IDA spends it's credibility, changes its name to IIROC

[admin]

would you believe......................

that the RCMP IMET looks at the IDA as a quasi police agency, in assisting them in investigating financial fraud.

Now here is the problem. Everyone knows the IDA is a registered lobby organization (registered in Ottawa) for industry. Funded by industry, staffed etc. For the benefit of the industry. Only through antique regulatory thinking are they allowed to pose as self regulators in addition to the original looby role. Now the RCMP is investigating the inside info/leak problem of the income trust announcement. The day of the announcement Goodale met with the IDA about it. Think about it. The government met with the lobby group of the investment dealers to negotiate and figure out how to best "handle" things.

That day, the amount of trading spiked to unprecedented levels and then came the announcement.

Is the IDA truly going to stand by and consider themselves "part" of the RCMP investigation? They should be part of it all right, but perhaps in the manner of a subject being questioned into who was in the room, which firms they represent, and how much trading did they do that day based on what they learned. They should certainly never again be considered as impartial, nor as self regulatory. They have proven that they cannot handle even this level of potential conflict of interest without putting selfish interests ahead of those of the public.

[admin]

dually posted in income trust forum

for further case info showing where the "selfish" regulators have perhaps violated criminal code section 122, breach of trust, see:

http://www.investorvoice.ca/Regulators/index.html and click on the section marked "cases" or on "IDA". You will be shocked and amazed at the amount of (mostly elderly) folks who have had to fight in the courts, after being snubbed and practically ridiculed by the "selfish" regulatory system.

below are my own small example of complaint that is still to come before the courts in Alberta:

the IDA, by trying to have it both ways, first by wanting to be an industry trade and lobby group, and second by wanting to be it's own self regulating agency has always forgotten how to deal with this conflict of interest. They talk the talk, but the walk of money always prevails.

There are seemingly two sets of rules in the investment industry; one set of rules written by the industry to supposedly protect client interests, and another set of rules written by the industry to protect the industry interests. My experience is that client protective rules can and do get overlooked when it is convenient to do so. No one in the industry suffers, and if a client complains, the industry is self policing, so they can easily brush it aside. Any rule intended to protect the industry can and will be fully enforced as intended.

For example, when I wrote to the IDA to complain about ethical lapses and what I felt to be violations of the securities act by my employers when I was with RBC, I received a nicely worded letter back saying that they have looked into my allegations and have decided not to initiate formal disciplinary proceedings against me in this matter. (say what??)

In my letter of complaint I outlined the many violations I was aware of from my position within the firm, and that I had tried to write newspaper articles telling clients how they could save money on mutual funds by not paying commissions. This writing process was banned by RBC at the time, due to the explanation they gave that such fees were too important to some advisors to give up. I responded that if they were true advisors, they would advise clients in the best interest of the client and not in the best interest of fees. I ignored the small industry protective rule in favor of the bigger client protective issue.

In typical IDA fashion, they chose to ignore the ethical and securities act violations (client protective) and instead threaten me (industry protective). I look forward to my day in court here in Alberta to debate the "you first" advertising promises of RBC which I felt were being ignored, and I look forward to the day when so called regulatory officials like the IDA (or provincial securities commissions) are held to the account of the breach of trust standards outlined in Terry Corcoran's Financial Post editorial yesterday. Criminal code violations (section 122) are being made by a self policing industry that wants to have it both ways, and it is nearing the time when this will no longer go un-noticed.

Here again is the link to Canada's top research site on they system:

for further case info showing where the "selfish" regulators have perhaps violated criminal code section 122, breach of trust, see:

http://www.investorvoice.ca/Regulators/index.html and click on the section marked "cases" or on "IDA". You will be shocked and amazed at the amount of (mostly elderly) folks who have had to fight in the courts, after being snubbed and practically ridiculed by the "selfish" regulatory system.

[admin]

Regulatory Effectiveness

Will the MFDA back up its threats?

February 7, 2006



I think it’s fair to say, the financial industry is at an interesting crossroad. In the MFDA’s January bulletin, member firms were notified that MFDA staff is starting a second round of compliance examinations. In this second examination, the MFDA will be reviewing the various deficiencies they uncovered in their initial examinations at member firms. In the conclusion of the notice, the MFDA noted: ‘any deficiencies that were noted in the first examination that have not been rectified will be considered for referral to the Enforcement Department of the MFDA.’



The question is:

what deficiencies will actually be referred, and how will the Enforcement Department handle the referrals?


