Politics and hungry lawyers help abuse the system for gain

[admin]

News Release from www.investoradvocates.ca

Larry Elford

Lethbridge Alberta

FOLLOW THE MONEY to find a partial cause of recent layoffs at the
University of Calgary

Starting at the layoffs at U of C, caused partially by a shorfall of
some $14 million dollars in their finances.

Step back one step to recall how they lost some $18 million in ABCP
(toxic Asset Backed Commercial Paper) which was sold to them as a
sound investment by an investment firm (s).

Step back one step from this to see that these investments DID NOT
meet Alberta Securities laws, and in fact had to be "exempted" from
the law in order to be sold in Alberta.

Step back one step to see that the ASC (Alberta Securities Commission)
sold these firms (Source Alberta Finance and Enterprise Dept) legal
permission slips to skirt our laws, thereby knowingly allowing tainted
and illegal investment products into our economy.

Step back one step to learn that the ASC earned up to $24 million in
fee revenue in 2009 from things like these exemptions (and other fees).

Step back one step to learn that Alberta Finance and Enterprise (in
charge of the ASC) is aware of these exemptions, and aware also that
they have had to bail out other institutions (Alberta Treasury
Branches were risking failure recently after placing 47% of deposits
into these failed investments, and prior to the Alberta Government
stepping in to save them)

Step back one step to ask Iris Evans why she is covering up these
issues and why she refuses to be accountable and responsible for
answering "what public interest is served" by allowing these
exemptions to be done to Albertans, behind closed doors.

It smacks of negligence and breach of trust by public officers, and in
light of the world financial crisis, should we be surprised to learn
that some financial regulators have crossed over the line and become
captured by the financial industry?

Iris Evans is avoiding answering the above questions. What is she
hiding? Where does the buck stop in Alberta?

Follow the money. Find the failures.

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

www.breachoftrust.ca doc film journey of similar "tricks of the
financial trade" learned during twenty years inside the industry

[admin]

Criminal Negligence (C.C.C. section 219 (1))



Criminal negligence

219. (1) Every one is criminally negligent who

(a) in doing anything, or

(b) in omitting to do anything that it is his duty to do,

shows wanton or reckless disregard for the lives or safety of other persons.

Definition of "duty"

(2) For the purposes of this section, "duty" means a duty imposed by law.

(applies to regulators and ministers responsible for those regulators who ignore their duties and instead serve a different master...........sometimes the master they choose is money, sometimes career advancement, etc)

[admin]

1. A recent letter to premier Ed Stelmach
Jan 17, 2009

To: Premier Ed Stelmach,

In a Jan 15th Globe and Mail newspaper article by Kevin Carmichael of Ottawa, you were quoted as saying that there has not been a scandal in the Canadian markets that would justify having government focus its energy on overhauling the securities system instead of the economy.

The Alberta Securities Commission (ASC) has knowingly allowed tainted investments to be sold in Alberta. Investments that did not meet our securities laws. Iris Evan’s department has admitted that there were 22 exemptions to our laws to facilitate the sale of ABCP and short term commercial paper. This has hurt our economy.

These tricks were done with the help of our very own crown corporation, the ASC, which calls into question the public interest value of this agency.
They were done in secret, which is why you may not be aware of them. Back-room deals, done between investment firms and the ASC, for a fee. There was no public notice, nor public input into allowing our laws to be violated. The ASC and the investment firms have effectively hidden vital information from the public on investments which have ended up costing billions of dollars. A scandal, done in secret is still a scandal.
The total economic costs of financial frauds and crimes against Canadians is growing to somewhere between $50 billion and $100 billion per year due to a failed securities regulatory system. (source, BREACH OF TRUST) These numbers are equal to two or three times the budget for Alberta. It is an economic tsunami, and you must deal with it.
The economic costs of frauds, abuses and crimes like these, against Canadians is, according to government of Statistics Canada and Justice Canada, greater than the costs of each and every other crime in Canada. Imagine ignoring financial damage sufficient to equal every robbery, auto theft, property crime, murder, mugging, break and enter etc., etc.

I have submitted to your finance minister, Iris Evans, two (2) case studies recently, that clearly illustrate how the Alberta Securities Commission has aided in pulling the wool over the eyes of the public while damaging the public. Damaging our economy.

In the interests of full, public discourse, I am asking you to open a provincial inquiry into these two case studies to show the public if there is any cause for concern. You will discover that there has been more than one scandal that justifies an overhaul of the securities system.

I thank you for your time and for your timely response to this matter on behalf of all Albertans.

Larry Elford (former CIM, CFP, FCSI, Associate Portfolio Manager, retired)
Executive Director of investoradvocates.ca

[admin]

