The BMO announced today another $130 million writedown, bringing total writedown to date of $210 million, on investments in Apex Trust and Sitka Trust. This is a writedown of -30% of the original face amount for Apex Trust and Sitka Trust. The BMO warns that if there is no restructuring, it may need to right off the remaining $495 million balance of its investments in these two trusts. Apex Trust and Sitka Trust are not on the list of 22 frozen Non Bank ABCP under the Montreal Accord. Nonetheless, these BMO writedowns may be an indicator of the prospects for some of the frozen Non Bank ABCP trusts with underlying super senior positions having exposure to high quality diversified corporate debt within collateralized debt obligations. The leverage in some of these CDO's is causing massive marked to market impairment, despite their super senior positions and reference to high quality credit portfolios.
Globe and Mail - BMO to take $490 million charge, February 19, 2008
BMO also is taking an $130-million charge against its investment in Apex/Sitka Trust, a Canadian conduit for asset-backed commercial paper. This is in addition to an $80-million writedown it took on this investment in the fourth quarter.
The bank, which is scheduled to report its results on March 4, warned that it could face an additional pre-tax charge of about $495- million its entire net investment in the trust if talks under way with the aim of restructuring Apex/Sitka do not succeed. It added that it may provide additional support to the trust.
BMO Financial Group Media Release - Update on Apex/Sitka Trust, February 19, 2008
Apex/Sitka Trust
BMO is continuing its discussions with a number of counterparties on
restructuring alternatives for Apex/Sitka Trust. The conduit's underlying
positions are super senior positions with exposures to high quality
diversified corporate debt through collateralized debt obligations. The
ratings on these positions continue to be rated AAA, although they are under
review. Charges taken in BMO's fourth quarter 2007 and first quarter 2008 in
connection with Apex/Sitka Trust total $210 million, leaving BMO with a net
position of $495 million. The charges that BMO has taken reflect its
expectations with respect to the probability of Apex/Sitka Trust being
restructured. If Apex/Sitka is not restructured, it is expected that BMO would
incur an additional charge that would approximate its remaining net investment
of $495 million pre-tax. If BMO determines it is in its interest to do so, it
may provide additional support to Apex/Sitka Trust.
Diane Urquhart
Independent Analyst
Mississauga, Ontario
visit breachoftrust.ca for BREACH OF TRUST film info
E-MAIL us at investoradvocate@shaw.ca
ABCP's of stealing $32 Billion. Case study 2 for inquiry
incest is better than nocest, in Canadian financial "se
by admin » Thu Feb 21, 2008 11:09 am
Curious optics
Barry Critchley, Financial Post
Thursday, February 21, 2008
With all the regulatory actions launched in the U.S. into subprime matters, the question for Canadian investors is why hasn't the OSC waded in with its own inquiries into how $35-billion of asset-backed commercial paper became stranded, and whether rules, procedures and disclosures were not properly followed.
Of course, we likely wouldn't know if an investigation were underway, as the country's largest regulator likes to keep its activities close to its chest, but there are some curious optics that have come to our attention -- thanks to the research efforts of Diane Urquhart, an independent analyst -- that could explain what's going on.
More than two years back, Purdy Crawford, a lawyer with Osler Hoskin & Harcourt and a veteran of the world of securities regulation,
was named head of the nomination committee to name the next chair of the Ontario Securities Commission.
It selected David Wilson, former CEO of Scotia Capital Markets. Wilson was the first non-lawyer to hold the position at the body that "administers and enforces securities legislation in the Province of Ontario."
On Feb. 22, 2007, Wilson announced Lawrence Ritchie and James Turner as OSC vice-chairs.
"Both Mr. Ritchie and Mr. Turner have outstanding reputations, extensive experience in securities law and a keen interest in policy development," he said, noting both had worked at the OSC.
At the time, Ritchie was a partner with Osler, Hoskin & Harcourt, while Turner was a senior partner with Torys. What the release didn't say was the link between Crawford and Ritchie.
The link: Ritchie is married to Crawford's daughter, Heather.
Fast forward a few months to mid-August, when a liquidity crisis in the global debt markets caused Canada's $35-billion non-bank asset-backed commercial-paper (ABCP) market to seize up.
"The crisis was largely triggered by market sentiment as news of significant defaults on U.S. subprime mortgages spread, and not by the creditworthiness of the underlying assets of the ABCP," wrote Crawford in this paper last November.
Crawford noted that
"a group of market participants -- including financial institutions, institutional investors and international banks -- signed the Montreal Accord on Aug. 16, 2007, preventing the default of most third-party ABCP and the accompanying destruction of value that a 'fire-sale' liquidation would undoubtedly have caused. The Mont-real Accord led to the creation of a 'Pan Canadian Committee' of investors, which I was invited to chair."
A tentative workout plan was reached in December that is slated to be in place by next month. Most of the key details haven't been disclosed.
Back to Urquhart, who has written to the OSC wondering what it was doing on ABCP. The reply, dated Dec. 24, said,
"The OSC is actively reviewing the causes, circumstances and consequences of recent developments in the credit markets ... we are participating with a number of international organizations in assessing the various factors that have led to these developments."
But no enforcement actions. (To date, at least two ABCP-related lawsuits have been filed.)
Urquhart has expressed an opinion regarding the role of the regulator in allowing the issuance of the now-stranded ABCP: The
"securities commissions were enablers of DBRS being the only credit-rating organization providing credit ratings for the non-bank ABCP conduits and of DBRS providing top credit ratings."
bcritchley@nationalpost.com
Barry Critchley, Financial Post
Thursday, February 21, 2008
With all the regulatory actions launched in the U.S. into subprime matters, the question for Canadian investors is why hasn't the OSC waded in with its own inquiries into how $35-billion of asset-backed commercial paper became stranded, and whether rules, procedures and disclosures were not properly followed.
Of course, we likely wouldn't know if an investigation were underway, as the country's largest regulator likes to keep its activities close to its chest, but there are some curious optics that have come to our attention -- thanks to the research efforts of Diane Urquhart, an independent analyst -- that could explain what's going on.
More than two years back, Purdy Crawford, a lawyer with Osler Hoskin & Harcourt and a veteran of the world of securities regulation,
was named head of the nomination committee to name the next chair of the Ontario Securities Commission.
It selected David Wilson, former CEO of Scotia Capital Markets. Wilson was the first non-lawyer to hold the position at the body that "administers and enforces securities legislation in the Province of Ontario."
On Feb. 22, 2007, Wilson announced Lawrence Ritchie and James Turner as OSC vice-chairs.
"Both Mr. Ritchie and Mr. Turner have outstanding reputations, extensive experience in securities law and a keen interest in policy development," he said, noting both had worked at the OSC.
At the time, Ritchie was a partner with Osler, Hoskin & Harcourt, while Turner was a senior partner with Torys. What the release didn't say was the link between Crawford and Ritchie.
The link: Ritchie is married to Crawford's daughter, Heather.
Fast forward a few months to mid-August, when a liquidity crisis in the global debt markets caused Canada's $35-billion non-bank asset-backed commercial-paper (ABCP) market to seize up.
"The crisis was largely triggered by market sentiment as news of significant defaults on U.S. subprime mortgages spread, and not by the creditworthiness of the underlying assets of the ABCP," wrote Crawford in this paper last November.
Crawford noted that
"a group of market participants -- including financial institutions, institutional investors and international banks -- signed the Montreal Accord on Aug. 16, 2007, preventing the default of most third-party ABCP and the accompanying destruction of value that a 'fire-sale' liquidation would undoubtedly have caused. The Mont-real Accord led to the creation of a 'Pan Canadian Committee' of investors, which I was invited to chair."
A tentative workout plan was reached in December that is slated to be in place by next month. Most of the key details haven't been disclosed.
Back to Urquhart, who has written to the OSC wondering what it was doing on ABCP. The reply, dated Dec. 24, said,
"The OSC is actively reviewing the causes, circumstances and consequences of recent developments in the credit markets ... we are participating with a number of international organizations in assessing the various factors that have led to these developments."
But no enforcement actions. (To date, at least two ABCP-related lawsuits have been filed.)
Urquhart has expressed an opinion regarding the role of the regulator in allowing the issuance of the now-stranded ABCP: The
"securities commissions were enablers of DBRS being the only credit-rating organization providing credit ratings for the non-bank ABCP conduits and of DBRS providing top credit ratings."
bcritchley@nationalpost.com
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White Collar Crime Wave
by admin » Fri Feb 22, 2008 12:26 pm
Subprime Is Really SubCRIME:
America's Deeper Financial Crisis
By Danny Schechter, AlterNet
Posted on February 21, 2008
http://www.alternet.org/story/77375/
At long last, the Democrats are talking about the economy and the need for serious relief and reforms. The reason is simple. The people are feeling the squeeze.
Reports the Baltimore Sun:
"Since January alone, the public's perception about the state of the economy has plummeted -- with just 17 percent calling the nation's economy excellent or good -- down from 26 percent last month. The percentage rating the economy poor has grown from 28 to 45 percent."
Hillary Clinton and Barack Obama now have their instant 10-point plans and programs. They have dipped into John Edwards' tool chest for ideas on fighting poverty and listened to policy advisors who have come up with a laundry list of proposals for stop-gap measures from hikes in the minimum wage and middle-class tax cuts. All of these proposals will take time to implement and probably will be forgotten by the time one of them becomes president, if they do.
Meanwhile the economy is collapsing because of crimes and irresponsibility on Wall Street, and no one is really talking about that. An inequality gap and structural crisis compounded by profiteering in high places goes on and is largely ignored.
The media is not investigating the profiteers and, in fact, continues to contribute to the problem by accepting millions for dubious ads for more loans that end up getting more Americans in debt. Prosecutors are not prosecuting wrong doing. No fundamental new regulations and oversight are being proposed.
The candidates don't even seem to know the extent of damage that is being done by the subprime crisis and its assignees. Andrew Abraham reports:
Bank of America delivered a report last night highlighting the current losses of the "credit crisis." According to the report, the meltdown in the U.S. subprime real estate market has led to a global loss of $7.7 trillion in stock market value since October.
Quoting Bank of America's chief market strategist, Joseph Quinlan, the crisis, which has spread beyond U.S. shores to banks and other sectors worldwide, is "one of the most vicious in financial history."
That number again: $7.7 TRILLION. That phrase again: "the most vicious," that is, worse than 1929 and all the financial crises since.
Who is responsible for this, and who is being made responsible? Why aren't we talking about these massive losses and the growing debt burden? Why is this issue not on the political agenda save for the efforts of a few advocacy groups on the left and Ron Paul on the right?
It was discouraging when our government's leading critic of these practices got so discouraged that he quit last week. David Walker, the comptroller of the currency had warned back in 2005 (as reported in my film In Debt We Trust):
Continuing on this unsustainable path will gradually erode if not suddenly damage our economy, our standard of living and ultimately our national security.
And guess what? Just two years later, our economy was "suddenly damaged." The damage is "affecting our standard of living," and very few public officials or political candidates are connecting the dots. Why not?
When will we condemn the false prophets of the free market and their misguided policies? When will we indict those who cashed in on our country's misery?
