairman of the OSC, to undertake a review of the investment fund industry.

“At the time we undertook the review of the mutual fund industry, it wasn’t that anything was broken,” explains Waitzer, now a partner at law firm Stikeman Elliott LLP in Toronto. “The industry had grown way beyond its own expectations and way beyond the regulatory framework.”

Waitzer chose Stromberg as the best candidate to conduct the review because of her vast knowledge of the industry and the law, and her willingness to steer her own course. “Glorianne is fiercely independent, in terms of her thinking,” Waitzer says. “She listens to people, but she comes to her own view.”

The result of the review was a groundbreaking report entitled Regulatory Strategies for the Mid-’90s: Recommendations for Regulating Investment Funds in Canada. The report called for a slew of regulatory reforms, including the creation of a self-regulatory organization, improved corporate governance for investment funds and improved disclosure requirements, among others. A key theme underlying the recommendations was the need to protect individual investors and enhance consumer knowledge.

This theme was also prominent in two subsequent reports overseen by Stromberg: one on investment funds and consumer protection, commissioned by Industry Canada’s Office of Consumer Affairs; and another on financial services industry regulatory recommendations, prepared for the Organization for Economic Co-operation and Development’s committee on financial markets.

Investor rights groups have praised her work. The Markham, Ont.-based Small Investor Protection Association, an organization committed to fair practices in the investment industry, calls Stromberg a “SIPA Hero” for supporting the needs of small investors in her reports.

Some investors have even offered Stromberg their gratitude in person. On several occasions, Stromberg says, individuals have approached her in public to thank her for her work in advocating change. “To me,” she says, “that made it all worthwhile.”

But Stromberg’s recommendations were considered controversial among other groups. Many mutual fund industry players argued the industry was functioning well, and were unprepared for the extensive changes that Stromberg encouraged. “There was a natural inclination on the part of the industry to say, at the time: ‘If it ain’t broke, don’t fix it’,” says Waitzer. “So, there was some degree of antagonism.”

David Velanoff, president and CEO of Winnipeg-based MGI Financial Inc., who has been in the industry for more than 30 years, says Stromberg’s ideas were simply ahead of their time. “A number of her recommendations were very forward-thinking,” he says. “But probably at the time, they were a little radical in the eyes of the mutual fund industry.”

Upon gathering a group of industry representatives to provide feedback on the recommendations, however, the industry’s tone was more receptive. A steering group of industry players submitted a report to the Canadian Securities Administrators (CSA) in response to Stromberg’s 1995 report, and ultimately supported many of her recommendations.

“When we got together a group of industry leaders to work through it, there wasn’t a lot of substantive disagreement,” says Waitzer. “They basically validated most of what she said.”

As a result, several of Stromberg’s recommendations became the foundation for much of the regulatory reform that was eventually adopted, as well as for changes that are still being shaped. For example, creating a mutual fund industry self-regulatory organization became a key priority for the CSA following the reports, leading to the creation of the Mutual Fund Dealers Association of Canada in 1998. Efforts to improve disclosure requirements have also been underway in the years since her reports, and recently have moved closer to implementation.

Although Stromberg admits that progress on reform has been slow, she’s frustrated by the widespread skepticism within the industry regarding the possibility for change in areas such as securities regulation. “Instead of sitting on the sidelines doubting,” Stromberg says, “why don’t we roll up our sleeves and make sure it happens?”

Her advice for the industry is simple, a caution that is well to keep in mind in a rapidly evolving business: “Don’t be afraid of change.” Rather, she says, “Change before you have to.”

[admin]

Quebec to form squad to fight financial exploitation of seniors

The Montreal Gazette, December 8, 2009

The Quebec government rolled out a plan to fight the financial exploitation of seniors on Tuesday, saying far too many seniors are losing their savings to fraudsters like Vincent Lacroix and Earl Jones.

A four-page pamphlet advising seniors on how to avoid being a fraud victim will be published in several newspapers across Quebec on Saturday including The Gazette. About 50,000 copies of the pamphlet will be distributed to seniors’ organizations.
“Seniors groups have been asking the government for help,” Marguerite Blais, the Quebec minister responsible for seniors, said Tuesday at a press conference in Montreal.

Quebec Justice Minister Kathleen Weil said the Quebec Human Rights Commission will put together a squad of six (6) investigators who will look into allegations of financial exploitation. The squad will be up and running in April.