Ponoka News
Aug 2009

Adam Eisenbarth

Something about the Alberta government isn’t sitting right with one man
from Lethbridge.
Larry Elford of Visual Investigations is imploring Albertans to wake up
and start making the provincial government accountable for their
actions, and he has plenty of evidence to back up his allegations.
Elford has no background in politics but has extensive knowledge of
“toxic investments” that have cost investors millions of dollars. He
wants answers from Finance Minister Iris Evans but has yet to receive
one.
Elford says several legal exemptions have been made on several occasions
so the government can turn around and make money off a fee.
“If you wanted to go and rob a bank, that’s against the law, you can’t
get permission to do that, but if a bank wants to rob you, you can go
and get permission to change the laws and sell something that is
otherwise illegal and all they have to do is prove that it’s in the
public interest in some way and they won’t answer that question.”
Lacombe-Ponoka MLA Ray Prins immediately shot down the accusations.
“This sounds really crazy, I won’t even comment on this.”
Prins also mentioned that several accusations are often thrown around
without any truth to them, and he has no knowledge of the toxic
investments and legal exemptions.
“I’m all for upholding the law.”
Finance Minister Iris Evans could not be contacted for explanations as
she was out of town.
Elford insists investment plans with no value have made their way into
Alberta, thanks to the irresponsibility of the government.
“The Alberta Securities Commission has 100 pages of legal exemptions on
their website. So that’s 100 pages of approximately some several
thousand times that they have exempted the law to a financial company
and they won’t tell you why they’ve done that and they won’t give you
any public notice of it because what they’ve done has affected your
retirement. You could have mutual funds, a royal trust, a bond or
anything in your investment portfolio. It could have not met our laws,
applied for it and received an exemption to get around our laws and you
could be the proud owner of that and they don’t have to tell you.”
Elford also has a letter from Alberta Finance that says there have been
legal exemptions to about 20 issuers.
“So they had applications from 20 different financial groups that were
packaging up this crap to sell to the public and they had to go through
the regulators and say, ‘This stuff doesn’t meet your requirements but
can we please have permission to violate your law?’
So why would the Alberta government allow these investments into the
province? Elford says the government is simply being irresponsible with
its power.
“The Alberta government earned $24 million last year, selling fee
revenue. One of those fees is selling permission to violate our law. I
can’t balance that with logic. How do we sell permission to violate our
laws?”
Elford says the toxic investments have cost the University of Calgary
$18 million, the City of Lethbridge $32 million and the Alberta Treasury
Branch nearly went under.
“The Alberta Treasury Branch, they were a failed institution after
putting 47 per cent of their money, your deposits, into toxic
investments that have no value. There’s been over $1 billion put into
that, it’s in the auditor general’s report.”
Elford says the cost of bailing out the Alberta Treasury Branch was a
major one, and it is likely part of the reason for Alberta’s recent
debt.
“So how do we have something that could have brought down the entire
Alberta Treasury Branch sold into Alberta when it didn’t meet our laws
to start with? That’s all they have to answer to and they won’t say.”
Elford has plenty of experience in the financial services. He had a
20-year career in the industry and he is hoping to give Albertans an
idea of the money woes the government is causing.
“Ive got an application in with the Alberta government to get a
provincial inquiry under the Provincial Inquiries Act. They don’t want
to have to investigate themselves so there’s not a lot that’s going to
happen there.”
Elford is doing his best to get through to the government as well.
“I’m going to ask them if they will explain themselves. They aren’t
answering questions very openly or very transparently and that’s an
answer unto itself. Unfortunately there’s an imbalance of power between
them and myself. I spent 20 years in the financial services industry, 17
years with RBC, so I’ve been in the business and I know that side of it
and I’ve found honesty is more often spoke of and less often practiced.
That’s not surprising, I think we all know that.”
Elford says the government has gone too far and Albertans will be paying
for it.
“It’s a sad tragedy when even good intentioned people get into power.
There becomes this ‘I will do anything to stay in power’ mentality, and
even if that means violating your own principles, you want to stay in
power. I have no political stripes whatsoever but I see a government
that’s in power 32 years and they don’t have to answer to anyone. They
are a power unto themselves and I feel there’s got to be a way to stand
up and ask them a question, even if it’s just to embarrass them. That’s
the only result I can see.”
Elford continues his movement to find an answer, one that he knows the
government won’t answer.
The question is simply Why? Why would you do that? And the answer has
been ‘None of your damn business.’”
Elford encourages people to check his website, breachoftrust.ca which
includes his appearance on CTV W5 and his Ottawa testimony.

[admin]

Here in Canada, we have a similar problem of lawyers feeding off the investment industry......advocate.