Notes scholar Lionel Tiger:
Those who have been operating the managerial levers of the financial system have failed embarrassingly and massively to comprehend the processes for which they are responsible. They have loaned money avidly and recklessly to people who couldn't pay it back. They fudged data to get loans approved and recalculated. Then they sausaged fragile figments of money-reality into new "products" which could be sold around the world to investors eager to enjoy the surprising returns which often accompany theft, managerial incompetence and fraud. When it comes to responsibility for all this, there appears to be no one here but us spring chickens. Not only that, but the overseers of the bitter debacle may lose their jobs for a month but nonetheless fill their wheelbarrows with company money and "severance" when they leave to tide them over until the next corner office becomes available."
And what is to be done about this white-collar crime wave? At long last even shamed executives in the financial industry are joining those of us who long ago charged that subprime is really subcrime. Basil Williams, chief executive officer of Concordia Advisors, a hedge fund, says we need "a safety net for the innocent and a dragnet for the guilty."
Writing in the Record in Bergen County, N.J., he says that the greedy should pay to help the needy:
"The costs can be recouped by going after those who profited handsomely and unfairly from the multitude of transactions that touched the industry, including:
Mortgage brokers who originated loans to those who didn't understand the conditions, couldn't afford them and should not have qualified.
Appraisers who overvalued homes, knowing that the higher the value they gave a property, the more business they would reap from a dishonest broker.
Banks and brokerage firms that purchased, packaged and resold the mortgages for huge fees."
He goes on to discuss ratings agencies and more. This is a litany that the candidates and activists should sign on to.
With millions facing foreclosure, we have to expose those responsible and mount a movement for economic justice. It can be done. It should be done. Who is ready to stand up and organize a national mobilization to stop this outrage? Who is ready to fund it?
Who?
© 2008 Independent Media Institute.
All rights reserved.
View this story online at: http://www.alternet.org/story/77375/
America's Deeper Financial Crisis
By Danny Schechter, AlterNet
Posted on February 21, 2008
http://www.alternet.org/story/77375/
At long last, the Democrats are talking about the economy and the need for serious relief and reforms. The reason is simple. The people are feeling the squeeze.
Reports the Baltimore Sun:
"Since January alone, the public's perception about the state of the economy has plummeted -- with just 17 percent calling the nation's economy excellent or good -- down from 26 percent last month. The percentage rating the economy poor has grown from 28 to 45 percent."
Hillary Clinton and Barack Obama now have their instant 10-point plans and programs. They have dipped into John Edwards' tool chest for ideas on fighting poverty and listened to policy advisors who have come up with a laundry list of proposals for stop-gap measures from hikes in the minimum wage and middle-class tax cuts. All of these proposals will take time to implement and probably will be forgotten by the time one of them becomes president, if they do.
Meanwhile the economy is collapsing because of crimes and irresponsibility on Wall Street, and no one is really talking about that. An inequality gap and structural crisis compounded by profiteering in high places goes on and is largely ignored.
The media is not investigating the profiteers and, in fact, continues to contribute to the problem by accepting millions for dubious ads for more loans that end up getting more Americans in debt. Prosecutors are not prosecuting wrong doing. No fundamental new regulations and oversight are being proposed.
The candidates don't even seem to know the extent of damage that is being done by the subprime crisis and its assignees. Andrew Abraham reports:
Bank of America delivered a report last night highlighting the current losses of the "credit crisis." According to the report, the meltdown in the U.S. subprime real estate market has led to a global loss of $7.7 trillion in stock market value since October.
Quoting Bank of America's chief market strategist, Joseph Quinlan, the crisis, which has spread beyond U.S. shores to banks and other sectors worldwide, is "one of the most vicious in financial history."
That number again: $7.7 TRILLION. That phrase again: "the most vicious," that is, worse than 1929 and all the financial crises since.
Who is responsible for this, and who is being made responsible? Why aren't we talking about these massive losses and the growing debt burden? Why is this issue not on the political agenda save for the efforts of a few advocacy groups on the left and Ron Paul on the right?
It was discouraging when our government's leading critic of these practices got so discouraged that he quit last week. David Walker, the comptroller of the currency had warned back in 2005 (as reported in my film In Debt We Trust):
Continuing on this unsustainable path will gradually erode if not suddenly damage our economy, our standard of living and ultimately our national security.
And guess what? Just two years later, our economy was "suddenly damaged." The damage is "affecting our standard of living," and very few public officials or political candidates are connecting the dots. Why not?
When will we condemn the false prophets of the free market and their misguided policies? When will we indict those who cashed in on our country's misery?
Notes scholar Lionel Tiger:
Those who have been operating the managerial levers of the financial system have failed embarrassingly and massively to comprehend the processes for which they are responsible. They have loaned money avidly and recklessly to people who couldn't pay it back. They fudged data to get loans approved and recalculated. Then they sausaged fragile figments of money-reality into new "products" which could be sold around the world to investors eager to enjoy the surprising returns which often accompany theft, managerial incompetence and fraud. When it comes to responsibility for all this, there appears to be no one here but us spring chickens. Not only that, but the overseers of the bitter debacle may lose their jobs for a month but nonetheless fill their wheelbarrows with company money and "severance" when they leave to tide them over until the next corner office becomes available."
And what is to be done about this white-collar crime wave? At long last even shamed executives in the financial industry are joining those of us who long ago charged that subprime is really subcrime. Basil Williams, chief executive officer of Concordia Advisors, a hedge fund, says we need "a safety net for the innocent and a dragnet for the guilty."
Writing in the Record in Bergen County, N.J., he says that the greedy should pay to help the needy:
"The costs can be recouped by going after those who profited handsomely and unfairly from the multitude of transactions that touched the industry, including:
Mortgage brokers who originated loans to those who didn't understand the conditions, couldn't afford them and should not have qualified.
Appraisers who overvalued homes, knowing that the higher the value they gave a property, the more business they would reap from a dishonest broker.
Banks and brokerage firms that purchased, packaged and resold the mortgages for huge fees."
He goes on to discuss ratings agencies and more. This is a litany that the candidates and activists should sign on to.
With millions facing foreclosure, we have to expose those responsible and mount a movement for economic justice. It can be done. It should be done. Who is ready to stand up and organize a national mobilization to stop this outrage? Who is ready to fund it?
Who?
© 2008 Independent Media Institute.
All rights reserved.
View this story online at: http://www.alternet.org/story/77375/
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by admin » Tue Mar 04, 2008 7:04 pm
Larry Elford
Statement to the Scotiabank Annual General Meeting
By Reid Mosley, appointed proxy representative of Scotiabank shareowner Diane Urquhart
March 4, 2008, Edmonton, Alberta, 11: 45 a.m. Mountain Time
Audio statement is at the following webpage starting at time 1:44:15
http://events.onlinebroadcasting.com/sc ... ,20,2,lo,2
My name is Reid Moseley and I am one of 1400 individuals, who is suffering financial distress due to Non Bank Asset Backed Commercial Paper. Most of us are customers of Canaccord Capital and the Central Credit Unions, but these firms were retail sub-agents for Scotia Capital who sold them this flawed savings product. Many of us own Structured Investment Trust III, where the Bank of Nova Scotia is the issuing and paying agent.
The Montreal Accord solution of restructured long term notes is not going to help us. Scotiabank's participation in the $14 billion margin facility organized by Purdy Crawford is simply offering a lifeline for possible recovery of our money in seven years time. For this, your bank is getting 1.6% more annual fees and market rates of interest.
Scotiabank has the expertise and duty to know it was selling a flawed savings product to unknowing retail investors. Scotiabank executives took large bonuses from profits made. But, you did not administer and sell a savings product that performed according to its stated return and safety.
Most of us were shocked when our cash was not there to buy houses, to buy businesses, to settle estates for the care of our loved ones, and to pay for living expenses. We parked our cash for just 60 days, and now our plans are destroyed. In some cases, this is our life savings from our jobs or businesses we built.
Purdy Crawford has admitted to our group this week that he expects the restructured long term notes to trade at significant discounts to what we invested. No-one guarantees that we will get our money back in seven years.
National Bank bought, at full value plus accrued interest, the Non Bank ABCP of its retail customers in mutual funds and brokerage accounts. Scotiabank and other major banks appear to have bought the Non Bank ABCP owned by their direct retail customers. Canaccord Capital and the Central Credit Unions Group are either unable to afford making their retail customers whole, or for legal reasons have decided not to do so, in order to support their claim that they are not solely responsible for our damages. Already, Canaccord has added Scotia Capital Markets as a party to lawsuits brought by two of its retail clients.
I am very concerned that the banks want to create reputation and financial difficulties for their competitors, Canaccord Capital and the Central Credit Union Group. The banks do so, notwithstanding their extensive involvement and responsibility for the defective Non Bank ABCP, that they participated in and sold to Canaccord and the Central Credit Union Group.
Scotiabank needs to join Canaccord and the Central Credit Union Group in supplying cash to buy our commercial paper at par value. Lawsuits are not the answer for our personal financial distress. Lawsuits are well-founded and we will sponsor them, if necessary.
The shareowners of Scotiabank are not winners from the sale of defective savings products into the retail marketplace. Protracted litigation to mitigate Scotiabank losses from their multiple roles in Non Bank ABCP will only serve to damage Scotiabank's reputation to Canadians. Scotiabank either stands behind the savings products it administers and sells, or it does not. Which is it?
For additional information contact:
Spokespeople for Retail Owners of Non Bank ABCP:
Reid Moseley - cell phone 403-660-4888
Brian Hunter - cell phone 403-650-4960
Layne Arthur - cell phone 403-660-4888
Independent Analyst of Non Bank ABCP:
Diane Urquhart - telephone 905-822-7618
Statement to the Scotiabank Annual General Meeting
By Reid Mosley, appointed proxy representative of Scotiabank shareowner Diane Urquhart
March 4, 2008, Edmonton, Alberta, 11: 45 a.m. Mountain Time
Audio statement is at the following webpage starting at time 1:44:15
http://events.onlinebroadcasting.com/sc ... ,20,2,lo,2
My name is Reid Moseley and I am one of 1400 individuals, who is suffering financial distress due to Non Bank Asset Backed Commercial Paper. Most of us are customers of Canaccord Capital and the Central Credit Unions, but these firms were retail sub-agents for Scotia Capital who sold them this flawed savings product. Many of us own Structured Investment Trust III, where the Bank of Nova Scotia is the issuing and paying agent.
The Montreal Accord solution of restructured long term notes is not going to help us. Scotiabank's participation in the $14 billion margin facility organized by Purdy Crawford is simply offering a lifeline for possible recovery of our money in seven years time. For this, your bank is getting 1.6% more annual fees and market rates of interest.
Scotiabank has the expertise and duty to know it was selling a flawed savings product to unknowing retail investors. Scotiabank executives took large bonuses from profits made. But, you did not administer and sell a savings product that performed according to its stated return and safety.
Most of us were shocked when our cash was not there to buy houses, to buy businesses, to settle estates for the care of our loved ones, and to pay for living expenses. We parked our cash for just 60 days, and now our plans are destroyed. In some cases, this is our life savings from our jobs or businesses we built.
Purdy Crawford has admitted to our group this week that he expects the restructured long term notes to trade at significant discounts to what we invested. No-one guarantees that we will get our money back in seven years.
National Bank bought, at full value plus accrued interest, the Non Bank ABCP of its retail customers in mutual funds and brokerage accounts. Scotiabank and other major banks appear to have bought the Non Bank ABCP owned by their direct retail customers. Canaccord Capital and the Central Credit Unions Group are either unable to afford making their retail customers whole, or for legal reasons have decided not to do so, in order to support their claim that they are not solely responsible for our damages. Already, Canaccord has added Scotia Capital Markets as a party to lawsuits brought by two of its retail clients.