In the past eight months, the commission has received 50 requests to intervene in cases of alleged financial exploitation of seniors.

“As soon as someone calls with doubts about someone or suspicious behaviour, the squad will intervene and do an inquiry,” Weil said. “If it looks criminal, they will advise the police.”

..............article online at http://www.montrealgazette.com/Quebec+f ... story.html

[admin]

House votes to reform financial regulations
REPUBLICANS UNITE IN OPPOSITION
Crisis-inspired overhaul faces an uncertain future in Senate
By Brady Dennis
Washington Post Staff Writer
Saturday, December 12, 2009

More than a year after the near-collapse of Wall Street plunged the economy into crisis, a divided House on Friday approved the most sweeping overhaul of the nation's financial regulatory system since the Great Depression.

"We are sending a clear message to Wall Street: The party is over," House Speaker Nancy Pelosi said after the 223 to 202 tally, which failed to attract a single Republican vote.

The bill's passage marks a milestone in the Obama administration's efforts to rein in the abuses that contributed to the crisis and to prevent similar failures in the future. President Obama has called financial reform one of his top priorities, alongside health care and climate change. In a statement Friday, he said the legislation "brings us another important step closer to necessary, comprehensive financial reform," and he urged the Senate to act as quickly as possible.

The 1,279-page House bill would create a new federal agency dedicated to consumer protection, establish a council of regulators to police the financial landscape for systemic risks, initiate oversight of the vast derivatives market and give the government power to wind down large, troubled firms whose collapse could endanger the entire financial system. The legislation also would give shareholders an advisory say on executive compensation, increase transparency of credit-ratings agencies and set aside billions of dollars to aid unemployed homeowners.

Rep. Barney Frank (D-Mass.), who guided the bill through the House Financial Services Committee, compared the legislation to efforts in previous generations to expand the government's oversight of private enterprise.

"Innovation is generally a good thing. But in the absence of sensible regulation, it can cause abuses," he said. "And so I think this is, frankly, of the historic dimensions of what Theodore Roosevelt and Woodrow Wilson did, and what Franklin Roosevelt did."

House Republicans were unanimous in their opposition, saying that the bill would amount to an egregious overreach of government powers and leave unresolved many of the problems that led to the recent crisis. They argue that it would create unnecessary new layers of bureaucracy and stifle financial innovation.

"We are left with a perpetual Wall Street bailout bill," Rep. Jeb Hensarling (R-Tex.), an outspoken critic, said during Friday's debate. "We are left with a bill that will crush job creation at a time when our nation needs to be creating jobs. We have a bill that assaults the fundamental economic liberties of every American citizen."

Despite Friday's victory for administration officials, the elation won't last long. An uncertain road lies ahead in the Senate, where success requires a three-fifths majority and where support from key Democrats is far from certain.

Vision for reform
"We did not choose how this crisis began, but we do have a choice in the legacy this crisis leaves behind," President Obama said June 17, as his administration unveiled an 85-page white paper that laid out its vision for financial reform. From there, Frank steered versions of that blueprint through the House Financial Services Committee as lobbyists of all stripes descended on lawmakers in a furious effort to shape the outcome.

Consumer advocates pushed for more rigorous regulation, saying that the institutions responsible for wrecking the economy need strict supervision. Financial and business groups mounted multimillion-dollar attacks on the proposed consumer-protection agency and other parts of the bill, arguing that too much regulation could strangle both large and small firms.

The summer passed in a flurry of press releases and public statements, conference calls and letter-writing operations. There were rallies and protests, closed-door meetings and shoe-leather lobbying in the marble hallways of Congress. The U.S. Chamber of Commerce produced ads claiming that a new consumer agency would crack down on local butchers and bakers.

Faced with so many competing interests, Frank often was forced to compromise.

He cut a deal with the big banks, Republicans and moderate Democrats who objected to a provision that would allow state consumer protection laws to exceed federal standards. He exempted groups such as retailers, lawyers, auto dealers and real-estate brokers from oversight by the new consumer agency. He agreed to a proposal that would require financial firms to pay ahead of time into a fund that the government could use to wind down large, troubled institutions. He didn't fight a popular measure by Rep. Ron Paul (R-Tex.) that would subject the Federal Reserve to unprecedented scrutiny. He worked to placate members of the Congressional Black Caucus, who held up the bill in protest of the administration's handling of the economy.