The deficiencies found in the first examination were extensive, and in some cases, down right embarrassing. The MFDA found evidence of everything from churning and discretionary trading (issues that were immediately referred to the Enforcement Department of the MFDA), to simple but obviously critical issues like:

Trade blotters not being reviewed regularly
No evidence of follow up on issues discovered on the trade blotter
Not maintaining a log of client complaints and/or not responding to client complaints
No branch compliance reviews being conducted

After reviewing the ‘common deficiencies’ discovered by the MFDA, someone from outside the financial industry might reasonably ask, ‘since mutual fund dealers were monitored by the various securities commissions prior to the invention of the MFDA, how could these types of basic supervision issues be common?’



They are common, because prior to the MFDA, dealers were so rarely disciplined for such infractions. It’s hard for a dealer today to take these threats seriously. Although cheep, user-friendly technology exists to wipe out almost all of the more mundane day-to-day suitability and review problems pointed out by the MFDA, compliance departments have a tough time justifying the costs (or even the effort) to management, when the perceived threat is so low.



This lack of dealer motivation is not just an MFDA inherited problem. According to a BCSC’s 2002 audit of the IDA, ‘since taking sole responsibility for member regulation at IDA firms in 2000 (prior to 2000 the jurisdiction was shared by the CDNX, formerly the VSE), not only was the volume of proceedings not commensurate with the IDA’s new regulatory role, at the time of the report, the IDA had taken no action against firms in the previous 24 months.’ Even today, a review of discipline statistics on the IDA website shows an appallingly low number of investigations.



I’m not aware of the IDA releasing numbers from any audits they perform at member firms, but having personally been through a BCSC audit prior to the MFDA as well as an IDA sales audit, I can tell you the number of unsuitable investment cases randomly discovered by auditors makes the tiny number of complaints that actually get documented by COMSET look ridiculous.



Why are the numbers reported to COMSET so low? Almost certainly because of the cost and effort required by investors to hire legal council to try and chase down losses. If you go into the IDA’s statistic page again, you’ll see another possible reason: the number of cases of investors that win arbitration are also frightenly low. In such an environment it is easy to see why dealers take these reviews somewhat lightly.



The IDA’s attitude appears to have changed little since 2002 in regards to suitability and supervision complaints. For example, someone not familiar with the financial industry might wrongly assume the IDA would consider fining a dealer for improper supervision when an audit detects a large percentage of randomly reviewed accounts containing unsuitable investments. Instead, the IDA issues a written notice to the dealer to ‘correct the deficiencies’.



Hey, I’m the first to admit, it’s a lot easier to deal with the handful of investor’s who lose their shirts each year to some crook than it is to try and stamp out all of the unsuitable investment problems before they happen. I’m sure it’s a lot easier to type up a deficiency report and walk away from the mess than it is to demand immediate action, but aren’t regulators in business to guard against such messes happening in the first place?



To be fair, I should point out both the MFDA and IDA are fining and banning obvious crooks in slam-dunk cases in which the advisor has simply stolen money from clients. But to be effective as protectors of the average investor, both regulators need to be far more proactive than regulators have been in the past. Regulators need to start fining incompetent advisors, and complacent dealers instead of just waiting for the investor complaints to roll in.



So, as I said before, we appear to be at a crossroad: what will the MFDA Enforcement Department do with the referrals it receives following this second round of reviews? Will the MFDA follow up on its threats and start issuing serious fines to make compliance with their policies and rules worthwhile from a business point of view? Will the increased pressure for positive headlines spur the IDA into doing more to protect the average investor? The MFDA notices look promising, as do the initial round of fines issued for serious rule infractions. But without follow-up, the threatening looking ‘bite’ will fizzle into an annoying small-dog ‘bark’ that can again be safely ignored by dealers.



About the author:



Edward Iftody is the president of PureLogix Corp., a financial technology firm dedicated to increasing investor knowledge and product awareness.

[admin]

IDA can’t discipline former registrants
Saskatchewan regulator rules SRO lacks jurisdiction


Wednesday, February 8, 2006


By James Langton



The Saskatchewan Financial Services Commission has ruled that the Investment Dealers Association doesn’t have jurisdiction to bring disciplinary action against former registrants.

The IDA launched disciplinary proceedings against three registrants in 2004. Two of the three were no longer registrants, and they sought a stay of the disciplinary proceedings on those grounds. These motions were dismissed by the IDA hearing panel, and its appeal panel. From there, they turned to the SFSC.

In the case of the two who are no longer registrants, the SFSC found, “Since the IDA has no authority to regulate former members or former approved persons either under its bylaws or in contract, it has no jurisdiction.” It therefore allowed their appeals and granted stays of the disciplinary proceedings against them.