I am very concerned that the banks want to create reputation and financial difficulties for their competitors, Canaccord Capital and the Central Credit Union Group. The banks do so, notwithstanding their extensive involvement and responsibility for the defective Non Bank ABCP, that they participated in and sold to Canaccord and the Central Credit Union Group.
Scotiabank needs to join Canaccord and the Central Credit Union Group in supplying cash to buy our commercial paper at par value. Lawsuits are not the answer for our personal financial distress. Lawsuits are well-founded and we will sponsor them, if necessary.
The shareowners of Scotiabank are not winners from the sale of defective savings products into the retail marketplace. Protracted litigation to mitigate Scotiabank losses from their multiple roles in Non Bank ABCP will only serve to damage Scotiabank's reputation to Canadians. Scotiabank either stands behind the savings products it administers and sells, or it does not. Which is it?
For additional information contact:
Spokespeople for Retail Owners of Non Bank ABCP:
Reid Moseley - cell phone 403-660-4888
Brian Hunter - cell phone 403-650-4960
Layne Arthur - cell phone 403-660-4888
Independent Analyst of Non Bank ABCP:
Diane Urquhart - telephone 905-822-7618
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by admin » Wed Mar 05, 2008 12:26 am
Here is a back and forth between member of the facebook dicussion group on the ABCP crisis.
If I am correct in my understanding, the banks who were to be the backup guarantor to these things are now refusing to back these things up..........they are saying there has been no market disruption, which is a fair bit like lying through their teeth........... while investors are stuck with this bad paper.
This issue needs intervention by the government of Canada at the highest levels to restore confidence.........or else our five most solid Canadian banks look a lot like confidence artists.
discussion below:
I'm a little confused. Please help me.
This Pan-Canadian committee, which is made up of Canada's
Big Banks (most of them) and our favorite investor dealer, among others, has managed to freeze $33B in accounts for almost 7 months because these same Big Banks are arguing that a 'general disruption' has NOT occurred?
Because if a general disruption had occurred, they would be on the hook to provide liquidity? They sold this promise of liquidity to others for a fee, right?
-Jim
response..........That's correct. The banks took the position back in August that a general market disruption had not occurred, because bank-sponsored ABCP was still trading. Which it was - until yesterday. Perhaps this accounts for the silence from the Committee. If they were aware that BMO was about to run afoul of its sponsored ABCP, maybe discussions are now focusing on the repercussions from that, such as the potential requirement to now provide liquidity for the non-bank ABCP.
second question...........Sorry for being a little thick here Daryl, correct me if I'm wrong.
$33B in accounts have been frozen for almost 7 months. The banks are claiming a 'general disruption' has NOT occurred because their own paper is still trading.
If a 'disruption' had occurred, some of these banks would be on the hook to provide liquidity to Non-Bank ABCP's because they sold this liquidity as insurance to someone, somewhere, for a fee.
Now these same banks are major participants in this Pan-Canadian Committee to restructure Non-Bank ABCP because if this standstill agreement falls apart, they are on the hook for even more losses, because now they have pay up on the insurance they sold.
Am I out of line to suggest that this Pan-Canadian committee '7-10' proposal and their 'credit facility' in nothing more than a bold and brazen attempt to by the Big Banks and Caisse to limit their losses and shift the liabilities for their bad insurance underwriting to unsuspecting individuals (and companies) with the fewest resources to defend themselves?
This may be legal, but it is a long, long way from being ethical.
-Jim in The Hague
If I am correct in my understanding, the banks who were to be the backup guarantor to these things are now refusing to back these things up..........they are saying there has been no market disruption, which is a fair bit like lying through their teeth........... while investors are stuck with this bad paper.
This issue needs intervention by the government of Canada at the highest levels to restore confidence.........or else our five most solid Canadian banks look a lot like confidence artists.
discussion below:
I'm a little confused. Please help me.
This Pan-Canadian committee, which is made up of Canada's
Big Banks (most of them) and our favorite investor dealer, among others, has managed to freeze $33B in accounts for almost 7 months because these same Big Banks are arguing that a 'general disruption' has NOT occurred?
Because if a general disruption had occurred, they would be on the hook to provide liquidity? They sold this promise of liquidity to others for a fee, right?
-Jim
response..........That's correct. The banks took the position back in August that a general market disruption had not occurred, because bank-sponsored ABCP was still trading. Which it was - until yesterday. Perhaps this accounts for the silence from the Committee. If they were aware that BMO was about to run afoul of its sponsored ABCP, maybe discussions are now focusing on the repercussions from that, such as the potential requirement to now provide liquidity for the non-bank ABCP.
second question...........Sorry for being a little thick here Daryl, correct me if I'm wrong.
$33B in accounts have been frozen for almost 7 months. The banks are claiming a 'general disruption' has NOT occurred because their own paper is still trading.
If a 'disruption' had occurred, some of these banks would be on the hook to provide liquidity to Non-Bank ABCP's because they sold this liquidity as insurance to someone, somewhere, for a fee.
Now these same banks are major participants in this Pan-Canadian Committee to restructure Non-Bank ABCP because if this standstill agreement falls apart, they are on the hook for even more losses, because now they have pay up on the insurance they sold.
Am I out of line to suggest that this Pan-Canadian committee '7-10' proposal and their 'credit facility' in nothing more than a bold and brazen attempt to by the Big Banks and Caisse to limit their losses and shift the liabilities for their bad insurance underwriting to unsuspecting individuals (and companies) with the fewest resources to defend themselves?
This may be legal, but it is a long, long way from being ethical.
-Jim in The Hague
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by admin » Fri Mar 14, 2008 3:57 pm
Liberals demand review of ABCP crisis
Duncan Mavin, Financial Post
Published: Friday, March 14, 2008
Liberal finance critic John McCallum has filed a notice of motion that proposes to give retail investors in Canada's asset backed commercial paper market the chance to have their complaints heard in Ottawa.
The notice of motion, filed Thursday, asks for hearings on the ABCP crisis, "including hearing from severely affected Canadians."
If the hearings take place as proposed by Mr. McCallum, they will try to find out whether regulators and other stakeholders could have done a better job in anticipating the crisis and reducing its costs.
The notice also asks "what action the federal government, federal regulators and other stakeholders are taking so as to reduce the likelihood of experiencing a similar crisis in the future."
Canada's $33-billion ABCP market has been frozen since last summer when investors found they could not roll over the paper as planned.
A group of investors, banks and lawyers working on a restructuring are due to release details of their proposals on Friday.
Earlier this week, the Financial Post reported that the crisis in the non-bank asset-backed commercial-paper market could be nearing an end. Sources told the Post that the committee tasked with restructuring the notes plans to file papers in an Ontario court, seeking a judge's approval to implement a restructuring package agreed to in late December. Those plans have left some small investors concerned that their interests will be steamrollered by those of much bigger players.
Duncan Mavin, Financial Post
Published: Friday, March 14, 2008
Liberal finance critic John McCallum has filed a notice of motion that proposes to give retail investors in Canada's asset backed commercial paper market the chance to have their complaints heard in Ottawa.
The notice of motion, filed Thursday, asks for hearings on the ABCP crisis, "including hearing from severely affected Canadians."
If the hearings take place as proposed by Mr. McCallum, they will try to find out whether regulators and other stakeholders could have done a better job in anticipating the crisis and reducing its costs.
The notice also asks "what action the federal government, federal regulators and other stakeholders are taking so as to reduce the likelihood of experiencing a similar crisis in the future."
Canada's $33-billion ABCP market has been frozen since last summer when investors found they could not roll over the paper as planned.
A group of investors, banks and lawyers working on a restructuring are due to release details of their proposals on Friday.
Earlier this week, the Financial Post reported that the crisis in the non-bank asset-backed commercial-paper market could be nearing an end. Sources told the Post that the committee tasked with restructuring the notes plans to file papers in an Ontario court, seeking a judge's approval to implement a restructuring package agreed to in late December. Those plans have left some small investors concerned that their interests will be steamrollered by those of much bigger players.
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by admin » Sat Mar 15, 2008 5:06 pm
Breaking News from The Globe and Mail
ABCP players to seek bankruptcy protection
TARA PERKINS
Saturday, March 15, 2008
The committee working to untangle $33-billion of frozen commercial paper plans to ask an Ontario judge Monday to grant bankruptcy protection to the 20 trusts that issued the paper, as it works to restructure them.
Investors ranging from major corporations to provincial and territorial governments and private individuals have been stuck holding the paper since last August, when the U.S. subprime mortgage crisis tossed financial markets into a tailspin, causing the market for Canadian third-party asset-backed commercial paper to come to a screeching halt.
Three days after it nosedived, a group of major players, led by the Caisse de dépôt et placement du Québec, announced a plan to restructure the market. It involved converting the short-term paper into longer-term debt. To give the group time to hammer out the details and put the plan in place, the players agreed to a standstill period that essentially froze the market.
The committee, which has missed self-imposed deadlines, failed to unveil its final plan to investors yesterday, even though an agreement that was helping to keep the market frozen was to expire at midnight. A committee spokesman said they remained confident that the market would not descend into chaos.
The committee plans to file an application in Ontario Superior Court to put each of the 20 trusts under the protection of the Companies' Creditors Arrangement Act, a law that's normally used by companies that are trying to restructure under bankruptcy protection. CCAA prevents creditors from seizing assets and halts lawsuits against the company.
If the trusts are granted CCAA protection, the standstill agreements that are keeping the market frozen will remain in place “and provide note holders an opportunity to consider fully the committee's proposal in an informed way,” said Purdy Crawford, the Toronto lawyer who was parachuted into the situation months ago to lead the committee and to broker a solution.
Investors have been anxiously waiting for news. Garry Webber, a 59-year-old pastor in Calgary, says much of his retirement savings have been tied up.
“It's a significant chunk in my RRSP, which is what I'm ideally depending on for my future,” he said. “I had gone into the pastorate from business with the expectation of prudently investing my money. You don't get a whole lot as a pastor, but it would supplement what I did get.” One of the committee's major headaches in recent months has been securing bank support for a $14-billion emergency line of credit that would provide some security to the restructured market. The Canadian banks had been asked to commit to $2-billion, and a source said yesterday that the committee failed to meet its deadline yesterday because one of the banks wasn't yet ready to sign on the dotted line.
The situation is being closely watched by the Bank of Canada and finance officials.
As the restructuring drags on, it's still not clear exactly how much money Canadian investors will recoup. While the committee had hoped that those who hold the long-term notes until they expire would receive most of their value back, it's believed that investors who need to sell the paper quickly once the market's unfrozen could lose one-third or more.
With reports from Boyd Erman and Kevin Carmichael
© The Globe and Mail
ABCP players to seek bankruptcy protection
TARA PERKINS
Saturday, March 15, 2008
The committee working to untangle $33-billion of frozen commercial paper plans to ask an Ontario judge Monday to grant bankruptcy protection to the 20 trusts that issued the paper, as it works to restructure them.
Investors ranging from major corporations to provincial and territorial governments and private individuals have been stuck holding the paper since last August, when the U.S. subprime mortgage crisis tossed financial markets into a tailspin, causing the market for Canadian third-party asset-backed commercial paper to come to a screeching halt.