Pelosi praised Frank on Friday as a "maestro" for the way he navigated the various legislative landmines. The maestro looked more disheveled than usual after three days of intense debate. He emerged from the House floor to handshakes and hugs from fellow Democrats, his belt pulled sideways, his shirt coming untucked, his eyes bleary. He thanked his staff and wound down a news conference saying, "I'm sure you're as worn out as we are."

Uncertain future
While Frank has done his part, the fate of regulatory reform remains in jeopardy.

"It's probably the third inning of this game," said Robert Litan, an economist and senior fellow at the Brookings Institution. "This is not going to be the bill that finally passes. Not all of it will survive."

By all accounts, the Senate presents a much tougher ballgame. There, financial lobbyists have said they plan to target a handful of moderate, business-friendly Democrats who have expressed skepticism about parts of the president's proposals in hopes of reshaping the final legislation next year.

The Senate Banking Committee only recently began to consider a 1,136-page bill by its chairman, Sen. Christopher J. Dodd (D-Conn.). It differs in significant ways from Frank's legislation and the administration's original vision, bulldozing the existing regulatory establishment, stripping power from agencies including the Federal Reserve and the Federal Deposit Insurance Corp., and erecting a triumvirate of new regulators with sweeping, unprecedented powers.

Edward Yingling, president of the American Bankers Association, said his group assumed that Frank would get a bill through the House despite industry opposition. But he and other financial industry lobbyists expect that final legislation would look quite different. "There is a possibly of getting a bipartisan bill in the Senate, but it will entail compromise. I think it would have to be modified significantly," he said.

Dodd has expressed a desire to reach bipartisan agreement, but Republicans have not endorsed his version of reform. Unless they can find middle ground, it would prove tough to round up the 60 votes necessary to avoid a filibuster.

One indication of the delicate road ahead came Friday in the waning moments of the House debate. An amendment from Rep. Walt Minnick (D-Idaho) to eliminate the proposed Consumer Financial Protection Agency and replace it with a council of existing regulators failed, but not before it garnered more than 30 votes from moderate Democrats. Like-minded Democrats in the Senate hold far more collective power and will play a central role in shaping any legislation with a prayer of passing.

[admin]

one positive move regarding confidentiality agreements:


Canadian securities regulators approve new complaint-handling rules proposed by IIROC /MFDA
In a Dec. 18 OSC Bulletin, the Ontario Securities Commission announced that it has approved the new rules and rule amendments required to implement new complaint-handling standards by the IIROC and the MFDA. The other regulators have ruled similarly. The objective of the proposed amendments is to establish minimum requirements for the client complaint handling process, and to harmonize them between the self-regulatory organizations and the Canadian Securities Administrators. Among other things, the IIROC rule requires firms to appoint a designated complaints officer, establish written procedures for dealing with complaints, it imposes deadlines (complaints must be acknowledged in five days, and clients must receive a substantive response in 90 days), and it prohibits settlement agreements from imposing confidentiality restrictions.OSC Bulletin http://www.oscbulletin.carswell.com/bb/ ... on3251.htm

finally, a step towards ending the industry code of silence by which it has hidden its bad deeds for far too long.

[admin]

further positives on complaint handling process:

http://www.oscbulletin.carswell.com/bb/ ... on3251.htm

INVESTMENT INDUSTRY REGULATORY ORGANIZATION OF CANADA

AMENDMENTS TO COMPLAINT HANDLING REQUIREMENTS - CLIENT COMPLAINT HANDLING RULE AND

GUIDANCE NOTE AND AMENDMENTS TO DEALER MEMBER RULES 19, 37 AND 2500

Amendments to version published for comment on February 13, 2009

PROPOSED AMENDMENTS

1. A new Dealer Member Rule and Guidance Note{1} on the complaint handling process are enacted as follows:

"RULE XXXX

Client Complaint Handling

1. Introduction

This rule establishes minimum requirements for the client complaint handling process including timely complaint resolution, record retention, and internal discipline. Clients who are considered to be institutional clients pursuant to Rule 2700 are not subject to this rule. There are additional requirements set out in Rule 3100 that are also applicable to the processes of handling client complaints.