Madoff and the SEC's Revolving Door
By PAM MARTENS
The long-awaited investigative report by the Securities and Exchange Commission’s (SEC) Inspector General on how the SEC bungled multiple investigations of Bernard Madoff is set for release this week. Unfortunately, according to media reports, the long suffering investing public will not receive the report until the SEC itself has had a chance to review it.
The team that produced this report on one of the most long-running and convoluted frauds in the history of Wall Street included Inspector General H. David Kotz who came to the SEC-IG post in December 2007 after five years as Inspector General and Associate General Counsel for the Peace Corps. The Deputy Inspector General, Noelle Frangipane, also came to the SEC from the Peace Corps where she had served as Director of Policy and Public Information.
This lack of Wall Street cronyism by the top two in the Inspector General’s office might have been refreshing to some in Congress and compensated for their not knowing the difference between puts and calls and peaks and troughs and the intricacies of Mr. Madoff’s split-strike conversion strategy (he splits with your money while converting you to a pauper). But the background of the member of the team heading up the Inspector General’s Office of Investigations, J. David Fielder, should have rang serious alarm bells to Congressional investigators.
For the ten years leading up to July 2007, J. David Fielder worked for the SEC as a Senior Counsel in the Division of Enforcement. In February 1999, he moved to the Division of Investment Management, first as Senior Counsel on the Task Force for Adviser Regulation, then as Advisor to the Director. In November 2000, SEC Chairman, Arthur Levitt, appointed Fielder Counsel to the Chairman.
In July 2007, Mr. Fielder was invited to join the corporate law firm, Haynes and Boone LLP, as a partner. In other words, Mr. Fielder’s government issue rolodex filled with the names, home numbers and email addresses of his colleagues at the SEC along with the investigatory matters in his head is deemed fungible currency among corporate law firms and can be freely exchanged for partner status, instantaneously moving one from the lowly wages and attendant lifestyle of public servant to the rarefied bracket and luxuriant trappings of corporate law firm partner.
But what happened next is where things get interesting. In March 2009, just as the SEC Inspector General was hot in pursuit of Madoff aiders and abettors, Mr. Fielder gave up his lucrative partner status at Haynes and Boone to accept the lowly post of Assistant Inspector General of Investigations, working under a boss from the Peace Corps. In other words, he gave up big bucks for a demotion at the SEC.
What Mr. Fielder did might not raise alarm bells were it not happening on a regular basis throughout the corridors of Washington and Wall Street. To understand the implications, this maneuver deserves an appropriate name. A revolving door is assumed to mean one gets all the right connections as a public servant and cashes them in to the highest bidder in private industry. That concept doesn’t typically entertain the door revolving back to public servant status. On Wall Street, they call a maneuver like that a round trip: you buy 100 shares and eventually sell the same 100 shares. You end up back where you started: a round trip.
Just how many lawyer round trippers are involved in the Madoff investigation? Enough to raise a strong stench of circular corruption.
Linda Chatman Thomsen left the SEC in February and has now returned to the corporate law firm that represents many of the largest Wall Street firms, Davis Polk & Wardwell LLP. Ms. Thomsen, who served as head of Enforcement at the SEC, also achieved partner status in this round trip. Ms. Thomsen is married to Steuart Hill Thomsen, a partner in the law firm, Sutherland Asbill & Brennan LLP, which brags as follows in its brochure: “Many of our financial services attorneys have worked in the federal government, including regulatory agencies such as the SEC, FINRA and the Department of Justice.” Mr. Thomsen represents “many in the financial services industry” including “securities fraud cases.”
Linda Thomsen’s February 4, 2009 appearance before the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises left Chairman Paul E. Kanjorski (D-PA) and Committee Member Gary Ackerman (D-NY) smoldering over her smug attitude and refusal to answer questions. Congressman Ackerman erupted at one point, telling Ms. Thomsen and her colleagues: “You have single handedly diffused the American public of any sense of confidence in our financial markets if you are the watchdogs…”
Congressmen Kanjorski and Ackerman’s outrage was set off by earlier testimony that day from whistleblower Harry Markopolos who presented the multi year, documented complaints he had filed with the SEC advising that the Madoff operation was a giant Ponzi scheme, without any serious action on the part of the SEC. Markopolos said the agency “roars like a mouse, bites like a flea” and “when an entire industry you were supposed to be regulating disappears due to unregulated, unchecked greed, then you are both a captive regulator and a failed regulator….”
On May 14, 2009, Wayne Jett, Managing Principal and Chief Economist of Classical Capital LLC summed up Ms. Thomsen’s more recent SEC tenure as follows in a published letter to the SEC:
“As SEC's director of enforcement, Thomsen presided over the firing of her investigating attorney, Gary Aguirre, in 2005 shortly after Aguirre disclosed to Paul Berger, Thomsen's immediate subordinate, evidence of insider trading by a hedge fund. Berger learned that Aguirre's evidence pointed to Wall Street player John Mack [the head of Morgan Stanley] as the "tipper" in insider trading by Pequot Capital, a major hedge fund. Berger fired Aguirre and closed the investigation of Pequot…
After a statute of limitations expired foreclosing further action against Mack, Berger resigned from the SEC to accept a position with a major Wall Street law firm -- the same law firm which had contacted the SEC on behalf of investment bank Morgan Stanley to inquire whether Mack was exposed to any pending investigation. Berger pursued his new position as he exercised authority in the Pequot investigation and in the inquiry by Morgan Stanley.
Two Senate committees investigated Aguirre's firing and a joint minority report found appearances of impropriety. The report was followed by resignations of the SEC's inspector general, chief economist and three commissioners. A new SEC inspector general investigated and recommended disciplinary action against Thomsen for her conduct in the Pequot/Mack/Aguirre matter. But the Enforcement staff issued its own press release denying misfeasance. Commissioners voted to take no action against Thomsen despite the inspector general's report, and laudatory comments followed her eventual resignation.
In other words, if you’re only a domestic diva like Martha Stewart, SEC round trippers may see fit to throw you to the wolves. If you’re a major Wall Street firm generating tens of millions in billable hours to round trippers and their legal colleagues, you may get a gift-wrapped get out of jail free card.
This isn’t just my suspicion. U.S. District Court Judge Jed Rakoff smelled something fishy in the August 3rd deal the SEC cooked up with Bank of America. The Judge refused to approve what he perceived as a measly SEC settlement of $33 million in a lawsuit over Bank of America withholding from investors information that it had approved of Merrill Lynch paying out billions of dollars in bonuses as part of its rescue acquisition of the firm. (Both firms required life support from the public purse known as TARP.) Bloomberg News quotes Judge Rakoff as follows: “I would be less than candid if I didn’t express my continued misgivings about this settlement at this stage…When this settlement first came to me, it seemed to me to be lacking, for lack of a better word, in transparency. I did not know much about the facts from the complaint. I did not know much, or really anything, about the basis for the settlement.”
That was the same view held by the Congressional questioners in the Madoff matter at the February 4, 2009 dust up with top SEC officials. After many rounds of pointed questions produced unresponsive answers, round tripper Andrew Vollmer, then Acting General Counsel of the SEC, explained why. He and his fellow SEC panelists were claiming executive privilege. This position elicited the following outburst from Congressman Ackerman: “Your value to us is useless…Our economy is in crisis, Mr. Vollmer. We thought the enemy was Mr. Madoff. I think it’s you…you were the shield…You come here and fumble through make believe answers that you concoct and attribute it to executive privilege….”
On April 2, 2009, another of Wall Street’s favorite law firms, WilmerHale, announced that Andrew Vollmer would be returning to the firm as a partner. According to the press release, before joining the SEC, Vollmer was a vice-chair of WilmerHale’s Securities Department.
The idea that highly paid corporate lawyers have an insatiable altruistic bent to periodically serve as low wage staffers at the SEC is worthy of its own Congressional hearing. Any serious reading of the facts will likely prove these lawyers are going to protect that big Wall Street firm that represents their next big pay day and fast track to partnership.
And just what does the Madoff fraud have to do with the big firms on Wall Street? The multi billion dollar proceeds of the fraud were wired in and out of JPMorgan Chase where Madoff maintained his firm’s account. Also, Madoff partnered with Citigroup’s Smith Barney, Morgan Stanley, Merrill Lynch and Goldman Sachs to compete head on with the New York Stock Exchange in a venture called Primex Trading as reported here at HYPERLINK "http://www.counterpunch.com/martens01152009.html" CounterPunch on January 15, 2009.
Pam Martens worked on Wall Street for 21 years; she has no security position, long or short, in any company mentioned in this article. She writes on public interest issues from New Hampshire. She can be reached at HYPERLINK "mailto:pamk741@aol.com" pamk741@aol.com

[admin]

Sept 18, 2009

Iris Evans
Minister
Alberta Finance and Enterprise
208 Legislature Building
10800-97 Ave
Edmonton, AB T5K 2B6

Re: Petition to “come clean or resign”

Dear Mrs. Evans,

I write to you further to your letter of Aug 12, 2009. It relates to more than a billion dollars of substandard investments that have been sold into our Alberta economy, with the help of your Alberta Securities Commission, (ASC) and legal exemptions granted by this Commission to allow our provincial laws to be bypassed or ignored.