Three days after it nosedived, a group of major players, led by the Caisse de dépôt et placement du Québec, announced a plan to restructure the market. It involved converting the short-term paper into longer-term debt. To give the group time to hammer out the details and put the plan in place, the players agreed to a standstill period that essentially froze the market.
The committee, which has missed self-imposed deadlines, failed to unveil its final plan to investors yesterday, even though an agreement that was helping to keep the market frozen was to expire at midnight. A committee spokesman said they remained confident that the market would not descend into chaos.
The committee plans to file an application in Ontario Superior Court to put each of the 20 trusts under the protection of the Companies' Creditors Arrangement Act, a law that's normally used by companies that are trying to restructure under bankruptcy protection. CCAA prevents creditors from seizing assets and halts lawsuits against the company.
If the trusts are granted CCAA protection, the standstill agreements that are keeping the market frozen will remain in place “and provide note holders an opportunity to consider fully the committee's proposal in an informed way,” said Purdy Crawford, the Toronto lawyer who was parachuted into the situation months ago to lead the committee and to broker a solution.
Investors have been anxiously waiting for news. Garry Webber, a 59-year-old pastor in Calgary, says much of his retirement savings have been tied up.
“It's a significant chunk in my RRSP, which is what I'm ideally depending on for my future,” he said. “I had gone into the pastorate from business with the expectation of prudently investing my money. You don't get a whole lot as a pastor, but it would supplement what I did get.” One of the committee's major headaches in recent months has been securing bank support for a $14-billion emergency line of credit that would provide some security to the restructured market. The Canadian banks had been asked to commit to $2-billion, and a source said yesterday that the committee failed to meet its deadline yesterday because one of the banks wasn't yet ready to sign on the dotted line.
The situation is being closely watched by the Bank of Canada and finance officials.
As the restructuring drags on, it's still not clear exactly how much money Canadian investors will recoup. While the committee had hoped that those who hold the long-term notes until they expire would receive most of their value back, it's believed that investors who need to sell the paper quickly once the market's unfrozen could lose one-third or more.
With reports from Boyd Erman and Kevin Carmichael
© The Globe and Mail
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by admin » Sat Mar 15, 2008 5:10 pm
MP rallying support for asset-backed loans probe
thestar.com
Liberal wants voice for consumers hurt by crisis
Mar 15, 2008 04:30 AM
Rita Trichur
Business Reporter
Liberal finance critic John McCallum is urging other members of the House of Commons finance committee to heed the request of a B.C. couple and hold hearings on why non-bank asset-backed commercial paper was sold to Canadians.
Key opposition members confirmed yesterday they would support his request and urge their peers to do the same when meetings resume in two weeks.
McCallum's notice of motion asks the committee to "hold at least 12 hours of hearings" on the asset-backed-credit crisis, including testimony from "severely affected Canadians, representatives from the real estate sector and others."
The hearings should determine "whether federal regulators and other stakeholders could have done a better job in anticipating the crisis and/or reducing its costs; and what action the federal government, federal regulators and other stakeholders are taking so as to reduce the likelihood of experiencing a similar crisis in the future," McCallum wrote.
Committee members are expected to vote on the proposal at their next sitting on March 31.
McCallum's motion follows a letter from Mike and Wynne Miles of Victoria this week, beseeching members to hold hearings.
"It gives us some hope," Wynne Miles said in an interview. "We very much want to have an opportunity to explain to people, especially government officials, how this freeze of our retirement savings has affected our life."
She said hearings could give the government "some feeling of the emotional and financial stress this puts on us."
The Mileses claim to be among 1,400 ordinary investors with savings entangled in the frozen notes.
Wynne Miles also expressed concern the committee in charge of the Montreal Accord does not represent the interests of ordinary investors. The committee, led by Bay Street lawyer Purdy Crawford, is attempting to convert short-term debt into longer-term notes. Miles said ordinary folks can't wait seven to 10 years for their money. Crawford has previously said those who reject the deal would be "on their own."
MPs, however, are increasingly concerned about the plight of ordinary investors, Conservative Ted Menzies said. "I think we should have a serious look at this."
Those sentiments were echoed by the NDP's Thomas Mulcair. "These people, a lot of them are losing everything. And so we're going to try to get to the bottom of it," he said. "A lot of the individuals, they didn't even know their (money) was being put into these vehicles."
Meanwhile, the Crawford committee plans to file an application in Ontario Superior Court under the Companies' Creditors Arrangement Act on Monday. It wants the court to call a meeting of note-holders to vote on its plan to restructure 20 of the affected trusts, involving some $32 billion of notes.
"Given the progress we have made in resolving the outstanding issues, and the good relations with all stakeholders, we ... are confident we will be able to submit a plan for a comprehensive and simultaneous restructuring of all affected ABCP that will be of benefit to all noteholders," Crawford said yesterday.
thestar.com
thestar.com
Liberal wants voice for consumers hurt by crisis
Mar 15, 2008 04:30 AM
Rita Trichur
Business Reporter
Liberal finance critic John McCallum is urging other members of the House of Commons finance committee to heed the request of a B.C. couple and hold hearings on why non-bank asset-backed commercial paper was sold to Canadians.
Key opposition members confirmed yesterday they would support his request and urge their peers to do the same when meetings resume in two weeks.
McCallum's notice of motion asks the committee to "hold at least 12 hours of hearings" on the asset-backed-credit crisis, including testimony from "severely affected Canadians, representatives from the real estate sector and others."
The hearings should determine "whether federal regulators and other stakeholders could have done a better job in anticipating the crisis and/or reducing its costs; and what action the federal government, federal regulators and other stakeholders are taking so as to reduce the likelihood of experiencing a similar crisis in the future," McCallum wrote.
Committee members are expected to vote on the proposal at their next sitting on March 31.
McCallum's motion follows a letter from Mike and Wynne Miles of Victoria this week, beseeching members to hold hearings.
"It gives us some hope," Wynne Miles said in an interview. "We very much want to have an opportunity to explain to people, especially government officials, how this freeze of our retirement savings has affected our life."
She said hearings could give the government "some feeling of the emotional and financial stress this puts on us."
The Mileses claim to be among 1,400 ordinary investors with savings entangled in the frozen notes.
Wynne Miles also expressed concern the committee in charge of the Montreal Accord does not represent the interests of ordinary investors. The committee, led by Bay Street lawyer Purdy Crawford, is attempting to convert short-term debt into longer-term notes. Miles said ordinary folks can't wait seven to 10 years for their money. Crawford has previously said those who reject the deal would be "on their own."
MPs, however, are increasingly concerned about the plight of ordinary investors, Conservative Ted Menzies said. "I think we should have a serious look at this."
Those sentiments were echoed by the NDP's Thomas Mulcair. "These people, a lot of them are losing everything. And so we're going to try to get to the bottom of it," he said. "A lot of the individuals, they didn't even know their (money) was being put into these vehicles."
Meanwhile, the Crawford committee plans to file an application in Ontario Superior Court under the Companies' Creditors Arrangement Act on Monday. It wants the court to call a meeting of note-holders to vote on its plan to restructure 20 of the affected trusts, involving some $32 billion of notes.
"Given the progress we have made in resolving the outstanding issues, and the good relations with all stakeholders, we ... are confident we will be able to submit a plan for a comprehensive and simultaneous restructuring of all affected ABCP that will be of benefit to all noteholders," Crawford said yesterday.
thestar.com
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by admin » Sat Mar 15, 2008 5:39 pm
from www.canadianfundwatch.com
Abused ABCP investor speaks out at Bank of Nova Scotia Annual General Meeting Audio statement is at the following webpage starting at time 1:44:15
http://events.onlinebroadcasting.com/sc ... ,20,2,lo,2 Reid Moseley is one of approximately 1400 individuals, who is suffering from financial assault due to Non Bank Asset Backed Commercial Paper. Most are lients of Canaccord Capital and the Central Credit Unions, but these firms were retail sub-agents for Scotia Capital who sold them this flawed savings product. Many own Structured Investment Trust III, where the Bank of Nova Scotia is the issuing and paying agent. Most retail investors were shocked when their hard-earned savings was not there to buy houses, to buy businesses, to settle estates for the care of loved ones, and to pay for living expenses. They parked their cash for just 60 days, and now this life-altering fiasco is destroying lives. Financial assault lives.[ courtesy of Hugh Urquhart ]
Abused ABCP investor speaks out at Bank of Nova Scotia Annual General Meeting Audio statement is at the following webpage starting at time 1:44:15
http://events.onlinebroadcasting.com/sc ... ,20,2,lo,2 Reid Moseley is one of approximately 1400 individuals, who is suffering from financial assault due to Non Bank Asset Backed Commercial Paper. Most are lients of Canaccord Capital and the Central Credit Unions, but these firms were retail sub-agents for Scotia Capital who sold them this flawed savings product. Many own Structured Investment Trust III, where the Bank of Nova Scotia is the issuing and paying agent. Most retail investors were shocked when their hard-earned savings was not there to buy houses, to buy businesses, to settle estates for the care of loved ones, and to pay for living expenses. They parked their cash for just 60 days, and now this life-altering fiasco is destroying lives. Financial assault lives.[ courtesy of Hugh Urquhart ]
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by admin » Mon Mar 17, 2008 10:49 pm
http://www.youtube.com:80/watch?v=eIhpxKyBDcw
visit youtube for various interesting video comments on ABCP
visit youtube for various interesting video comments on ABCP
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by admin » Tue Mar 18, 2008 8:26 am
More individuals owning Non Bank ABCP are willing to speak on the record about how their brokers sold these flawed savings products to them and how their lives have become emotionally and financially distressed by Purdy Crawford's ultimatum: take the long term restructured notes and sign the blanket legal releases committing them not to sue the banks, the brokers and DBRS; or, be left on your own.
This is rock bottom low for the Canadian banks' conduct preying on the victims that they themselves financially assaulted. The banks created the shocking damages on individuals' life savings by manufacturing or distributing this flawed savings product into the unsophisticated retail market, when these banks had the expertise and duty of care to know the following:
(1) DBRS's credit rating was inflated and DBRS was paid a % of the Non Bank ABCP outstanding by the Non Bank ABCP trust sponsors;
(2) the Non Bank ABCP trusts were sold unlawfully without a prospectus upon Standard and Poors giving de facto ratings of below investment grade in its 2002 Report, "The Leap of Faith"; below investment grade does not meet the provincial securities act minimum standard for an approved credit rating from an approved credit rating agency;
(3) the liquidity agreements, or so-called bank guarantees, were of "limted use" causing the paper to be below investment grade according to Standard and Poors in The "Leap of Faith Report" in 2002, and the banks obviously knew this;
(4) the leveraged credit default swap contracts within the trusts imposed massive liabilities and the prospects for significantly impaired ABCP marked-to-market values; the Canadian bank distributors knew the international banks had the right to call margin and force default of the trusts, if the margin funding was not forthcoming. The Canadian bank distributors knew these international banks within the same trusts were the signatories to the "limited use" liquidity agreements. The Non Bank ABCP manufacturers and distributors knew the international banks could walk from their bank guarantees and have done so, even though they have not been able to do so in other countries of the world;
(5) the retail brokerage distributors, and the wholesale brokerage distributors who knew their Non Bank ABCP was specifically destined for redistribution by their retail sub-agent to unsophisticated individual customers, did not exercise their duty of care to sell suitable investments into the retail market;
(6) the retail brokerage distributors, and the wholesale brokerage distributors who knew their Non Bank ABCP was specifically destined for redistribution by their retail sub-agent to unsophisticated individual customers, are alleged to have received concrete material adverse information affecting the solvency and depleted net asset value of the trusts from the trusts' sponsors in the days and hours prior to their sale to the unsophisticated individual savings product customers; and, there was no public media release, nor any specific warning about the material adverse information to the unsophisticated individual savings product customers (and perhaps their brokers were also uninformed by the investment banks' senior executives who knew the product had become tainted.)