2. General

A "complaint" subject to this rule must be submitted by a client or a person authorized to act on behalf of a client and is deemed to includeincludes:

• A recorded expression of dissatisfaction with a Dealer Member or employee or agent alleging misconduct; and

• A verbal expression of dissatisfaction with a Dealer Member or employee or agent alleging misconduct that would reasonably necessitate an investigation based on the circumstances of the complainant, or the nature or severity of the alleged misconductwhere a preliminary investigation indicates that the allegation may have merit.

Alleged misconduct includes, but is not limited to, allegations of breach of confidentiality, theft, fraud, misappropriation or misuse of funds or securities, forgery, unsuitable investments, misrepresentation, unauthorized trading relating to the client's account(s), other inappropriate financial dealings with clients and engaging in securities related activities outside of the Dealer Member.

Complaints are to be handled by sales supervisors or compliance staff (or the equivalent) and a copy must be filed with the compliance department / function (or the equivalent) of the Dealer Member.

A matter which is the subject of litigationa civil claim or arbitration is not considered a "complaint" for the purposes of this Rulerule.

3. Designated complaints officer

The Dealer Member must appoint an individual to act as the designated complaints officer. The individual must have the requisite experience and authority to oversee the complaint handling process and to act as a liaison with the Corporation.

4. Complaint procedures / standards

Establish written procedures for dealing with complaints

Dealer Members must have written policies and procedures to ensure that complaints are dealt with effectively, fairly and expeditiously. Such policies and procedures must address the following:

• the fair and thorough investigation of the complaint;

• the process by which an assessment is made regarding the merit of the complaint;

• where the complaint is determined to have merit, the process to be followed in determining what offer should be made to the client; and

• the remedial actions which may be appropriate to be taken within the firm.

Policies and procedures must not allow for complaints to be dismissed without due consideration of the facts of each case. There must be a balanced approach to dealing with complaints that objectively considers the interests of the complainant, the Dealer Member, the registered representative, employee or agent of the Dealer Member, and/or any other relevant parties. Each Dealer Member must ensure that registered representatives and their supervisors are made aware of all complaints filed by their clients.

Each Dealer Member must put procedures in place so that its senior management is made aware of complaints of serious alleged misconduct and of all legal actions.

Dealer Members must have policies and procedures in place to monitor the general nature of complaints. When a Dealer Member reasonably determines that the number and / or severity of complaints is significant, or when a Dealer Member detects frequent and repetitive complaints made with respect to the same matter which may on a cumulative basis indicate a serious problem, then internal procedures and practices must be reviewed, with recommendations to be submitted to the appropriate management level.to remedy any such systemic or recurring matters.

Client access to complaint process

At time of account opening, Dealer Members must provide new clients with:

• a written summary of the Dealer Member's complaint handling procedures, which is clear and can be easily understood by clients; and

• a copy of a Corporation approved complaint handling process brochure.

On an ongoing basis, Dealer Members must make available to their clients (either on their website or by other means) a written summary of the Dealer Member's complaint handling procedures, so that clients can stay informed on how to submit a complaint.

Complaint acknowledgement letter

The Dealer Member must send an acknowledgement letter to the complainant within five (5) business days of receipt of a complaint.

The acknowledgement letter must include the following:

(a) The name, job title, and full contact information of the individual at the Dealer Member handling the complaint;

(b) A statement indicating that the client should contact the individual at the Dealer Member handling the complaint if he / she would like to inquire about the status of the complaint;

(c) An explanation of the Dealer Member's internal complaint handling process, including but not limited to the role of the designated complaints officer;

(d) A reference to an attached copy of a Corporation approved complaint handling process brochure and a reference to the statutes of limitations contained in the document;

(e) The ninety (90) calendar days timeline to provide a substantive response to complaints; and

(f) A request for any information reasonably required to investigate the complaint.

Complaint substantive response letter

The Dealer Member must send a substantive response letter to the complainant. The substantive response letter must be accompanied by a copy of a Corporation approved complaint handling process brochure.

Dealer Members must respond to client complaints as soon as possible and no later than ninety (90) calendar days from the date of receipt by the firm. The ninety (90) days timeline must include all internal processes (with the exception of any internal ombudsman processes offered by an affiliate of the firm) of the Dealer Member that are made available to the client. The client must be advised if he / she is not to receive a final response within the ninety (90) days time frame accompanied by, including the reasons for the delay and the new estimated time of completion.