You state in your letter to me that your deputy minister Robert Bhatia addressed the question of “what public interest” is served when granting legal exemptions to financial corporations? The specific cases (to narrow it down for a public inquiry request under the Provincial Inquiries Act) were limited to the approximately twenty legal exemptions granted to sellers or manufacturers of Asset Backed Commercial Paper, and commission rebating (commission kickbacking) exemptions granted to Assante’s proprietary mutual funds.

Out of several thousand legal exemptions (found on the ASC web site) for which the very same questions could and should be answered by you, these two cases are significant enough, damaging enough, and documented well enough to this justify public inquiry. One case has allowed $800 million to be put into the pockets of an investment firm at the expense of its trusting clients, while the second case has resulted in $32 billion dollars disappearing from the pockets of the public, and appearing in the pockets of financial service providers.

A public inquiry will, in my opinion, show a damaging incestuous relationship between the financial services industry and our government securities regulator (ASC). As our Minister of Finance you should not be hiding from this issue as you now appear to be doing but rather moving forcefully towards honest accountability.

Again, for clarification, the questions unanswered by you are:

What possible public interest is served by taking money (by a Crown Corporation) in exchange for allowing our financial laws to be violated or ignored? This smacks of selling out the public interest for money. I ask this in general terms and in specific relation to the two cases mentioned for public inquiry.

Why are special deals to exempt our laws done without public input and without public notice when known toxic products or tainted investment advice are then passed to Alberta consumers?

Why does it appear, that despite numerous notices to you, and over one billion gone in Alberta, ($32 billion in Canada overall) that your ministry seems more intent on protecting the ASC, or suppressing investigation into this matter, than in protecting the citizens of Alberta?

You state in your response to me that “I believe that Mr. Robert Bhatia, in his January 5, 2009 response sent on my behalf, addressed this issue”, when you refer to those public interest questions. Would you mind resending me the responses to those questions, in case I am misinformed, as I am unaware of them being addressed by your department in any way?

Here for your information is Mr. Robert Bhatia’s answer to this issue from his January 5, 2009 letter:

“In this particular situation (ABCP) it appears the commissions carefully considered the situation and acted properly in granting the exemptions.”

As you can see, Mr. Bhatia’s one line response in no way addresses the issues, or answers the public interest questions posed. In fact it appears to be more an effort to conceal or hide the full answers to those questions. You were copied his letter, but I gather that you are unaware of his lack of answers, and that you would like the Alberta public to be treated in a manner befitting honest and transparent disclosure. I therefore ask you once again, for at least the fifth occasion, to provide the correct information so that we can be assured that corrupt, inept or industry favoring behaviors have not infected our public financial agency, The Alberta Securities Commission.

I trust that you are up to this task, and that we will be provided access to the documents within the ASC that show what, if any, process was followed to ensure that the public interest was not compromised. In the event that this is not possible, I would ask you to convene a commission of public inquiry into allowing certain entities to bypass our provincial laws without notice to the public. A public inquiry specifically to investigate these questions.

In the event that this level of openness is not possible from your ministry, then I must respectfully ask that you resign your position as Finance Minister, as it will then be clear that you are unable to be truthful with myself, or with the Alberta public. These matters have caused billions of dollars to be siphoned out of our economy by legal trickery assisted by your securities commission. Your public service position would demand that you do the only right thing and turn over your portfolio to someone who can provide honesty and transparency in this most important portfolio of Minister of Finance. Our province and our economy can no longer afford the type of help that is coming from this current Ministry.

I await your proper response so that it can be posted in public view at one or more social justice web sites who fully support this request:

Yours Truly
Larry Elford
Former CFP, CIM, FCSI, Associate Portfolio Manager, retired
www.investoradvocates.ca 403 328-0391 403 393-4742

Starting today, there has begun a movement and a petition for the honest accountability requested in this letter. Please visit http://alfimi.epetitions.net/

[admin]

Sunday, November 8, 2009

www.AuContrarian.com
"Greenspan’s legacy will be how he turned the United States into a third world country."

Five Questions
for Frederick J. Sheehan, Author,
PANDERER TO POWER


Q. What was Alan Greenspan’s greatest influence on the United States?

FS: Alan Greenspan was the kingpin in the impoverishment of the American people. The middle class barely exists today, though the barrage of government spending prolongs the illusion of stability. As Federal Reserve chairman, Alan Greenspan’s pronouncements were sacrosanct. He told the American people they were getting richer when they were becoming poorer. It is axiomatic that when savings are depleted and debts are rising the person, or company, or government is poorer.


Q. How did Greenspan create an illusion of recovery, based on complex math-designed products, rather than the creation of goods and real jobs?

FS: The American economy’s recovery from the early 1990s was financial. This was a first. The recovery was a product of banks borrowing, leveraging and lending to hedge funds. The banks were also creating and selling complicated and very profitable derivative products. Greenspan needed the banks to grow until they became too-big-to-fail. It was evident the ‘real’ economy – businesses that make tires and sell shoes – no longer drove the economy. Thus, finance was given every advantage to expand, no matter how badly it performed. Financial firms that should have died were revived with large injections of money pumped by the Federal Reserve into the banking system.

The change in the American economy can be seen in how profits shifted from manufacturing to finance. In 1950, 59% of U.S. corporate profits were from manufacturing; 9% from financial activities. During the past decade (2000 -2008), 18% of profits were from manufacturing and 34% from finance.