I hope that your media organization is able to interview these people and provide an indepth story about how the Non Bank ABCP is affecting them personally.
Court protection sets stage for new debt fight
TARA PERKINS
FROM TUESDAY'S GLOBE AND MAIL
MARCH 17, 2008 AT 9:32 PM EDT
"Mr. Crawford sought to head off what he knows will be one sore spot for some investors. These are blanket legal releases, which will be given to nearly all participants in Canada's third-party asset-backed commercial paper sector if the committee's current plan is approved. The releases would be extended to banks, credit rating agency DBRS Ltd. and brokers, in addition to the companies that created the paper, making it more difficult for investors in the sector to successfully sue them.
Some investors believe they have rights to sue parties on account of their losses, and that the releases would take those rights away, Mr. Crawford said in an affidavit filed in court yesterday. Some have told me they support the financial aspects of the plan, but do not wish to release the parties they believe should be held responsible to them for their losses.
I understand these views. However, negotiation of the plan has been the art of the possible, he said, explaining that some key players in the restructuring said they wouldn't participate without the releases."
"The committee expects some of the new longer-term notes that will be created by the restructuring will receive investment-grade ratings by DBRS. It attempted to obtain ratings from a second rating agency, but could not do so, Mr. Crawford said in his affidavit."
"It also said that the combined fees, costs and expenses for the plan including those for lawyers and advisors are expected to be about $80-million to $100-million."
List of Individual Non Bank ABCP Victims Willing to Speak on the Record to Media:
Ron Lawley (72 year old retired)
Nanaimo
Tel: 250-756-9819
rlawley@shaw.ca
Ken Markel
(Husband of individual victim Helen Ashlyn Huynh)
Vancouver
Tel: 604-304-9873
Cell: 480-747-2120
E-mail: kenmarkel@hotmail.com
Gary Webber (Pastor)
Calgary
Tel: 403-278-7481
Cell: 403-804-9998
Church: 403-250-5547
gwebber@telusplanet.net
Murray Candlish (Hog farmer)
Daysland, Alberta
Tel: 780-374-2243
candlish@telusplanet.net
http://www.youtube.com/watch?v=eIhpxKyBDcw
Brian Iler (Lawyer)
Iler Campbell LLP, Barristers & Solicitors
Suite 700, 890 Yonge Street
Toronto M4W 3P4
Work: (416) 598-0103 x114
Cell: (416) 835-4384
Fax: (416)598-3484
www.ilercampbell.com
Penny Caceres (72 year old retired)
Toronto
penny.caceres@gmail.com
Layne Arthur (Money from sale of second generation farm)
Sylvan Lake, Alberta
Tel: 403-660-4888
laynearthur@shaw.ca
Larry Caskey (retired businessman)
Edmonton
Tel: 780-487-1766
lcaskey@telusplanet.net
Nick Kovics (Chemical engineer and MBA student)
North Vancouver
Tel: 604-415-7225
Cell: 778-881-5474
nkovics@sfu.ca
Ryan Laudien
5647 Westport Road
West Vancouver, BC, V7W 1V2
Residence phone: 604 926 8905
Cellular phone: 604 607 5910
E-mail: relay@telus.net
Mike and Wynne Miles (Self-employed)
Victoria
Tel: 250-595-0653
Cell: 250-213-7465
mikemiles@shaw.ca
Ted McFeely (Energy businessman)
Calgary
Tel: 403-242-00273
Cell: 403-809-1761
emcfeely@shaw.ca
emcfeely@grandbanksenergy.com
Jill O'Hara (Legal firm employee)
Victoria
Tel: 250-294-5259
jill.ohara@shaw.ca
http://www.youtube.com/watch?v=c04VLlR1d8g
Yulan Wong (Retired real estate agent with estate for nieces tied up)
Vancouver
Tel: 604-872-0011
yulanwong@hotmail.com
Brian Hunter (Engineer)
Calgary
Tel: 403-650-4960
windyfield@hotmail.com
Angela Spelling (Homemaker)
Victoria
Tel: 250-382-3908
w_speller@hotmail.com
Reid Moseley (Retired teacher and small business owner)
Calgary
Tel: 403-399-2521
Bus Tel: 403-262-2397
rmoseley@odakim.net
http://www.youtube.com/watch?v=c04VLlR1d8g
For additional information contact:
Diane Urquhart
Independent Analyst
Mississauga, Ontario
Telephone: (905) 822-7618
Cell: (416) 505-4832
E-mail: urquhart@rogers.com
This is rock bottom low for the Canadian banks' conduct preying on the victims that they themselves financially assaulted. The banks created the shocking damages on individuals' life savings by manufacturing or distributing this flawed savings product into the unsophisticated retail market, when these banks had the expertise and duty of care to know the following:
(1) DBRS's credit rating was inflated and DBRS was paid a % of the Non Bank ABCP outstanding by the Non Bank ABCP trust sponsors;
(2) the Non Bank ABCP trusts were sold unlawfully without a prospectus upon Standard and Poors giving de facto ratings of below investment grade in its 2002 Report, "The Leap of Faith"; below investment grade does not meet the provincial securities act minimum standard for an approved credit rating from an approved credit rating agency;
(3) the liquidity agreements, or so-called bank guarantees, were of "limted use" causing the paper to be below investment grade according to Standard and Poors in The "Leap of Faith Report" in 2002, and the banks obviously knew this;
(4) the leveraged credit default swap contracts within the trusts imposed massive liabilities and the prospects for significantly impaired ABCP marked-to-market values; the Canadian bank distributors knew the international banks had the right to call margin and force default of the trusts, if the margin funding was not forthcoming. The Canadian bank distributors knew these international banks within the same trusts were the signatories to the "limited use" liquidity agreements. The Non Bank ABCP manufacturers and distributors knew the international banks could walk from their bank guarantees and have done so, even though they have not been able to do so in other countries of the world;
(5) the retail brokerage distributors, and the wholesale brokerage distributors who knew their Non Bank ABCP was specifically destined for redistribution by their retail sub-agent to unsophisticated individual customers, did not exercise their duty of care to sell suitable investments into the retail market;
(6) the retail brokerage distributors, and the wholesale brokerage distributors who knew their Non Bank ABCP was specifically destined for redistribution by their retail sub-agent to unsophisticated individual customers, are alleged to have received concrete material adverse information affecting the solvency and depleted net asset value of the trusts from the trusts' sponsors in the days and hours prior to their sale to the unsophisticated individual savings product customers; and, there was no public media release, nor any specific warning about the material adverse information to the unsophisticated individual savings product customers (and perhaps their brokers were also uninformed by the investment banks' senior executives who knew the product had become tainted.)
I hope that your media organization is able to interview these people and provide an indepth story about how the Non Bank ABCP is affecting them personally.
Court protection sets stage for new debt fight
TARA PERKINS
FROM TUESDAY'S GLOBE AND MAIL
MARCH 17, 2008 AT 9:32 PM EDT
"Mr. Crawford sought to head off what he knows will be one sore spot for some investors. These are blanket legal releases, which will be given to nearly all participants in Canada's third-party asset-backed commercial paper sector if the committee's current plan is approved. The releases would be extended to banks, credit rating agency DBRS Ltd. and brokers, in addition to the companies that created the paper, making it more difficult for investors in the sector to successfully sue them.
Some investors believe they have rights to sue parties on account of their losses, and that the releases would take those rights away, Mr. Crawford said in an affidavit filed in court yesterday. Some have told me they support the financial aspects of the plan, but do not wish to release the parties they believe should be held responsible to them for their losses.
I understand these views. However, negotiation of the plan has been the art of the possible, he said, explaining that some key players in the restructuring said they wouldn't participate without the releases."
"The committee expects some of the new longer-term notes that will be created by the restructuring will receive investment-grade ratings by DBRS. It attempted to obtain ratings from a second rating agency, but could not do so, Mr. Crawford said in his affidavit."
"It also said that the combined fees, costs and expenses for the plan including those for lawyers and advisors are expected to be about $80-million to $100-million."
List of Individual Non Bank ABCP Victims Willing to Speak on the Record to Media:
Ron Lawley (72 year old retired)
Nanaimo
Tel: 250-756-9819
rlawley@shaw.ca
Ken Markel
(Husband of individual victim Helen Ashlyn Huynh)
Vancouver
Tel: 604-304-9873
Cell: 480-747-2120
E-mail: kenmarkel@hotmail.com
Gary Webber (Pastor)
Calgary
Tel: 403-278-7481
Cell: 403-804-9998
Church: 403-250-5547
gwebber@telusplanet.net
Murray Candlish (Hog farmer)
Daysland, Alberta
Tel: 780-374-2243
candlish@telusplanet.net
http://www.youtube.com/watch?v=eIhpxKyBDcw
Brian Iler (Lawyer)
Iler Campbell LLP, Barristers & Solicitors
Suite 700, 890 Yonge Street
Toronto M4W 3P4
Work: (416) 598-0103 x114
Cell: (416) 835-4384
Fax: (416)598-3484
www.ilercampbell.com
Penny Caceres (72 year old retired)
Toronto
penny.caceres@gmail.com
Layne Arthur (Money from sale of second generation farm)
Sylvan Lake, Alberta
Tel: 403-660-4888
laynearthur@shaw.ca
Larry Caskey (retired businessman)
Edmonton
Tel: 780-487-1766
lcaskey@telusplanet.net
Nick Kovics (Chemical engineer and MBA student)
North Vancouver
Tel: 604-415-7225
Cell: 778-881-5474
nkovics@sfu.ca
Ryan Laudien
5647 Westport Road
West Vancouver, BC, V7W 1V2
Residence phone: 604 926 8905
Cellular phone: 604 607 5910
E-mail: relay@telus.net
Mike and Wynne Miles (Self-employed)
Victoria
Tel: 250-595-0653
Cell: 250-213-7465
mikemiles@shaw.ca
Ted McFeely (Energy businessman)
Calgary
Tel: 403-242-00273
Cell: 403-809-1761
emcfeely@shaw.ca
emcfeely@grandbanksenergy.com
Jill O'Hara (Legal firm employee)
Victoria
Tel: 250-294-5259
jill.ohara@shaw.ca
http://www.youtube.com/watch?v=c04VLlR1d8g
Yulan Wong (Retired real estate agent with estate for nieces tied up)
Vancouver
Tel: 604-872-0011
yulanwong@hotmail.com
Brian Hunter (Engineer)
Calgary
Tel: 403-650-4960
windyfield@hotmail.com
Angela Spelling (Homemaker)
Victoria
Tel: 250-382-3908
w_speller@hotmail.com
Reid Moseley (Retired teacher and small business owner)
Calgary
Tel: 403-399-2521
Bus Tel: 403-262-2397
rmoseley@odakim.net
http://www.youtube.com/watch?v=c04VLlR1d8g
For additional information contact:
Diane Urquhart
Independent Analyst
Mississauga, Ontario
Telephone: (905) 822-7618
Cell: (416) 505-4832
E-mail: urquhart@rogers.com
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immunity from prosecution??
by admin » Wed Mar 19, 2008 8:16 am
However, it was also disclosed that in connection with the restructuring, the banks, investment dealers and rating agencies such as DBRS that created the ABCP will be granted immunity from prosecution as a reward for supporting the restructuring.