The third person accused remains a registrant, although he alleges that the IDA has lost jurisdiction because there has been unreasonable delay by the IDA in its investigation or prosecution of the charges against him. The SFSC dismissed this argument, disallowed his appeal and denied a stay in that case.

[admin]

The previous post, and article by James Langton give me the further impression that the IDA has not yet come clean on what it is allowed to be responsible for under the Securities Act

I see it as example that the IDA continues to spend it's credibililty by misrepresenting what it is responsible for and not responsible for to the public.

The issue goes much, much further than the discipline of former brokers. It relates to each Securities Commission, to a breach of duty to the public on investigations, allegations of fraud that may or may not have been handled correctly under the law, etc., etc.

It is an ever widening story with attachments far and wide. Stay tuned.

[admin]

13 March 2006



Hon. Gerry Phillips

Minister of Government Services

12th Floor, Ferguson Block

77 Wellesley Street West

Toronto, Ontario

M7A 1N3



Registered Mail







Dear Mr. Phillips,



As you are aware, I have contacted your office on a number of occasions since you last agreed to create a task force to perform a government review of the Investment Dealers Association of Canada (“IDA”). As you may recall, this was a strong and unanimous recommendation from the Standing Committee on Finance and Economic Affairs and is found at page 21, paragraph 26 of the Report on the Five Year Review of the Securities Act.



The actual wording in the report is as follows:



The testimony received by the Standing Committee revealed a deep-seated skepticism on the part of the investing public. They simply are not confident that complaints will always be handled in an objective manner under a system of self-regulation.



Further that



We believe the question of whether SROs should be given more powers or, indeed, whether they should have any powers at all, should be the subject of further review by a task force established to examine this specific issue.



On November 1st, 2004, as minister responsible for the administration of the Ontario Securities Act, you stated before the Ontario Legislative Assembly:



The committee recommended the government establish a task force to review the role of self-regulatory organizations, or SROs, as they are commonly known. That would give us an opportunity to respond to those who appeared before the committee and expressed their concerns with the current SRO system. The task force would work toward improving the current system, and in doing so, would instill greater investor protection and confidence in our capital market.



Later on February 24th, 2005 again you stated before the Ontario Legislature:



The committee also recommended that the government establish a task force to review the role of self-regulatory organizations. We have begun the necessary background work and will be moving forward on this recommendation later this year.



With respect to the many letters I have sent your office, in order to bring critical investor protection issues involving SROs to your attention, I only received one written response dated April 21st, 2005. I have attached that letter for your convenience.



Therein you again state,



We will be moving on this recommendation later this year.



Mr. Phillips it has now been more than 17 months since the recommendations were first tabled to the Ontario Legislative Assembly on October 18, 2004.



· Why have you apparently not acted on this all-party recommendation to date?

· When will you act?

· Who will comprise the task force if you proceed with your commitment?

· Will you include consumer/investors on that task force?



Not to act on it would not only be irresponsible, it would also be disrespectful to all Associations and individuals who participated by appearing before the Finance Committee. I do not feel that those organizations, Ontario investors, advisors, or voters will appreciate a failure to follow through – if that is what we have here.



Further, many stakeholders have intimated that they perceive the relationship between the IDA and the Ontario Securities Commission as a major stumbling block in achieving agreement on a single national regulator.



For now, a progress report and timeline to completion of the SRO review is the minimum entitlement of all stakeholders. I have copied the stakeholders listed below.



I look forward to hearing from you at your earliest convenience.



Regards,










Robert Kyle

60 Pleasant Blvd. #2501

Toronto, Ontario

M4T 1K1



For further information please see:



http://www.investorvoice.ca/regulators/ ... Index.html



c. Hon. Dalton McGuinty, Premier of Ontario

c. Hon. Dwight Duncan, Ontario Minister of Finance

c. Hon. Jim Flaherty, Federal Minister of Finance

c. John Tory, Leader, Official Opposition

c. Howard Hampton, Leader, Recognized Party





Participating Organizations and Individuals
2004 SCFEA Members/Substitutes

and Critics

c.
Consumers Council of Canada
c.
Pat Hoy

c.
CARP 50PLUS
c.
John O'Toole

c.
Small Investor Protection Association
c.
Michael Prue

c.
Democracy Watch
c.
Deborah Matthews

c.
Social Investment Organization
c.
John Milloy

c.
Glorianne Stromberg
c.
Linda Jeffrey

c.
Al Rosen
c.
Bob Delaney

c.
Larry Elford
c.
Lorenzo Berardinetti

c.
Diane Urquhart
c.
Laurel Broten

c.
David Yudelman
c.
Bruce Crozier

c.
John Hollander
c.
Toby Barrett

c.
Bill Weissglas
c.
Hon. Mike Colle

c.
Joe Killoran
c.
Phil McNeely

c.
Sandra Gibson
c.
John Wilkinson

c.
Gloria Hutton
c.
Carol Mitchell

c.
Robert Verdun
c.
Judy Marsales

c.
Peter Schnobb
c.
Wayne Arthurs

c.
J. Edward DeToro
c.
Joseph Tascona

c.
Ernest Wotton
c.
Peter Kormos

c.
Jocelyne Robidoux

Media

c.
Dr. Joel Fried
c.
Advisor.ca

c.
Jim Roache
c.
Toronto Star

c.
Paul Winkler
c.
Globe and Mail



c.
National Post



c.
Investment Executive

[admin]

from industry canada website registry of ottawa lobbyest's comes the Investment Dealers Association true mission in life.

Now if only they were as forthcoming with the truth as to their true mandate..............."

OUR DUAL ROLES AS AN INDUSTRY REGULATOR & TRADE ASSOCIATION ARE COMPLEMENTARY".................

...............if only they were honest with the public, this statement would replace the word "complementary", with "contradictory".



Registration type: In-house (Organization) Lobbyists
Lobbyist number: 0002672
Registration number: 0002672-024
Effective date: 2004-04-20
Date last modified: 2005-06-10

A. Responsible Officer and Employer Information
Last Name: OLIVER
First Name: JOSEPH
Middle Initial: J
Preferred Language: English
Position Title: PRESIDENT & CEO
* Name of Organization: INVESTMENT DEALERS ASSOCIATION OF CANADA
Business Address of the Responsible Officer and Organization:
* Address 1: 1600 - 121 KING STREET WEST
* City: TORONTO
* Province or State: Ontario
* Country: Canada
* Postal or Zip Code: M5H 3T9
* Telephone Number: 416 - 865 - 3020
Facsimile Number: 416 - 364 - 0753
Email Address: ebrady@ida.ca

--------------------------------------------------------------------------------

B. Organizational Lobbyist(s)
* Last Name: OLIVER
* First Name: JOSEPH
Middle Initial: J
* Position Title: PRESIDENT & CEO
* Former Public Office Holder: Unknown

* Last Name: RUSSELL
* First Name: IAN
Middle Initial: C
* Position Title: SENIOR VICE-PRESIDENT, CAPITAL MARKETS
* Former Public Office Holder: Unknown

* Last Name: COCKERLINE
* First Name: JON
* Position Title: DIRECTOR OF CAPITAL MARKETS
* Former Public Office Holder: Unknown


--------------------------------------------------------------------------------

C. Description of Organization

Briefly describe the organization's business or activities
OUR DUAL ROLES AS AN INDUSTRY REGULATOR & TRADE ASSOCIATION ARE COMPLEMENTARY. AS THE NATIONAL SELF-REGULATORY ORGANIZATION OF THE CDN SECURITIES INDUSTRY, THE IDA MONITORS MEMBER FIRMS FROM COAST TO COAST IN TERMS OF BOTH THEIR CAPITAL ADEQUACY & CONDUCT OF BUSINESS. THE QUALIFYING, REGISTERING, COMPLIANCE AND DISCIPLINARY PROCESSES OF THESE FIRMS ALSO IS OUR RESPONSIBILITY. INVESTOR PROTECTION IS A TOP PRIORITY FOR US AS IT IS FOR THE MONTREAL, TORONTO, ALBERTA, & VANCOUVER STOCK EXCHANGES WHICH ALSO MONITOR SOME MEMBER FIRMS IN THEIR RESPECTIVE REGIONS. HOWEVER, AS THE COUNTRY'S ONLY NATIONAL SRO, THE IDA HAS AN ADDITIONAL RESPONSIBILITY TO LISTEN TO THE VIEWS OF PEOPLE IN ALL PARTS OF THE COUNTRY, & TO ENSURE THESE VARIOUS PERSPECTIVES ARE TAKEN INTO ACCOUNT WHEN FORMULATING NATIONAL POLICIES & RULES GOVERNING INDUSTRY PRACTICES & STANDARDS. THIS NATIONAL SELF-REGULATORY FUNCTION OBVIOUSLY CONTRIBUTES TO OUR EFFECTIVENESS AS A TRADE ASSOCIATION DURING ADVOCACY WORK ON BEHALF OF THE SECURITIES INDUSTRY. FROM THE UNCOMMON VIEWPOINT OF REGULATORY RESPONSIBILITY & EXPERIENCE, WE ARE ABLE TO BRING FORWARD CONSTRUCTIVE RECOMMENTATIONS TO THE FEDERAL & PROVINCIAL GOVERNMENTS ON A WIDE RANGE OF POLICY ISSUES THAT IMPACT THE BROADER PUBLIC GOOD.
Briefly describe the organization's membership or classes of membership
ONLY ONE CLASS - FULLY PARTICIPATING (VOTING) MEMBER. ALL MEMBERS ARE PROVINCIALLY REGISTERED AS "INVESTMENT DEALERS".