Middle management, a staple of the middle class, had lost considerable ground during the early-1990s. Companies hollowed out middle management to cut costs. A large portion of those who were laid off never recovered financially. The same was true after the recession that followed the stock market bubble that popped in 2000, particularly among technology workers. Many have never recovered.


Q. What role did Greenspan play in the financialization of the economy?

FS. He cut the fed funds rate from nearly 10% in early 1989 to 3% by late 1992. This was the platform from which the financial firms borrowed at low short term rates and invested at higher long-term rates. This also chased the middle class into the stock market. Net cash flows into stock-mutual funds rose from $8 billion in 1985 to $79 billion in 1992 and to $127 billion in 1993. In 1992 and 1993, money market funds suffered net outflows. This was unusual: individuals were pouring money into the stock market when their incomes were falling (according to the Census Bureau). In addition to incomes falling, so had returns on fixed investments. They were chased into the stock market by the Federal Reserve.


Q. Did Greenspan continue to influence destructive consumer behavior?

FS. Behind closed doors, at FOMC meetings, the Federal Reserve Open Market Committee] Alan Greenspan was told (in 1994) by Federal Reserve governor Lawrence Lindsey: “[T]he non-rich, non-old live paycheck to paycheck, quite literally.” In 1995: “[T]here has been a lot of easing of credit terms. At some point this is going to stop.” In 1996, Lindsey lectured Greenspan: “I think there is a long-term social cost we are going to pay from all this…. [T]he price we are paying is the increasing fragility of the underlying financial structure of the household sector.”

How did Alan Greenspan respond? “[T]his big increase in installment credit” is a product of the mortgage market. “[L]arge realized capital gains…have been financed in the mortgage market. Those funds are going disproportionately into the financing of consumer durables.”

That was in 1996, when he told the FOMC: "I recognize that there is a stock market bubble problem at this point.... We do have the possibility of raising major concerns by increasing margin requirements. I guarantee that if you want to get rid of the bubble, whatever it is, that will do it.” He soon retreated and claimed central banks could not see a bubble until it popped. Greenspan needed the stock market bubble to support the economy. Greenspan was no dummy when it came to enticing the public to speculate when interest rates fell. Again, behind closed doors, to the FOMC: “The sharp decline in long-term yields has struck me as quite extraordinary.... [W]e are getting issues of 100-year bonds…. The fact that some borrowers are issuing these bonds is terrific. Until you get somebody dumb enough to buy them...."


Q. Has Greenspan learned any lessons from the stock market bubble?

FS. He certainly remembered how to lure the public into an inflating bubble: cut interest rates. The platform for wild housing speculation was the fed funds cut from 6.5% in 2001 to 1.0% in 2003. Money always chases the rising asset class, especially when so much of the money is superfluous to the “real” economy: From the time Greenspan was named Federal Reserve chairman until he left office, the nation’s debt rose from $10.8 trillion to $41.0 trillion. The “real” economy only grew by a fraction of that rate-of-growth. Alan Greenspan had turned the country into a gambling casino.

The median cost of an existing, single-family house in California rose from $237,060 in 2000 to $542,720 in 2005. We can see the consequences are spreading far beyond the housing market. The state of California is cutting costs by laying off workers, not fixing sewers, and plans to release 40,000 prisoners. California leads the other states in trends. Greenspan’s legacy will be how he turned the United States into a third world country.

[admin]

A few examples:

-Our Heritage trust fund stands at $14 bil after some decades of operation while the similar fund in Norway is over $300 billion in half the time.

-Investment assets which have proven to be tainted and sold without care and knowledge were allowed under Alberta Finance and Enterprise and he Alberta Securities Commission, costing Albertans billions, and nearly bankrupting the Alberta Treasury Branch. (they placed 47% of deposits into tainted investments according to the Alberta Auditor General)

-It appears that our Finance Minister is along for the ride, in Alberta instead of doing any of the driving or managing of provincial finances.

There have been calls for her resignation by persons both inside and outside of the Conservative Party due to the damage done under her supervision.

There is now a request for criminal investigation with the RCMP IMET over manufacture, distribution and regulatory failure (negligence?) by financial institutions, and regulators who gave these institutions permission to violate Alberta laws to distribute toxic products.

There is discussion underway about citizen class action against government and regulatory officials who may be shown to have acted in a manner contrary to the public interest.

[admin]

Ottawa tries to skirt challenges to market regulator
Government plans to ask Quebec judge not to hear province's objections to national securities body, sources say

Jimmy Jeong/The Canadian Press

Iris Evans, Alberta Minister of Finance and Enterprise,
presents the 2009 Alberta Budget at the Alberta Legislature
in Edmonton, Alta..
Karen Howlett, Janet McFarland, Rhéal Séguin

Toronto, Quebec — Globe and Mail Update Published on Friday, Dec. 18, 2009 7:51PM EST Last updated on Saturday, Dec. 19, 2009 3:09AM EST