(advocate comments........."immunity from prosecution" pretty much sums up the level of guilt among those who created, rated and sold these products upon an unsuspecting market. If they are granted such immunity it will confirm that the lunatics are indeed in charge of the asylum of Canadian financial markets)
Full article below:
Retail investors' vote key to ABCP restructuring
John Greenwood, Financial Post
Tuesday, March 18, 2008
Retail investors now hold the key to the unfreezing of $32-billion of seized-up asset backed commercial paper following on details released earlier this week concerning what amounts to the largest bankruptcy protection filing in Canadian history.
Among other things, it was disclosed that the key to the success of the restructuring lies with retail investors rather than big institutions because the plan must win support from more than 50% of note holders. Although players such as the Caisse de depot et placement du Quebec hold the lion's share of the affected paper by value, retail investors are far more numerous.
Ever since the rescue known as the Montreal proposal took shape last August, small investors have complained that their interests were being pushed aside in favour of the institutional players. Now, according to Purdy Crawford, the head of an investors committee overseeing the restructuring, their voices will be heard.
However, it was also disclosed that in connection with the restructuring, the banks, investment dealers and rating agencies such as DBRS that created the ABCP will be granted immunity from prosecution as a reward for supporting the restructuring.
"Key participants who are making a substantial and necessary contribution require the releases," Mr. Crawford said in an affidavit. "Simply put, there can be no [restructuring] unless these releases are included, and I believe the benefits of the plan, taken as a whole, justify the releases."
Most of the frozen ABCP is held by organizations such as the Caisse de depot, National Bank Financial and various government bodies. However, investors also include more than 1,600 individuals, many of whom were sold the notes by investment dealers and banks even though they may not have been part of the sophisticated investor category permitted under regulatory requirements to own the securities.
"I went ballistic when I saw the part about the legal release," said a small investor based in Toronto. "I couldn't believe they would let these guys off the hook."
"It's an extreme abuse of investors who were sold a savings product that was flawed," said Diane Urquhart, an independent analyst.
The noteholder vote is slated for the end of April, and observers say that given the ongoing turmoil in the credit markets and the level of investor sentiment, the result may be too close to call, at least for now.
As part of the restructuring, investors will receive longer term notes. Originally, the new notes were to have ratings from at least two rating agencies, but according to Mr. Crawford, they will have just one rating, from DBRS. Given that the bulk of the underlying assets will be highly complex credit default swaps that have fallen out of favour with investors, many observers expect they will trade well below face value.
The decision of whether to support the restructuring is "a bit of a high-stakes poker game," said Colin Kilgour, an industry consultant. "Either investors [support the plan and] take the new notes or they keep the bankrupt ABCP and pursue their legal options."
(advocate comments.....financial crime does indeed pay in Canada)
(advocate comments........."immunity from prosecution" pretty much sums up the level of guilt among those who created, rated and sold these products upon an unsuspecting market. If they are granted such immunity it will confirm that the lunatics are indeed in charge of the asylum of Canadian financial markets)
Full article below:
Retail investors' vote key to ABCP restructuring
John Greenwood, Financial Post
Tuesday, March 18, 2008
Retail investors now hold the key to the unfreezing of $32-billion of seized-up asset backed commercial paper following on details released earlier this week concerning what amounts to the largest bankruptcy protection filing in Canadian history.
Among other things, it was disclosed that the key to the success of the restructuring lies with retail investors rather than big institutions because the plan must win support from more than 50% of note holders. Although players such as the Caisse de depot et placement du Quebec hold the lion's share of the affected paper by value, retail investors are far more numerous.
Ever since the rescue known as the Montreal proposal took shape last August, small investors have complained that their interests were being pushed aside in favour of the institutional players. Now, according to Purdy Crawford, the head of an investors committee overseeing the restructuring, their voices will be heard.
However, it was also disclosed that in connection with the restructuring, the banks, investment dealers and rating agencies such as DBRS that created the ABCP will be granted immunity from prosecution as a reward for supporting the restructuring.
"Key participants who are making a substantial and necessary contribution require the releases," Mr. Crawford said in an affidavit. "Simply put, there can be no [restructuring] unless these releases are included, and I believe the benefits of the plan, taken as a whole, justify the releases."
Most of the frozen ABCP is held by organizations such as the Caisse de depot, National Bank Financial and various government bodies. However, investors also include more than 1,600 individuals, many of whom were sold the notes by investment dealers and banks even though they may not have been part of the sophisticated investor category permitted under regulatory requirements to own the securities.
"I went ballistic when I saw the part about the legal release," said a small investor based in Toronto. "I couldn't believe they would let these guys off the hook."
"It's an extreme abuse of investors who were sold a savings product that was flawed," said Diane Urquhart, an independent analyst.
The noteholder vote is slated for the end of April, and observers say that given the ongoing turmoil in the credit markets and the level of investor sentiment, the result may be too close to call, at least for now.
As part of the restructuring, investors will receive longer term notes. Originally, the new notes were to have ratings from at least two rating agencies, but according to Mr. Crawford, they will have just one rating, from DBRS. Given that the bulk of the underlying assets will be highly complex credit default swaps that have fallen out of favour with investors, many observers expect they will trade well below face value.
The decision of whether to support the restructuring is "a bit of a high-stakes poker game," said Colin Kilgour, an industry consultant. "Either investors [support the plan and] take the new notes or they keep the bankrupt ABCP and pursue their legal options."
(advocate comments.....financial crime does indeed pay in Canada)
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by admin » Wed Mar 19, 2008 5:50 pm
and now the "fix is in" as they say at the fights...................
Options dwindle for burned investors
March 19, 2008 | Mark Noble
Investor advocates say a restructuring plan approval vote is looking to be the only chance left for 1,600 retail investors to try to recover the money they invested in non-bank-sponsored asset-backed commercial paper.
Brian Hunter, a Calgary-based engineer, has $658,000 of his retirement savings frozen in ABCP in an account with Canaccord Capital. Hunter says he's one of about 1,400 retail clients with Canaccord Capital who was advised to purchase ABCP as an alternative to GICs and other guaranteed fixed income investments.
Hunter is one of the leaders of a growing group of ABCP investors seeking to get their money back from Canaccord. Monday's announcement by the Pan-Canadian Investors Committee for Third-Party Structured ABCP that protection had been granted under the Companies' Creditors Arrangement Act (CCAA) makes legal action against the firm virtually impossible.
If approved, the proposed restructuring deal would make all of the ABCP providers and sponsors immune from being sued by note holders. Hunter says the approval of the CCAA protection makes it impossible to go after them in the meantime. So unless retail note holders, each of whom gets a vote, turn down the approval agreement, they will lose all legal rights to go after their money.
"I had lined up a class-action lawsuit — you have to keep your options open, and that was absolutely the last resort. I had a lawyer who agreed to do that, but when I spoke to him this morning, he said he was backing off because he can't see his way through CCAA and what they have done there," Hunter says. "It's not just the trusts [we can't sue but] anybody, including all the banks that sponsored this — which is every one of them — including DBRS, including Canaccord, including Desjardins. They have taken the legal rights of everybody away."
If there are lawyers who can navigate CCAA, Hunter says, chances are they are already employed by the other side.
"I'm trying to find anybody who can represent me in court in Ontario, and that's not easy because anybody who knows anything about CCAA is already working with the vendors," he says.
Diane Urquhart, an independent financial analyst and vocal investor advocate, says by eliminating the legal recourse of investors, the proposed ABCP restructuring deal essentially protects corruption in Canada's financial system.
"It was sold without a prospectus, and I would say after having gone through the scene of the accident that non-ABCP was sold unlawfully into the whole market," Urquhart says.
To be sure, ABCP was an extremely complex financial product, which is why Urquhart says advisors who recommended the ABCP at Canaccord can't fully be blamed for recommending the investment vehicle, since it had high credit ratings from Dominion Bond Rating Service.
She says there is evidence to suggest ABCP should never have received investment-grade ratings in the first place because it had a flawed liquidity agreement backing it.
She points to a Standard & Poor's report from 2002 that outlines that the liquidity agreement underpinning commercial paper in Canada was insufficient. In the report, S&P says that liquidity agreements exist in Canada but that investing requires a "leap of faith" that liquidity will still be there if a crisis arises. As a result, S&P says it would not be possible to consider Canadian commercial paper investment grade.
"S&P indicated they had assessed the guidelines from the Office of the Superintendent of Financial Institutions and they had seen the content of the liquidity agreement behind the ABCP, and on that basis, they had determined that it was grossly deficient," Urquhart says. "There was not sufficient protection to give this an investment grade.
"Because this was short-term paper funding long-term assets, a liquidity crisis was inevitable, and OSFI would someday be sorry that they instructed the banks to offer such a liquidity agreement."
Urquhart says the banks that sponsored and distributed ABCP conduits are sophisticated enough to have realized this risk.
"I go back to the vendor, the financial institution that had a credit derivative research team, which likely had PhDs. To me it doesn't take a PhD to know that you have a flawed liquidity agreement," she says.
The 1,600 ABCP note holders do have the balance of power in the ABCP approval process, since they represent more than the majority of votes needed to pass, but the committee overseeing the restructuring has warned investors that if the deal falls through, investors risk losing everything. Instead, the committee has urged investors to hold on to the notes until maturity, at which time they might be able to recover most of their face value.
Urquhart estimates the majority of investors might get 60 cents on the dollar of their initial investment if they hold the notes for seven years. She doubts few, if any, will get all their money back.
"Using the estimated seven-year term of the proposed long-term notes and knowing how much credit spreads have gone up for AAA investment-grade credits, I would guess that the new notes will stabilize at 50 cents to 60 cents on the dollar, but all this depends on whether the material contracts within the trusts are released for independent examination to experts interested in buying or if indeed there are any buyers amongst the world's heavily damaged banks, hedge funds and other institutional investors," she says.
This solution doesn't help the contingent of retirees who invested in ABCP as a short-term income-generating vehicle — many of these investors need the money now.
Urquhart believes this could be solved if retail investors were remunerated by the banks that sponsored the ABCP, which she says is very costly, but they can afford to do it.
"These were being sold to these customers on the basis of being GIC and treasury bill substitutes with high credit ratings," she says. "The investment banks and their bank parents have had the means from the beginning and even now in light of the current damages to take this all — including pension funds and government funds — onto their own balance sheets. [They should do this] because they sold a flawed product."
Filed by Mark Noble, Advisor.ca, mark.noble@advisor.rogers.com
(03/19/08)
Options dwindle for burned investors
March 19, 2008 | Mark Noble
Investor advocates say a restructuring plan approval vote is looking to be the only chance left for 1,600 retail investors to try to recover the money they invested in non-bank-sponsored asset-backed commercial paper.
Brian Hunter, a Calgary-based engineer, has $658,000 of his retirement savings frozen in ABCP in an account with Canaccord Capital. Hunter says he's one of about 1,400 retail clients with Canaccord Capital who was advised to purchase ABCP as an alternative to GICs and other guaranteed fixed income investments.