--------------------------------------------------------------------------------

D. Subject-matters: Areas of concern
Areas of Concern:
Financial Institutions, Taxation and Finance, Other (specify) - CAPITAL MARKETS

--------------------------------------------------------------------------------

E. Subject-matters: Particulars
Retrospective:
ON-GOING BRIEFINGS WITH THE DEPARTMENT OF FINANCE ON CROSS-BORDER REGULATORY ISSUES. ASSIST FINANCE IN CONVEYING THE INDUSTRY POSITION ON SECURITIES MARKET ACCESS IN DEVELOPED COUNTRIES IN CONTEXT OF BILATERAL TRADE AGREEMENTS (E.G. COMMENT ON CHINA'S APPLICATION FOR WTO STATUS). ON-GOING DISCUSSIONS WITH DEPARTMENT OF FINANCE REPRESENTAIVES ON LEGISLATION TO EXPAND ACCESS TO THE CANADIAN PAYMENTS SYSTEM. PRE-BUDGET CONSULTATIONS WITH THE DEPARTMENT OF FINANCE. DISCUSSION WITH DEPARTMENT OF FINANCE ON PROBLEMS WITH RSP ELIGIBILITY OF CERTAIN SECURITIES. BANKING & FINANCE-DISCUSS WITH THE BANK OF CANADA AND THE DEPARTMENT OF FINANCE THE IDA STRIP BOND COMMITTEE'S RECOMMENDATIONS FOR STRIPPING AND RECONSTITUTION OF GOVERNMENT OF CANADA BONDS. COORDINATE WITH BANK OF CANADA AND FINANCE ON RESPONSE TO CSA PROPOSALS FOR DEBT MARKETS. BRIEF DEPARTMENT OF FINANCE AND BANK OF CANADA ON INDUSTRY POSITION ON THE MULTI JURISDICTIONAL DISCLOSURE SYSTEM (MJDS) TO ASSIST FINANCE IN DIRECT REPRESENTATION TO THE US SECURITIES AND EXCHANGE COMMISSION AND THE US DEPARTMENT OF TREASURY. SEMI-ANNUAL MEETINGS WITH BANK AND FINANCE OFFICIALS TO DISCUSS MONETARY POLICY & CAPITAL MARKET ACTIVITIES. BANK OF CANADA-PARTICIPATED IN PRESENTATION ON DEVLEOPING A PRE-SETTLEMENT NETTING SYSTEM TO THE CANADIAN FIXED INCOME MARKETS. WORKED WITH THE BANK TO ADMINISTER A NEW POSITION REPORT TEST IN MARCH PURSUANT TO IDA POLICY #5-CODE OF CONDUST FOR DEALING IN DOMESTIC DEBT MARKETS. RECOMMENDATIONS TO BANK OF CANADA TO ESTABLISH A FORMALIZED TIMEFRAME FOR ANNOUNCING CHANGES IN MONETARY POLICY. REPRESENTATIONS TO THE BANK OF CANADA ON IMPROVEMENTS TO THE CANADA TREASURY BILL AUCTION PROCESS. DISCUSSIONS WITH BANK OF CANADA REQUEST FOR COMMENT ON THE VIABILITY OF THE DAILY MONEY MARKET SURVEY. CONSULTATIONS WITH BANK OF CANADA ON THE DEVELOPMENT AND IMPLEMENTATION OF IDA POLICY #7-CODE OF CONDUCT FOR DEALING IN REPO MARKETS.
Prospective:
RUN THROUGH THE EXERCISE OF PRE-BUDGET CONSULTATIONS WITH THE DEPARTMENT OF FINANCE AND SENATE BANKING COMMITTEE. CONTINUE TO BRIEF THE DEPARTMENT OF FINANCE ON CROSS-BORDER ISSUES. MEET SEMI-ANNUALLY WITH THE BANK AND FINANCE TO DISCUSS MONETARY POLICY AND CAPITAL MARKET ACTIVITIES. PARTICIPATE IN ANY BANK OF CANADA ECONOMIC SURVEYS. CONTINUE TO KEEP THE BANK OF CANADA INFORMED OF THE PROGRESS TOWARDS THE IMPLEMENTATION OF A PRE-SETTLEMENT NETTING SYSTEM FOR THE FIXED INCOME MARKETS. WORK WITH THE BANK TO RUN A SECOND TEST OF THE NET POSITION REPORT TO EVALUATE THE IMPROVEMENTS MADE SINCE THE FIRST TEST. KEEP MONITORING THE AUCTION PROCESS AND DISCUSS WITH THE BANK ANY IMPROVEMENTS THAT COULD BE MADE.