The Dealer Member is required to advise the Corporation if it is unable to meet the ninety (90) days timeline and must provide reasons for the delay.

The substantive response must be presented in a manner that is fair, clear and not misleading to the client, and must include the following information:

(a) A summary of the complaint;

(b) The results of the Dealer Member's investigation;

(c) The Dealer Member's final decision on the complaint, including an explanation; and

(d) A statement describing to the client the options available if the client is not satisfied with the Dealer Member's response, including:

(i) arbitration;

(ii) if a request is made within 180 days from the date of the Dealer Member's final response, the ombudsperson service (i.e. the Ombudsman for Banking Services and Investments);

(iii) submitting a regulatory complaint to the Corporation for an assessment of whether disciplinary action is warranted;

(iv) litigation / civil action; and

(v) other applicable options.

In addition, where an internal ombudsman process is offered by an affiliate of the Dealer Member, the Dealer Member must disclose in the substantive response letter:

(a) that the use of the internal ombudsman process is not mandatoryvoluntary; and

(b) the estimated length of time the process is expected to take based on historical data.

Duty to assist in client complaint resolution

Approved Persons must co-operate with Dealer Members where they were employed or acted as agent when moving to a different firm after events or activities resulted in a client complaint.

Dealer Members must co-operate with each other if events relating to a complaint took place at more than one Dealer Member or the Approved Person is an employee or agent of another Dealer Member.

5. Settlement agreements

A release entered into between a Dealer Member and a client may not impose confidentiality or similar restrictions aimed at preventing a client from initiating a complaint to the securities regulatory authorities, self regulatory organizations or other enforcement authorities, or continuing with any pending complaint in progress, or participating in any further proceedings by such authorities.

6. Complaint record retention

The complaint file must be maintained for seven (7) years and retrievable within a reasonable period of time.

Each Dealer Member must keep an up-to-date record in a central, readily accessible place of all recorded submissions and follow-up documentation received by it relating to the conduct, business, and affairs of the Dealer Member, or an employee or agent of the Dealer Member for a period of two (2) years from the date of receipt of the complaint.

The following information must be retained for each complaint:

(a) The complainant's name;

(b) The date of the complaint;

(c) The nature of the complaint;

(d) The name of the individual who is the subject of the complaint;

(e) The security or services which are the subject of the complaint;

(f) The materials reviewed in the investigation;

(g) The name, title, and date individuals were interviewed for the investigation; and

(h) The date and conclusions of the decision rendered in connection with the complaint.

7. Internal Discipline

Each Dealer Member must establish procedures to ensure that breaches of the Rules of the Corporation as well as applicable securities legislation are subjected to appropriate internal disciplinary measures.

{1} IIROC is in the midst of a project to rewrite its Rule Book. Should these proposals be made effective prior to the implementation of the new Rule Book format, the rule and the guidance note will be implemented on an interim basis using the existing rule numbering approach.

[admin]

INVESTMENT EXECUTIVE MAGAZINE Canada's Newspaper for Financial "advisors"

SEC to consider banning trailer fees

Protecting retail investors should be regulator’s top priority, Shapiro says

Friday, December 4, 2009

By James Langton

The head of the U.S. Securities and Exchange Commission says that retail investors should be the SEC’s top priority, that it will focus on improving point-of-sale disclosure, and will rethink whether trailer fees should be permitted.

Speaking to the Consumer Federation of America’s 21st annual Financial Services Conference, SEC chairman, Mary Schapiro, said that retail investors are the constituency that the SEC should “be most attuned”.

“After all, broker-dealers and investment advisers put lots of thought and energy into selling their products and services to the public. They figure out how they can get new investors in the door and how they can make a profit. So, I want to be sure that we — at the SEC — are putting just as much thought and energy into how to protect individuals who are entrusting their money to our capital markets,” she said.

“I want to know that we’ve thought through what investors encounter when they walk into a financial professional’s office or call them on the phone. For example: Does the investor make a distinction between brokers and investment advisers, the way the law does? Does the investor get the relevant, simple and comparable information at the point of sale or recommendation, or only after the sale has occurred, if at all? Does the investor know about all the fees they are being charged and whether they are getting the services they are being charged for? And, does the investor appreciate the nuances of retirement investments and products?” she said.