The federal government plans to turn up the heat on its constitutional showdown with Quebec by asking the courts to toss out the province's legal challenge to a proposed national securities regulator.
The government plans to appear before the Quebec Court of Appeal and ask a judge not to hear the province's objections to a national regulator, government and industry sources said Friday.
The move is part of a two-pronged assault by the Stephen Harper government. It is also asking the Supreme Court of Canada to rule on whether Ottawa has the power to replace Canada's 13 provincial and territorial regulators with a single entity. And it comes just as Alberta launches its own challenge over a national securities watchdog.
“By going to the Supreme Court, the federal government is implicitly asking the Quebec Court of Appeal not to hear our case,” a Quebec government official who asked not to be named said Friday. “We figured this would be their strategy all along.”
No date has been set as yet for the Quebec court to hear the province's case, the official added.
The Alberta government announced Friday that it will go to the Alberta Court of Appeal and will also intervene in the Quebec case, where it will argue that securities regulation is a matter of provincial jurisdiction. Joining forces with Quebec allows the two provinces to send a stronger message of opposition to the federal government's plans, said Alberta Finance Minister Iris Evans.
“We do not want to easily relinquish something that has been our constitutional right,” Ms. Evans told reporters in Whitehorse. “That's why we feel it's important to participate with Quebec and also to pursue this as Alberta on behalf of Albertans.”
Federal Finance Minister Jim Flaherty is the chief architect of a single regulator, an initiative that has strong support from the Ontario government. Canada's largest province – home to the lion's share of the country's securities markets – has long advocated for a strong national regulator to improve the efficiency of the capital markets and to better co-ordinate enforcement and investor protection.
“We believe that the most appropriate venue to ultimately decide the federal government's jurisdiction in relation to securities regulation is the Supreme Court of Canada,” a spokeswoman for Ontario Finance Minister Dwight Duncan said Friday.
Quebec and Alberta both regard a national regulator as an encroachment on their turf. Alberta government officials are worried that once the federal government controls securities regulation, it will also control the province's capital markets and the ability of Albertans to raise funds in their home market, said a securities industry source close to the government. As a result, the source said, Alberta government officials are concerned they will lose an important lever on the province's economy.
Ms. Evans said Alberta does not want to allow Ottawa to open a door to permit federal control of other areas that historically have been regulated by the provinces.
The move means three courts in Canada are now expected to rule on the legality of the national regulator plan.
Alberta said Friday it is taking its own action because it could be many months before the federal government launches its Supreme Court challenge, and it wanted to move forward now on its action.
Canadian provinces have no option but to refer questions of constitutionality to their own appeal courts because they cannot refer a case directly to the Supreme Court of Canada, said Toronto securities lawyer Phil Anisman. And Alberta can frame its questions itself in an Alberta challenge, which it cannot do just by relying on intervention in support of the Quebec case, he said.
With files from reporter David Ebner in Whitehorse

[admin]

LEGAL
Punishing Lawyers in Corporate Frauds
January 19, 2010, 9:01 AM

Peter J. Henning, a professor at Wayne State Law School, specializes in issues related to white-collar crime and follows them for DealBook’s White Collar Watch.

Joseph P. Collins, a former partner at the international law firm Mayer Brown, received a seven-year prison sentence for his role as the lead attorney for the failed futures trading firm Refco Inc., whose collapse as a result of accounting fraud cost investors and lenders more than $2 billion. Mr. Collins was convicted of conspiracy, wire fraud and securities fraud in July 2009 for his role in the stunning demise of Refco only weeks after the firm’s initial public offering.

The company hid debts owed by its chief executive, Phillip R. Bennett, from a buyout firm in an leverage buyout in 2004 and then in the public offering in 2005. In addition to Mr. Collins’s conviction, Mr. Bennett received a 16-year sentence, and Refco’s former president, Tone N. Grant, was sentenced to 10 years for their role in the accounting fraud.

Mr. Collins was Refco’s long-time outside counsel and the firm was his largest client, generating $35 million in billings for Mayer Brown. It is rare that an outside lawyer is prosecuted for legal representation of a client, and the case can be understood as part of a growing trend in which federal prosecutors and regulatory agencies, including the Securities and Exchange Commission, focus on those who enable corporate fraud along with the officers and directors who orchestrate it. The punishment of Mr. Collins is substantial, and The New York Times’s chief financial correspondent, Floyd Norris, asked on his blog last week, “What are the longest sentences given to partners (or former partners) of major law firms, for crimes committed on behalf of clients?”

Although uncommon, Mr. Collins is not the first outside lawyer to be prosecuted for work on behalf of a client, although his sentence is among the most severe. Other lawyers are included on the list of those who have been convicted for conduct related to their legal practice:

Terry Christensen, a well known entertainment lawyer, received a three-year prison sentence for his role in the wiretapping of the ex-wife of his client, the billionaire Kirk Kerkorian,the during a child-support case. Mr. Christensen worked with private investigator Anthony Pellicano, the so-called “private eye to the stars” who was convicted in other cases.
Raymond Ruble, a tax lawyer at Sidley Austin, received a 6½-year prison term for his role in the sale of tax shelters by KPMG that resulted in more than $100 million in avoided taxes.
Melvyn I. Weiss and William S. Lerach, name partners at the plaintiffs class-action firm Milberg Weiss (which later split into two firms), received sentences of 30 months and 24 months, respectively, for their role in paying kickbacks to lead plaintiffs and expert witnesses in the firm’s cases. Two other name partners from the firm, Steven G. Schulman and David J. Bershad, received six-month prison terms.
John G. Gellene, a leading bankruptcy lawyer at Milbank Tweed, received a 15-month prison term for filing false documents in a corporate bankruptcy proceeding in 1994 that did not disclose a conflict of interest he had through prior work on behalf of a major creditor of the company. An excellent book by Professor Milton C. Regan Jr., “Eat What You Kill: The Fall of a Wall Street Lawyer,” looks at how Mr. Gellene came to find himself in a criminal prosecution.
I have not included Marc Dreier on the list because he did not act on behalf of clients in enriching himself, although certainly his standing in the legal community contributed to the fraud he perpetrated.

In-house counsel have also been the subject of criminal prosecutions, most recently in the options backdating cases. For example, the former general counsel of Comverse Technology, William Sorin, received a year-and-a-day sentence for his role in the issuance of backdated options by the company.

Not every case involving the prosecution of lawyers is successful, however, as juries have acquitted inside lawyers from McAfee, Tyco International and McKesson.

What is striking about the sentence that Mr. Collins, the former Mayer Brown lawyer, received is its length. This is largely a product of a change in the Federal Sentencing Guidelines adopted in late 2001 that substantially increased the likely sentence in fraud cases. The United States Sentencing Commission amended the fraud-loss table used to calculate the sentences so that a loss of more than $400 million pushed the potential punishment to more than 20 years and could even result in a term of life in prison when other factors, such as the number of victims, were considered.