--------------------------------------------------------------------------------

F. Government Institutions
Name of department or other government institutions:
Finance Canada, Other (Specify) - BANK OF CANADA

--------------------------------------------------------------------------------

G. Government Funding
* Is your employer funded in whole or in part by any government or government agency? No

[admin]

17 March 2006



Hon. Gerry Phillips

Minister of Government Services

12th Floor, Ferguson Block

77 Wellesley Street West

Toronto, Ontario

M7A 1N3





Dear Mr. Phillips,



Nearly 18 months ago I, as a citizen of Alberta and as past securities industry participant, was invited to provide evidence before the Ontario Standing Committee on Finance and Economic Affairs (the “Finance Committee”) with respect to securities regulation



My brief presentation, should you choose to review it, is located on the government web site at the following address;

http://www.ontla.on.ca/hansard/committe ... 752_223690



What flowed from the two-day hearings was a resounding and undeniable message from your constituents that the securities regulatory regime was an abysmal failure and that the root of the problem was the self-regulatory organizations.



Subsequently, the Finance Committee recommended a task force be created to perform a review of the self-regulatory organizations. The resulting wording of the recommendation within the Report on the Five Year Review of the Securities Act is as follows:



The testimony received by the Standing Committee revealed a deep-seated skepticism on the part of the investing public. They simply are not confident that complaints will always be handled in an objective manner under a system of self-regulation.



Further that



We believe the question of whether SROs should be given more powers or, indeed, whether they should have any powers at all, should be the subject of further review by a task force established to examine this specific issue.



You might think that living in western Canada might give me a different perspective on the SROs, in particular the Investment Dealers Association (“IDA”), well perhaps it does. In the end however the conclusion arrived at by Albertan retail investors is no different than Ontarian retail investors. As I said in my presentation;



I believe that the Investment Dealers Association should be eliminated from any role whatsoever of a self-regulatory nature. They are an industry trade association and, as such, they are interested in the benefits and the protection of their members. They are, in my opinion, equivalent to allowing the foxes to watch the henhouse and they're not doing the job of protecting or compensating the public -- to see the mandate of the IDA written is “to protect investors” -- and based on my 20 years in the industry, I find that sad.



The IDA is a private industry lobby group and trade association (club) which has been for some years misleading and masquerading as a regulatory body, at considerable harm to the public, in my experience.



The Ontario Securities Commission has improperly delegated securities law matters to this private club of investment dealers for years and that, I believe, is an assault on the trust the public has placed in government. I believe this assault on the public trust could fall under section 22 of the criminal code for public officials, “breach of trust”.



The IDA may be able to police their membership, their capital requirements and their behavior, but they should not be allowed to administer a parallel, and let me add the terms inferior and self serving, system of regulation thrust upon the public. They have been wrongly allowed to do this by rather nearsighted provincial regulators, and it is apparent that what we have received is self-interest and not self-regulation. This must be clarified and stopped if my assumptions are correct.



Again, one only has to look to the west to see the Saskatchewan Financial Services Commission (“SFSC”), clearly delineating the boundaries of the authority of the IDA. The SFSC ruled last month that the IDA has no authority/jurisdiction to go after a broker once the broker has left the club.



Here is an excerpt from the decision;



“Since the IDA has no authority to regulate former members or former approved persons either under its bylaws or in contract, it has no jurisdiction.” - William F. Ready, Q.C., Commissioner



That means, exactly what investors have been saying for 10 years, that the IDA has been misleading the public by issuing hollow orders claiming disgorgements of ill gotten gains, million dollar fines and demanding payment of “court” costs to appease those who have been financially raped, saying how ‘look how serious we are’ in protecting the public – when we know that they can’t – nor should they be allowed to pretend any further that they can.