Hunter is one of the leaders of a growing group of ABCP investors seeking to get their money back from Canaccord. Monday's announcement by the Pan-Canadian Investors Committee for Third-Party Structured ABCP that protection had been granted under the Companies' Creditors Arrangement Act (CCAA) makes legal action against the firm virtually impossible.
If approved, the proposed restructuring deal would make all of the ABCP providers and sponsors immune from being sued by note holders. Hunter says the approval of the CCAA protection makes it impossible to go after them in the meantime. So unless retail note holders, each of whom gets a vote, turn down the approval agreement, they will lose all legal rights to go after their money.
"I had lined up a class-action lawsuit — you have to keep your options open, and that was absolutely the last resort. I had a lawyer who agreed to do that, but when I spoke to him this morning, he said he was backing off because he can't see his way through CCAA and what they have done there," Hunter says. "It's not just the trusts [we can't sue but] anybody, including all the banks that sponsored this — which is every one of them — including DBRS, including Canaccord, including Desjardins. They have taken the legal rights of everybody away."
If there are lawyers who can navigate CCAA, Hunter says, chances are they are already employed by the other side.
"I'm trying to find anybody who can represent me in court in Ontario, and that's not easy because anybody who knows anything about CCAA is already working with the vendors," he says.
Diane Urquhart, an independent financial analyst and vocal investor advocate, says by eliminating the legal recourse of investors, the proposed ABCP restructuring deal essentially protects corruption in Canada's financial system.
"It was sold without a prospectus, and I would say after having gone through the scene of the accident that non-ABCP was sold unlawfully into the whole market," Urquhart says.
To be sure, ABCP was an extremely complex financial product, which is why Urquhart says advisors who recommended the ABCP at Canaccord can't fully be blamed for recommending the investment vehicle, since it had high credit ratings from Dominion Bond Rating Service.
She says there is evidence to suggest ABCP should never have received investment-grade ratings in the first place because it had a flawed liquidity agreement backing it.
She points to a Standard & Poor's report from 2002 that outlines that the liquidity agreement underpinning commercial paper in Canada was insufficient. In the report, S&P says that liquidity agreements exist in Canada but that investing requires a "leap of faith" that liquidity will still be there if a crisis arises. As a result, S&P says it would not be possible to consider Canadian commercial paper investment grade.
"S&P indicated they had assessed the guidelines from the Office of the Superintendent of Financial Institutions and they had seen the content of the liquidity agreement behind the ABCP, and on that basis, they had determined that it was grossly deficient," Urquhart says. "There was not sufficient protection to give this an investment grade.
"Because this was short-term paper funding long-term assets, a liquidity crisis was inevitable, and OSFI would someday be sorry that they instructed the banks to offer such a liquidity agreement."
Urquhart says the banks that sponsored and distributed ABCP conduits are sophisticated enough to have realized this risk.
"I go back to the vendor, the financial institution that had a credit derivative research team, which likely had PhDs. To me it doesn't take a PhD to know that you have a flawed liquidity agreement," she says.
The 1,600 ABCP note holders do have the balance of power in the ABCP approval process, since they represent more than the majority of votes needed to pass, but the committee overseeing the restructuring has warned investors that if the deal falls through, investors risk losing everything. Instead, the committee has urged investors to hold on to the notes until maturity, at which time they might be able to recover most of their face value.
Urquhart estimates the majority of investors might get 60 cents on the dollar of their initial investment if they hold the notes for seven years. She doubts few, if any, will get all their money back.
"Using the estimated seven-year term of the proposed long-term notes and knowing how much credit spreads have gone up for AAA investment-grade credits, I would guess that the new notes will stabilize at 50 cents to 60 cents on the dollar, but all this depends on whether the material contracts within the trusts are released for independent examination to experts interested in buying or if indeed there are any buyers amongst the world's heavily damaged banks, hedge funds and other institutional investors," she says.
This solution doesn't help the contingent of retirees who invested in ABCP as a short-term income-generating vehicle — many of these investors need the money now.
Urquhart believes this could be solved if retail investors were remunerated by the banks that sponsored the ABCP, which she says is very costly, but they can afford to do it.
"These were being sold to these customers on the basis of being GIC and treasury bill substitutes with high credit ratings," she says. "The investment banks and their bank parents have had the means from the beginning and even now in light of the current damages to take this all — including pension funds and government funds — onto their own balance sheets. [They should do this] because they sold a flawed product."
Filed by Mark Noble, Advisor.ca, mark.noble@advisor.rogers.com
(03/19/08)
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financial elder abuse in Canada,
by admin » Fri Mar 21, 2008 8:17 am
I try not to open too many new topics on this forum. As you can see there is already too large a variety to focus on, however as I read this latest article from the Vancouver Sun, this theme jumped out at me. I think professional, predatory practices which prey on the finances of the elderly pretty much sums up all the other topics on this forum, as well as explains some of my own problems of dealing with life. How can I work in a profession which allows, and too often encourages this predatory behavior on our seniors? The answer is that I cannot.
It (financial elder abuse) is something I have always been aware of, having worked inside the industry. Brokers have long known where the real investable dollars reside in Canada since that is where they make their living. Those over age 65 in Canada hold more than 75% of the wealth in this country according to stats Canada.
It is well known to those inside, that a senior, possibly a widow, without immediate family to guide him or her, is an easier person to gain the trust of, a more vulnerable person, and often, due to the generation they grew up in, a more trusting person. When you combine that with a game of risk (any game) such as investing, it can be decades or never before a person or thier sons and daughters find out that mom or dad was dealing with a predator, and not a pro.
The pros in my industry know this, and they are keenly aware of their responsibility and their obligation to respect and honor the trust of their clients. They may drink, argue, swear, spit and be human in all other ways, but a true financial professional has one common denominator, and that is that they place a great deal of value on the faith and trust that their customers grant to them. Not everyone does, however, and too often, I have witnessed the marching orders (or the defective investments) come down from the top. Sometimes investment people are forced to sell junk that they may not even know is junk, by managers and owners of these firms who know full well that they are peddling smoke and mirrors. I now speak to top research analysts who tell me stories of being forced (by top bank officials who are now top officials employed by our securities commissions) by bosses to give an investment report telling retail clients one story on an investment (that is is great stuff), while simultaneously instructing those in the firm who deal with valued institutions the exact opposite.
Imagine having a planned procedure, to dump the worst investment product you have ever run across, on your trusting and vulnerable retail clients, while protecting your valuable institutions. Been there, seen that. More than once. More than twice. More than I care to.
Remember, there is risk in this game, and losses can always be blamed on a myriad of "other" factors.
When you combine this kind of thinking (pathalogical greed) with an industry that polices itself, and where real criminal violations do not get the attention of real police (we regulate ourselves thanks) it puts Canada on a very unique and very slippery slope whereby the elderly in this country become very lucrative targets for nasty folks with an addiction to money.
Witness the ABCP crisis, where everyday clients have been badly sucked into the infinite vaccume of those with this money addiction. The ABCP crisis is just the latest, possibly the greatest, example of financial elder abuse. Of abuse which requires criminal acts of misrepresentation to which other police (or competition law officers) will not respond.
I may have touched on the topic of financial elder abuse "by trusted professionals" elsewhere and if I did, I will find the post and combine. I just had to write this down, now that the full effects of this classic case of elder abuse is unfolding.
To witness those "banksters" and brokers who peddled this product ask for creditor protection for this product, but first request immunity from prosecution perhaps proves my point, and for that I thank them. For once, they have shown the color of their ethics. I presume the color is red with embarassment, some guilt, some shame. For they have all but admitted to criminal violations of their duty to the customers they serve.
They have effectively helped me to prove my worst fears, that financial elder abuse is partially involved in Canada's largest financial scandal to date.
It (financial elder abuse) is something I have always been aware of, having worked inside the industry. Brokers have long known where the real investable dollars reside in Canada since that is where they make their living. Those over age 65 in Canada hold more than 75% of the wealth in this country according to stats Canada.
It is well known to those inside, that a senior, possibly a widow, without immediate family to guide him or her, is an easier person to gain the trust of, a more vulnerable person, and often, due to the generation they grew up in, a more trusting person. When you combine that with a game of risk (any game) such as investing, it can be decades or never before a person or thier sons and daughters find out that mom or dad was dealing with a predator, and not a pro.
The pros in my industry know this, and they are keenly aware of their responsibility and their obligation to respect and honor the trust of their clients. They may drink, argue, swear, spit and be human in all other ways, but a true financial professional has one common denominator, and that is that they place a great deal of value on the faith and trust that their customers grant to them. Not everyone does, however, and too often, I have witnessed the marching orders (or the defective investments) come down from the top. Sometimes investment people are forced to sell junk that they may not even know is junk, by managers and owners of these firms who know full well that they are peddling smoke and mirrors. I now speak to top research analysts who tell me stories of being forced (by top bank officials who are now top officials employed by our securities commissions) by bosses to give an investment report telling retail clients one story on an investment (that is is great stuff), while simultaneously instructing those in the firm who deal with valued institutions the exact opposite.
Imagine having a planned procedure, to dump the worst investment product you have ever run across, on your trusting and vulnerable retail clients, while protecting your valuable institutions. Been there, seen that. More than once. More than twice. More than I care to.
Remember, there is risk in this game, and losses can always be blamed on a myriad of "other" factors.
When you combine this kind of thinking (pathalogical greed) with an industry that polices itself, and where real criminal violations do not get the attention of real police (we regulate ourselves thanks) it puts Canada on a very unique and very slippery slope whereby the elderly in this country become very lucrative targets for nasty folks with an addiction to money.
Witness the ABCP crisis, where everyday clients have been badly sucked into the infinite vaccume of those with this money addiction. The ABCP crisis is just the latest, possibly the greatest, example of financial elder abuse. Of abuse which requires criminal acts of misrepresentation to which other police (or competition law officers) will not respond.
I may have touched on the topic of financial elder abuse "by trusted professionals" elsewhere and if I did, I will find the post and combine. I just had to write this down, now that the full effects of this classic case of elder abuse is unfolding.
To witness those "banksters" and brokers who peddled this product ask for creditor protection for this product, but first request immunity from prosecution perhaps proves my point, and for that I thank them. For once, they have shown the color of their ethics. I presume the color is red with embarassment, some guilt, some shame. For they have all but admitted to criminal violations of their duty to the customers they serve.
They have effectively helped me to prove my worst fears, that financial elder abuse is partially involved in Canada's largest financial scandal to date.
Last edited by admin on Fri Mar 21, 2008 8:34 am, edited 1 time in total.
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by admin » Fri Mar 21, 2008 8:18 am
Investors face a Catch-22
Owners with frozen savings can lose money -- or spend money
BY FIONA ANDERSON
Vancouver Sun
Thursday, March 20, 2008
CREDIT: Steve Bosch/Vancouver Sun
Yulan Wong of Vancouver is a Canaccord investor who has had her savings frozen.
VANCOUVER - Investors in British Columbia who put their money - and faith - in a Vancouver brokerage house, are now caught up in a financial nightmare.
Canaccord Capital Inc. put about 1,400 clients, many of them from B.C., in ill-fated asset-backed commercial paper. Those investors, and their almost $270 million worth of savings, have been stuck in a legal limbo since the paper was frozen last August after investors shunned the short-term debt because of concerns of possible links to U.S. sub-prime mortgages.