The timing of that change could not have been more propitious for prosecutors because shortly afterward financial meltdowns at companies like Enron, WorldCom and Adelphia Communications hit. While at one time prison sentences for white-collar offenders were uncommon, and anything over two years almost unheard of, the sentencing guidelines made substantial prison terms much more likely when a large corporation collapsed. Thus, defendants like WorldCom’s chief executive, Bernard Ebbers, got 25 years; Adelphia’s chief executive, John Rigas, 15 years; and Enron’s chief executive, Jeffrey K. Skilling, more than 24 years, although that term will be reduced and he could even be back in court for a new trial if the Supreme Court reverses his conviction.

More recently, Mr. Dreier received a 20-year sentence for his fraud that cost victims at least $400 million. A Florida lawyer, Scott Rothstein, has been accused of a similar scheme that may exceed $1 billion in losses, and he is likely to receive at least as much prison time if he pleads guilty as expected on Jan. 27.

Given the sizable losses in the Refco case, Mr. Collins may be fortunate to have received only seven years, as the potential punishment under the sentencing guidelines called for a maximum of 85 years in prison. The Federal District Court rejected his request not to be sent to prison at all, an unlikely result given the amount of the loss. Mr. Collins is seeking a new trial based on recently revealed e-mails, and he is certain to appeal the conviction. Whether the district court permits him to remain free pending the appeal remains to be seen.

The substantial sentence is sure to be noticed in major law firms throughout the country, but whether it has any deterrent effect is another issue.

– Peter J. Henning

[admin]

Feb 8, 2010

To: Ted Morton, Alberta Finance Minister

Dear Mr. Morton,

Why can investment sellers violate the law in Alberta and sell tainted products?
Why does our crown Alberta Securities Commission allow this? Profit from this?

More than a billion dollars of substandard investments have been sold in Alberta, with the permission of the Alberta Securities Commission. (ASC). In Canada $32 billion has gone missing with bad commercial paper (ABCP).

The cost of every other crime in the country is approx $40 bil according to Justice Canada, so we have that one financial crime equalling nearly every other crime in Canada combined.

Legal exemptions have allowed substandard investments and advice to be sold by the thousands to Canadians, without notice being sent to the investors.

The questions that went unanswered by Iris Evans after eight requests. Ted Morton third request.

-What public interest is served by allowing financial laws to be violated?

-Why are laws allowed to be broken without public input and public notice?

-Why is Alberta Finance suppressing this, rather than protecting the public?

Here is the answer received to date from the Alberta Finance:

“In this particular situation (ABCP) it appears the commissions carefully considered the situation and acted properly in granting the exemptions.”

Here is the official reason given by the ASC:

“Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met.”

There is a damaging incestuous relationship between the financial services industry and our government securities regulator. Our Minister of Finance should be moving forcefully towards honest accountability. Anything less may constitute a breach of trust.

These matters have caused billions of dollars to be siphoned out of our economy assisted by 13 securities commissions. Will you Mr. Morton please take steps to answer these questions for the benefit of Albertan’s?

Larry Elford

(Thankfully Iris Evans was replaced recently, and it is hoped that Mr Morton will have a greater understanding of the balance between protecting the investment industry and protecting the public. Time will tell if this will be the case)

[admin]

Thank you for your response Mr. Morton, but as you can see, this "detailed explanation" that you refer to does not even begin to answer the public interest questions as posed:

1. What public interest is served by allowing financial laws to be violated by certain parties?
2. Why are these back-room deals (eg. legal exemptions) done to violate our laws without public input and without any notice to the public?
3. Where is the open process and the transparency that best practices and the public interest would require?
4. Why is our Alberta Finance Ministry suppressing this matter, rather than protecting the citizens of Alberta?

I cannot understand why simple answers cannot be provided to simple questions, when it comes to the regulatory handling of investments and public money. Unless there is a legitimate reason NOT to provide answers, your government is appearing to condone secrecy and very damaging to the public financial practices. I am sure that this is not the message that your government is intending to send.

Please consider this matter to remain open until you find yourself able to answer the easy questions without obfuscation.

Best Regards

Larry elford

Begin forwarded message:

From: Finance and Enterprise <Fin-Ent.Minister@gov.ab.ca>
Date: April 12, 2010 4:15:05 PM MDT
To: lelford@shaw.ca
Subject: Provincial Securities Regulators - Issue of discretionary exemptions

Dear Mr. Elford:

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

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

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

Sincerely,


Ted Morton
Minister of Finance and Enterprise

Attachment

cc: Greg Weadick, MLA
Lethbridge-West
<<Letter.pdf>>

Mar , 2010

To: Ted Morton, Alberta Finance Minister Fax (780) 427-5543
1, 160 MacLaurin Drive (Springbank Airport)
Calgary, Alberta T3Z 3S4

Dear Mr. Morton,

On an email from you dated March 8, 2010 to Larry Elford of Lethbridge, you state that several contacts were made to Ed Stelmach and the Minister of Finance in 2009 about legal exemptions as they apply to investment products in Alberta. (the granting of legal permission to investment sellers to violate Alberta’s laws on known defective investment products and advice)

You specifically state that Mr. Elford was provided with “detailed explanation of why provincial securities regulators, including the Alberta Securities Commission, thought it was appropriate to issue the discretionary exemption orders about which you have expressed concern.”

Would please share with me the “detailed explanation” that you refer to as Mr. Elford claims that no such information was ever provided by your Ministry. I also note from Mr. Elford that the following questions were in several Alberta newspapers and yet have not been answered by your ministry. I request that your detailed explanation as well as answers to these important public matters be provided.

The questions for your ministry:

1. What public interest is served by allowing financial laws to be violated by certain parties?
2. Why are these back-room deals (eg. legal exemptions) done to violate our laws without public input and without any notice to the public?
3. Where is the open process and the transparency that best practices and the public interest would require?
4. Why is our Alberta Finance Ministry suppressing this matter, rather than protecting the citizens of Alberta?