The IDA has repeatedly misinformed the public that they represent the public interest. The Competition Act should be a strong deterrent for this type of misrepresentation and I have asked that they look into this. Copies of correspondence with Industry Canada are available at www.investoradvocates.ca



The Ontario capital markets are too important to permit an industry club to protect investors when they are the ones with the greatest potential to profit from a breakdown in that protection. The conflicts are too great, the money is too tempting and the results are too well known to allow this to continue.



It is too late to restore credibility to this organization. They have served themselves, time and again, and the public be damned. Whether the IDA “separates” its lobby function from its member regulatory function or not will not help investors.



I look forward to hearing from you at your earliest convenience, and I look forward to your promise of an inquiry (“review”) into the Investment Dealers Association.



Regards,



Larry Elford, (former CPF, CIM, FCSI, Associate Portfolio Manager, retired 2004)

Lethbridge, Alberta



For further information please see:



www.investorvoice.ca/regulators/Reports ... Index.html



www.investoradvocates.ca





c. Hon. Dalton McGuinty, Premier of Ontario

c. Hon. Dwight Duncan, Ontario Minister of Finance

c. Hon. Jim Flaherty, Federal Minister of Finance

c. John Tory, Leader, Official Opposition

c. Howard Hampton, Leader, NDP Party

c. Financial Post

c. Globe and Mail

[urquhart]

Diane A. Urquhart,
1486 Marshwood Place,
Mississauga, Ontario, L5J 4J6
Phone: (905) 822-7618
FAX: (905) 822-0041
urquhart@rogers.com


March 22, 2006


Honourable Minister Gerry Phillips,
Minister of Government Services,
Queen's Park, Management Board Secretariat,
77 Wellesley St W, 12th Floor, Ferguson Block,
Toronto Ontario, M7A 1N3
Telephone: 416-327-2333
FAX: 416-327-3790
E-mail: gphillips.mpp@liberal.ola.org

Dear Honourable Minister Gerry Phillips:

I am writing today to express my disappointment in your government’s failure to date in implementing most of the recommendations of the Ontario Standing Committee on Finance and Economic Affairs from the Five Year Review of the Ontario Securities Act that are attached below. Since October 18, 2004, white collar crime has accelerated and we have a pending $20 billion calamity in income trusts and income mutual funds, caused by financial reporting and marketing abuses, that is not receiving any urgent remedies or sanctions. There has been no published criticism of the Accountability Research Report entitled “The Worst is Yet to Come: The $20 Billion Deception that Dwarfs the Tax Debate.” This report’s findings on deceptions in cash yield and the unsustainability of most income trusts have been subsequently confirmed by Standard and Poors and Strategic Analysis Corporation.

David Wilson, new Chairman of the OSC and former C.E.O of Scotia Capital, may be concerned about his own reputation and civil liability associated with Scotia Capital’s co-lead in one third of the business income trusts and participation in two thirds of the syndicates for these deceptive products sold to seniors and other income seeking investors. I also know the Investment Dealers Association has been neutered and spayed by the February 6, 2006 decision of William F. Ready, Q.C., Commissioner of the Saskatchewan Financial Services Commission that “the IDA has no authority to regulate former members or former approved persons either under its bylaws or in contract, it has no jurisdiction.”





It is particularly disappointing that your government’s efforts to gain support for a single national securities commission are through the Crawford Panel, which is a private sector committee funded by Ontario government taxpayers. Yet, the Crawford Panel has no Ontario Government officials on it, no individual investor representatives and no policing expertise. The proposed single commission structure has the same fundamental defect of ill-perceived industry funding and no accountability to the public for the integrity and effectiveness of its investor protection mandate. We are well past the one year period for initiating the separation of the OSC policing and adjudication function, that was recommended by Honourable Coulter Osborne, the Ontario Ethics Commissioner, and supported by all the parties in the Ontario Legislature.

I ask you to convene an urgent hearing by the Ontario Standing Committee on Finance and Economic Affairs on the two subjects of:

(a) immediate solutions for fixing the deceptive cash yields being marketed by income trusts and their investment bankers to our least sophisticated, most trusting and most financially vulnerable Ontario residents, our seniors.

(b) immediate changes in Ontario securities laws and OSC procedures to address the new Saskatchewan Financial Services Commission decision that the IDA has no authority to regulate former members or former approved persons, which makes the current OSC delegation of complaints from individuals for investor losses caused by industry personnel malfeasance a breach of trust.