To address these concerns, the SEC is considering a variety of reforms. For one, it is planning to hold both broker-dealers and investment advisers to the same standard of care, imposing a fiduciary duty on them. “I believe that all securities professionals should be subject to the same fiduciary duty — and that all investors receiving advice should rest assured that the advice they get is being given with their interest at heart,” she said.

Additionally, she said that both types of firms should be subject to the same level of oversight. “This approach may disrupt a number of entrenched interests. But, we are doing no service to retail investors by continuing with a distinctly different regulatory approach for professionals who perform virtually the same or similar services,” she stressed.

Point-of-sale disclosure must also be improved, she said. “I believe retail investors should be provided clear, simple, meaningful disclosure at the time they are making an investment decision — disclosure that includes comprehensible and comparable information about the securities products and services being offered. It also should include information about the compensation the professional will receive on each product being sold — and information about the conflicts that may be causing the advisor or salesman to steer the investor to a certain investment,” she noted.

Schapiro admitted that this will not be easy, and that the financial industry will resist, but she stressed that it’s necessary. “Based on past experience, I know that getting to the point where we can have meaningful point of sale disclosure will be difficult. There will likely be significant pushback from the industry related to cost and convenience. But anything worth doing is not easy,” she said.

Related to the question of upfront disclosure, is the issue of trailer fees, or 12b-1 fees, as they are known in the U.S. “The problem is that our investor may have no idea these fees are being deducted or who they are ultimately compensating. That’s why I believe there needs to be a better approach,” she said.

“When it comes to these fees, there is a need for more fundamental change than merely disclosure reforms and a name change. We must critically rethink how 12b-1 fees are used and whether they continue to be appropriate,” she said. “For example, do they result in investors overpaying for services or paying for distribution services that they may not even know they are supposed to be getting?”

These fees amounted to more than $13 billion in 2008, up from just a few million dollars in 1980 when they were first permitted, she reported. “Of course, in 1980, they may have made sense — but after 30 years of growth and change in the mutual fund market, it is past the time to reassess their need and their effectiveness,” she said, adding that she has asked SEC staff for a recommendation on 12b-1 fees for the commission to consider in 2010.

Finally, she said that more effort needs to be applied to improving investor education and financial literacy. In particular, she has also asked SEC staff to provide the commission with its recommendations on target date funds early next year, noting that recent market losses have undermined the promise of these funds for investors near retirement.

“The ‘set it and forget it’ slogans of these funds resulted in shocked investors who were on the verge of retirement. It was a wake-up call for investors, employers and regulators, alike,” she said “Our staff has been focused on the marketing materials related to these funds and the use of target dates in fund names. I believe this an area in need of reform for the benefit of America’s retirement investors, and I look forward to completing the work we have started.”

[admin]

As I sit in my winter hideaway, dreaming of far off tropical locations, I came across this set of guidelines for duty of care, fiduciary duty, buyer or seller agent disclosure, etc. I thought it years ahead of the "no" disclosure required when selling investment products in Canada. We cannot even define what a salesperson or an advisor is, what duty of care is owed to a client. Very sad indeed.

simple real estate disclosures below:

Understanding the relationship between you and real estate agents can be confusing. Here are 6 things every home buyer or seller should know before working with a real estate agent.
1) What are the types of Agency?
Listing Agreements in which the Real Estate Agent represents the Seller.
Buyer Agency in which the Real Estate Agent represents the Buyer.
Dual Agency in which one Real Estate Agent represents both the Buyer and the Seller in a transaction.
2) What Is A Listing Agreement, and What Are Some Types of Listing Agreements?
A Listing Agreement is an agreement between a Broker and a Client.
Types Of Listing Agreements Include:
a) Exclusive Right To Sell Listing
The Broker has the exclusive right to market the property for the Seller and is paid the agreed-upon fee no matter who sells the property.
If the Owner sells the property with no help from the Broker, the fee must still be paid to the Broker.
b) Exclusive Agency Listing
The Broker is hired to act as the exclusive agent representing the owner and marketing the property for sale.
The owner will not have to pay the Broker a fee if the owner sells the property without the Broker’s assistance.
c) Open Listing (Nonexclusive/General Listing)
The property owner is not represented by any one Broker exclusively.
The property owner may use as many Brokers as necessary to sell the property.
No Broker will receive a fee if the owner sells the property without the assistance of any Broker.
3) What is the Multiple Listing Service (MLS)?
The Multiple Listing Service is a marketing service that allows Brokers to share information about listings.
Other Brokers may find a Buyer for a listed property, but the owner who has an agreement with the principal (the Seller) will earn a commission on the sale.
Other Brokers who facilitate a sale may or may not receive part of the commission depending upon their agreement with the Buyer.
4) What Is the Agent’s Responsibility To The Principal (Client)?
The Agent has a Fiduciary Duty to the Principal (Client), which may be a Buyer or a Seller. The Agent is the Fiduciary (Faithful Servant) of the Principal.
The Agent must represent the best interests of the Principal above all others, including the Agent’s own interests.
Brokers may be entrusted with funds such as the “earnest money” or “binder” that will be credited to the Buyer toward the down payment and eventually be transferred to the Seller. Other Buyer/Seller funds may also be held by the Broker.
The safekeeping of Client and Customer funds is part of their Fiduciary Duty of the Broker and all monies must be kept in a bank account separate from the Broker’s business or personal accounts to avoid commingling of funds, which is illegal, as is conversion, using Client or Customer funds to pay business or personal expenses.
5) What Are Fiduciary Duties?
A Real Estate Agent is bound by Fiduciary Duty to the Client, who may be the Buyer or the Seller.
The Primary Fiduciary Duties Are:
a) Care – Requires Agent To Use Their Best Effort and Skill To Help Their Client.
Suggesting that the Buyer Client hire a reputable Home Inspector.
Informing a Buyer Client about prices of other properties.
Helping a Seller Client determine the Property’s fair asking price.
Making every reasonable effort to market a Seller Client’s property.
b) Confidentiality (Provision of Fiduciary Duty)
Requires Agent to protect Client’s interest by keeping confidential all information that might harm the Client and personal information the Client wishes to keep private.
Even if the Agent believes that certain confidential information will not harm the Client’s interest if revealed, the information still must be kept confidential.
Examples of CONFIDENTIALITY:
A Seller Client has a strong desire to sell their property to generate money needed for some other purpose.
c) Disclosure (Provision of Fiduciary Duty)
A Buyer Client has the ability to pay more for a home than is offered, or needs to buy a house soon so their kids can be settled in for the school year.
Requires Agent to reveal all known facts that might benefit the Client.
Even information not requested by the Client, but known to the Agent, must be revealed to the Client if it might benefit them.
Examples of DISCLOSURE:
A Buyer Customer tells the Buyer Agent that he may have difficulty getting a mortgage and asks the Agent to keep the information private. The Agent must reveal this to the Seller Client.
d) Loyalty (Provision of Fiduciary Duty)
Requires Agent to put Client’s interest above all others, including the Agent’s own interest.
Examples of LOYALTY:
An Agent knows a Seller will take $400,000 for a property and the Agent’s Buyer Client wants to offer $410,000 to make a lower offer. Fiduciary Duty requires the Agent to tell the Client.
E) Obedience (Provision of Fiduciary Duty)
Requires the Agent to follow Client’s instructions as long as they are legal and ethical.
6) What Are the Agent’s Duties To the Customer?
While this article deals primarily with the Agent’s duties to their Client, the Agent also has duties to the Customer who wants to either buy or sell the property of the Agent’s Client.
Agent’s Obligations to Customer:
Honest and Fair Dealing – Agents must be honest with Customers, treat them fairly and properly account for all funds entrusted to the Agent.
Reasonable Care – The professional expertise and skills of the Agent must be utilized to assist the Customer to the extent that their Client’s interests are not compromised.
Disclosure of Material Facts – Important facts that may affect a Buyer’s decision about a house must be told to the Buyer, including structural problems, environmental hazards, leaks, mold, etc.

[admin]

Time to Start Putting the “Corporate Person” Behind Bars
Five new laws, suggested by representative Alan Grayson, would help to bring some sanity back to our political system and reign in the corporate criminals and their political graft that have nearly destroyed our system.



http://act.credoaction.com/campaign/gra ... cy/?rc=fbp


The only difference between Bernie Madoff and hundreds of other corporate criminals is that after years of hearing about his abuses, they had incontrovertible evidence, so the Justice department chose to act. Remember the mantra, “Too Big to Fail.” The addendum is “Too Big to Prosecute.”