Here is the answer received to date from the Alberta Finance Ministry:

“In this particular situation (ABCP) it appears the commissions carefully considered the situation and acted properly in granting the exemptions.”

Here is the official reason given for the exemptions by the ASC:

“Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met.”

These answers are usatisfactory, and may in fact indicate that there has been a violation of the public interest. Please address this in the most professional manner possible by your Ministry. There should be no political reason whatsoever for you to be protecting the investment industry or protecting the Alberta Securities Commission, if the public is being damaged by this process.

I thank you for for providing me with the explanation you refer to, Mr. Morton, as well as the answers to the enclosed questions.

Best Regards,

[admin]

I have now heard back from Alberta Finance Minister Ted Morton.   He says he will not answer questions on the practice of letting investment firms violate our laws.  It is strange to see a public servant stand so strongly on the side of financially abusive practices.

Despite $32 billion missing from the Canadian economy using such legal tricks. (ABCP toxic investments)  Despite mutual fund companies which put billions into their own pockets at the expense of the public.  Despite several investor suicides, by people who have been damaged by bad investments approved by your securities commission. By an investment industry that can buy permission to violate our laws.

Provincial securities commissions have done approx. 5000 such back-room deals with no notice to the public.  Deals that let investment sellers ignore the laws designed to protect investors.

The finance minister will not talk.  This might speak volumes about what he is hiding. Or who he is taking his “advice” from.  I suspect he gets his advice from persons at the Securities Commission with $500,000 jobs.   The Ontario Legislature is now on record as chastising it's securities commission for failing to protect the public interest.  Our politicians here are years behind even this step.

The questions are pretty simple:

“What public interest is served in letting investment firms sell products that do not meet our securities laws?”

“If there is a legitimate public interest, then why are these deals done in secret, without notice to the consumers of investment products, and no public disclosure?”

If there are sound reasons then the questions are easy.  If there is something to hide, then they become more difficult.  Mr. Morton, why are you hiding?

With no explanation after a few years of asking, (and with 30 years investment industry experience) I must conclude that our investment industry is getting away with the financial murder of our economy. That they are riding on the gifts of self regulation, corruption, connections and cronyism. Again Mr. Finance Minister, what in the world is motivating you to hide this?

For politicians to cover this up is a breach of the public trust.  Write them a note and see if they can give you an answer.  Then write me a note and I will keep track of their answers.  lelford@shaw.ca
Larry Elford (former CFP, CIM, FCSI, Associate Portfolio Manager, retired)

Founder of www.investoradvocates.ca

[admin]

thumbnail_greed.jpg (41.85 KiB) Viewed 294 times

In 2009 the conservative government introduced a bill, (C-52) which was intended to create stiffer penalties for white collar crime. It was also intended to bolster the conservatives image and to show that they were taking the matter seriously.
http://www2.parl.gc.ca/HousePublication ... 192&file=4


The only problem with the bill as it was written, which was carefully and clearly pointed out in Ottawa and on the record, was that when drafting the bill, someone carefully and cleverly “omitted” the effects of this bill for those people who deal in public markets. (fraud section 380 (2) "missing")

In layman terms that meant that they exempted stiffer penalties for the Bay Street boys, bankers, investment bankers etc.

When parliament was prorogued the bill was cancelled, and just this past Monday it was re-introduced with the same fanfare of how much the government was doing to protect the public.
http://www2.parl.gc.ca/HousePublication ... 626&file=4

The only thing I can see with the new bill is a new short name, “Standing up for victims of white collar crime”. Beyond that name, the bill appears identical to the old one in every respect.

Thanks means that the “Gift” of exempting stiffer penalties that the old bill gave to those who sell stocks, bonds, trusts, anything public market related still stands. In simplest terms I can state, it means that if this bill were for the United States it would exempt people like Goldman Sachs from penalties for any crimes they commit. Exempting the largest market participants is not in my opinion the way to stand up for anyone. It appears more to me the way to “sell out” to the highest bidder. God forbid.

[admin]

How to give our friends on Bay Street a free ride around the law.............


Alberta wary of white-crime bill


BY DARCY HENTON, EDMONTON JOURNAL MAY 5, 2010


A white-collar crime bill reintroduced by the federal Conservatives this week received a lukewarm reception Tuesday in Alberta from both a financial crime crusader and a fraud victim.

The justice bill, which had to be reintroduced after if died on the order paper when the prime minister prorogued Parliament last winter, sets a mandatory minimum two-year sentence for frauds over $1 million.

The bill also requires judges to look at several aggravating factors that could increase the sentence and to consider victim impact statements and restitution.

Retired investment broker Larry Elford, who advocates on behalf of investors, said the new bill still appears to contain a loophole that exempts it from being applied to investment institutions.

"It's a wonderful gift to the investment industry," he said. "It would exempt the largest fraudsters in Canada. I can't understand why they would reintroduce the law with the same loophole."

Elford said the law wouldn't apply to corporations like Goldman Sachs which is currently the subject of a civil fraud suit brought on by the Securities and Exchange Commission, the national securities regulatory authority in the U.S.

"Any Bay Street operator could sell any product in any fraudulent and misleading manner and this bill would not apply," Elford said.

Edmontonian Jason Cowan has been pressing for tougher white-collar crime laws since he and a partner were allegedly defrauded of more than $2 million in 1996.

"I think it's absolutely necessary that there are some checks and balances," he said. "These white-collar criminals are getting off all the time."

Justice Minister Rob Nicholson said the legislation will make jail mandatory for fraudsters who bilk their victims out of more than $1 million.

"Our government is standing up for victims of white-collar crime," he said when the bill was reintroduced Monday.

Justice spokeswoman Pamela Stephens said the bill, originally introduced in October 2009, is expected to pass quickly.

"This bill in the previous parliamentary sitting received support from all parties so we expect it should proceed expeditiously through the House," she said.

dhenton@thejournal.canwest.com

Read more: http://www.edmontonjournal.com/news/Alb ... z0n40NlCBP