And now with a proposal to resolve the ABCP freeze expected to be sent to note-holders next month, the investors are faced with a Catch-22.
Under the plan, reached March 17, the short-term paper would be converted into new notes maturing as late as 2017. Once trading resumes, the new notes will likely trade at 60 cents to 80 cents on the dollar, according to analysts. For that discount, investors may have to give up the right to sue the banks, rating agencies and investment dealers who got them into the mess in the first place.
Or they could hold what were supposed to be short-term investments for eight years and hope to regain the full amount of their investment at that time.
The alternative is to vote against the plan, see the value of the notes drop even further, yet retain the right to spend thousands of dollars in legal fees, and years in court, to try to get their money back.
It's a lose-lose situation for investors who thought they were in risk-free, conservative investments.
Angela Speller, 61, is a homemaker who lives with her retired husband in Victoria. Before they bought the ABCPs, the majority of their investments were guaranteed investment certificates and Canada Savings Bonds. The money was the couple's life savings, and so the investments needed to be guaranteed, Speller said. They also needed to be liquid, so that money could be easily withdrawn to supplement the couple's pension income and to help their two children finish their education.
"My broker knew that these were savings and that I would not purchase anything unless it was triple A, a sure investment," Spelling said.
But about a year before the ABCP freeze, her broker at Canaccord recommended the new notes, which he assured Speller were no different than GICs, except they provided a slightly better interest rate. And Speller believes the broker thought that was true. But that means little now that her and her husband's life savings are virtually frozen, and may eventually be lost.
Speller would not give the amount at risk, but said it took 41 years to accumulate.
"It was our life savings, it was a fair amount," Speller said.
Yulan Wong is a 60-year-old retired realtor in Vancouver who had cashed out her securities in anticipation of her retirement. She also invested money on behalf of her niece. Together, the two have about $300,000 frozen in their Canaccord accounts.
And like Speller, Wong wanted risk-free investments, that were easily accessible.
With her experience in the real estate market, and knowing assets like houses can go up and down, Wong said she would never have knowingly invested in ABCPs.
"I don't like risky stuff," Wong said.
Now she may have to sell her house just to get some cash. And her plan to go to Australia to look after her mother is on hold.
"I don't have an income but a few hundred dollars," she said. "That's why I'm in a very bad situation."
Wynne Miles, 55, has been lobbying to get a Parliamentary committee to determine what went wrong. But the wording of the current proposal before the House of Commons is forward-looking - how to prevent a recurrence - rather than how to help those currently affected.
The Victoria woman and her husband are both self-employed so their savings are their sole means of support when they retire. That's why they kept the bulk of their investments, which are with Canaccord, in government bonds and GICs until last July.
Miles hasn't made up her mind yet whether she will vote for or against the proposal, but she knows lots of people who are opposed. After all, the plan was developed by the pension funds, lenders and other institutional investors, and is not suitable for retail investors, she said.
"We don't think the solution they're proposing is appropriate because we don't have deep pockets," Miles said. "We can't wait five or eight years to get our money back. We need our savings back now with interest."
Nor does she like having to give up her right to sue.
"I don't like it when someone takes my money and won't give it back and then offers me an ultimatum," she said.
Miles complains that to date she hasn't had a say in how to solve the mess. But now Miles and the other retail investors have the power to nix the proposal because under the plan, and the related bankruptcy proceedings, 50 per cent of noteholders must vote in favour. So while the retail investors hold only a small portion of the total amount in jeopardy, they outnumber the approximately 100 institutional investors at least 15 to one.
If those institutional investors want to assure Miles doesn't vote against the plan, they'll have to buy the ABCPs she holds with interest.
"Then I would no longer be a noteholder and I would no longer have a vote," she said.
"So if they buy out the retail holders the larger institutions would be assured of a majority on the vote," Miles said. "So buy us out," she urged.
Calgary-based Canaccord customer Brian Hunter has set up a Facebook site for individuals holding ABCPs. He too urges the institutional investors to buy out the little guys.
Why would investors with $12 billion at stake risk having small investors vote against it, he asked.
And that's his dream, that he gets bought out and gets his money back.
"Faced with no other alternative I would vote against it and take my chances at suing," Hunter said.
But Canaccord says it can't afford to do that.
"We don't have the ability or the capital base to buy out [the paper] directly from our clients," Canaccord's chief operating officer Mark Maybank said in a telephone interview with Bloomberg.
"I have huge amount of empathy for them in what's been a structural collapse of part of the Canadian capital markets,'' he added. "We're doing everything we can to help."
Maybank said Canaccord was working on a "relief program" for its clients. "I'm optimistic that we're going to be able to post a successful restructuring, identify market participants, potential buyers that we can work with to address the needs of our clients,'' he said.
Last week, Canaccord also hired an ABCP expert to advise its clients on the proposal.
But Canaccord's position contrasts with that of the National Bank of Canada, the country's sixth-biggest bank, which agreed last year to buy back about $2 billion of the commercial paper held by its consumer clients. Vancity and other financial institutions have also taken that step.
Credential Securities Inc., which offers its services to credit unions, also has an unknown number of retail clients holding ABCPs. Jane Mitchell, a spokeswoman for Credential in Vancouver, did not return a call from Bloomberg seeking comment.
Exact details of the restructuring plan have yet to be finalized, but investors are expected to be asked to vote on the proposal next month.
fionaanderson@png.canwest.com
With files from Bloomberg
© Vancouver Sun
Owners with frozen savings can lose money -- or spend money
BY FIONA ANDERSON
Vancouver Sun
Thursday, March 20, 2008
CREDIT: Steve Bosch/Vancouver Sun
Yulan Wong of Vancouver is a Canaccord investor who has had her savings frozen.
VANCOUVER - Investors in British Columbia who put their money - and faith - in a Vancouver brokerage house, are now caught up in a financial nightmare.
Canaccord Capital Inc. put about 1,400 clients, many of them from B.C., in ill-fated asset-backed commercial paper. Those investors, and their almost $270 million worth of savings, have been stuck in a legal limbo since the paper was frozen last August after investors shunned the short-term debt because of concerns of possible links to U.S. sub-prime mortgages.
And now with a proposal to resolve the ABCP freeze expected to be sent to note-holders next month, the investors are faced with a Catch-22.
Under the plan, reached March 17, the short-term paper would be converted into new notes maturing as late as 2017. Once trading resumes, the new notes will likely trade at 60 cents to 80 cents on the dollar, according to analysts. For that discount, investors may have to give up the right to sue the banks, rating agencies and investment dealers who got them into the mess in the first place.
Or they could hold what were supposed to be short-term investments for eight years and hope to regain the full amount of their investment at that time.
The alternative is to vote against the plan, see the value of the notes drop even further, yet retain the right to spend thousands of dollars in legal fees, and years in court, to try to get their money back.
It's a lose-lose situation for investors who thought they were in risk-free, conservative investments.
Angela Speller, 61, is a homemaker who lives with her retired husband in Victoria. Before they bought the ABCPs, the majority of their investments were guaranteed investment certificates and Canada Savings Bonds. The money was the couple's life savings, and so the investments needed to be guaranteed, Speller said. They also needed to be liquid, so that money could be easily withdrawn to supplement the couple's pension income and to help their two children finish their education.
"My broker knew that these were savings and that I would not purchase anything unless it was triple A, a sure investment," Spelling said.
But about a year before the ABCP freeze, her broker at Canaccord recommended the new notes, which he assured Speller were no different than GICs, except they provided a slightly better interest rate. And Speller believes the broker thought that was true. But that means little now that her and her husband's life savings are virtually frozen, and may eventually be lost.
Speller would not give the amount at risk, but said it took 41 years to accumulate.
"It was our life savings, it was a fair amount," Speller said.
Yulan Wong is a 60-year-old retired realtor in Vancouver who had cashed out her securities in anticipation of her retirement. She also invested money on behalf of her niece. Together, the two have about $300,000 frozen in their Canaccord accounts.
And like Speller, Wong wanted risk-free investments, that were easily accessible.
With her experience in the real estate market, and knowing assets like houses can go up and down, Wong said she would never have knowingly invested in ABCPs.
"I don't like risky stuff," Wong said.
Now she may have to sell her house just to get some cash. And her plan to go to Australia to look after her mother is on hold.
"I don't have an income but a few hundred dollars," she said. "That's why I'm in a very bad situation."
Wynne Miles, 55, has been lobbying to get a Parliamentary committee to determine what went wrong. But the wording of the current proposal before the House of Commons is forward-looking - how to prevent a recurrence - rather than how to help those currently affected.
The Victoria woman and her husband are both self-employed so their savings are their sole means of support when they retire. That's why they kept the bulk of their investments, which are with Canaccord, in government bonds and GICs until last July.
Miles hasn't made up her mind yet whether she will vote for or against the proposal, but she knows lots of people who are opposed. After all, the plan was developed by the pension funds, lenders and other institutional investors, and is not suitable for retail investors, she said.
"We don't think the solution they're proposing is appropriate because we don't have deep pockets," Miles said. "We can't wait five or eight years to get our money back. We need our savings back now with interest."
Nor does she like having to give up her right to sue.
"I don't like it when someone takes my money and won't give it back and then offers me an ultimatum," she said.
Miles complains that to date she hasn't had a say in how to solve the mess. But now Miles and the other retail investors have the power to nix the proposal because under the plan, and the related bankruptcy proceedings, 50 per cent of noteholders must vote in favour. So while the retail investors hold only a small portion of the total amount in jeopardy, they outnumber the approximately 100 institutional investors at least 15 to one.
If those institutional investors want to assure Miles doesn't vote against the plan, they'll have to buy the ABCPs she holds with interest.
"Then I would no longer be a noteholder and I would no longer have a vote," she said.
"So if they buy out the retail holders the larger institutions would be assured of a majority on the vote," Miles said. "So buy us out," she urged.
Calgary-based Canaccord customer Brian Hunter has set up a Facebook site for individuals holding ABCPs. He too urges the institutional investors to buy out the little guys.
Why would investors with $12 billion at stake risk having small investors vote against it, he asked.
And that's his dream, that he gets bought out and gets his money back.
"Faced with no other alternative I would vote against it and take my chances at suing," Hunter said.
But Canaccord says it can't afford to do that.
"We don't have the ability or the capital base to buy out [the paper] directly from our clients," Canaccord's chief operating officer Mark Maybank said in a telephone interview with Bloomberg.
"I have huge amount of empathy for them in what's been a structural collapse of part of the Canadian capital markets,'' he added. "We're doing everything we can to help."
Maybank said Canaccord was working on a "relief program" for its clients. "I'm optimistic that we're going to be able to post a successful restructuring, identify market participants, potential buyers that we can work with to address the needs of our clients,'' he said.
Last week, Canaccord also hired an ABCP expert to advise its clients on the proposal.
But Canaccord's position contrasts with that of the National Bank of Canada, the country's sixth-biggest bank, which agreed last year to buy back about $2 billion of the commercial paper held by its consumer clients. Vancity and other financial institutions have also taken that step.
Credential Securities Inc., which offers its services to credit unions, also has an unknown number of retail clients holding ABCPs. Jane Mitchell, a spokeswoman for Credential in Vancouver, did not return a call from Bloomberg seeking comment.
Exact details of the restructuring plan have yet to be finalized, but investors are expected to be asked to vote on the proposal next month.
fionaanderson@png.canwest.com
With files from Bloomberg
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