Yours sincerely,



Diane A. Urquhart
Mississauga, Ontario

CC: All Ontario Members of Parliament

Ontario Standing Committee
on Finance and Economic Affairs
5 Year Review of the Ontario Securities Act


On October 18, 2004, the Standing Committee on Finance and Economic Affairs (the "Standing Committee") tabled in the Legislative Assembly of Ontario its "Report on the Five Year Review of the Securities Act." This report follows public hearings that the Standing Committee held in August 2004 as part of its review of the Five Year Review Committee Final Report: Reviewing the Securities Act, tabled in the Ontario legislature in May 2003. In this latter report, the Five Year Review Committee, chaired by Purdy Crawford, Q.C., made 95 recommendations dealing with many aspects of securities regulation in Ontario.

The Standing Committee's unanimous report contains the following 14 recommendations.

1 The next review committee should be struck in May 2007. The committee should deliver an interim report by May 2008 and a final report by early 2009. Thereafter, a review committee should be appointed four years after the date of the establishment of the previous committee. This recommendation is in no way intended to discourage or preclude the Minister of Finance from initiating reviews of individual issues, as necessary.
2 The Standing Committee recognizes the critical need for a single securities regulator, and strongly recommends that the Ontario government continue to work with all stakeholders, including Ministers in other provinces, toward the development of a single securities regulator. The key elements of the new regulatory system should be one new regulator, one common body of securities law and one set of fees. X Crawford Panel has no Ontario government representatives, no individual investor representatives and no policing expertise. The panel does not propose accountability to the public for the integrity and effectiveness of its investor protection laws and enforcement.
3 The government should introduce securities transfer legislation modelled on revised Article 8 of the Uniform Commercial Code in the United States. √
4 The Standing Committee believes that the status quo is unacceptable, and recommends that the government initiate a review of the Legislature’s oversight of the Ontario Securities Commission. Any new oversight mechanism should include a requirement that the annual reports of the Commission be automatically referred to a Committee of the Legislature, and should ensure that the Committee has the ability to compel witnesses to appear before it, including the responsible minister, to answer questions regarding progress in implementing recommendations approved by the Legislature. X
5 The adjudicative function of the Ontario Securities Commission should be separated from its other functions, based on the recommendations of the Fairness Committee. X
6 The Ontario Securities Commission should not be given basket rulemaking authority. √
7 The Ontario Securities Commission should not be given power to issue blanket rulings and orders; however, the Standing Committee recognizes that the Commission needs to be able to act in a timely manner and asks the government to study alternative mechanisms that would enhance efficiency, without sacrificing investor protection. √
8 The government should closely monitor the implementation of Recommendation 28 of the Crawford Report (page 102), and should ask the Ontario Securities Commission to report on the progress in implementation in its annual report to the Legislature. X
9 The government should establish a task force to review the role of SROs, including whether the trade association and regulatory functions of SROs should be separated. X
10 The government should reintroduce the relevant provisions of the former Bill 41, and proclaim the civil liability provisions of Bill 198. √
11 The Ontario Securities Commission should be given rulemaking authority over corporate governance matters generally, as recommended in Recommendation 61 of the Crawford Report (page 174). √

12 The government should introduce legislation to amend the proxy solicitation rules in Ontario’s corporate and securities laws, as recommended in Recommendation 62 of the Crawford Report (page 180).

13 The Ontario Securities Commission and the CSA should require publicly offered mutual funds to establish and maintain an independent governance body that provides for substantial investor protection. X
14 The Standing Committee recommends that the government work with the Ontario Securities Commission to establish a workable mechanism that would allow investors to pursue restitution in a timely and affordable manner and that the government report on its progress in this regard within 12 months. This work should take into account any measures to separate the adjudicative function of the Commission. X

[admin]

March 27, 2006
To: Investment Dealers Association
Industry Self Regulating side, not Trade Association please

Suite 1600, 121 King Street West ,
Toronto , Ontario M5H 3T9
Tel:(416) 364-6133 Fax:(416) 364-0753
Enforcement Matters Only: Fax (416) 364-2998

Dear Sir or madam,


I have learned a great deal since making my initial complaint about self-dealing practices such as double dipping, charging commissions on top of fee accounts, and or charging fees on top of commission accounts. I have since seen two account statements from separate retired people where they paid commission on investment products, only to be convinced later that a fee based account was in their best interest. The account was changed into fee based and they were dealt an additional cost, over and above what they had already paid. Why? In whose interest would this change be?

The one retired couple, when pointed out what had just occurred to them, said they were resigned to accept this kind of "financial abuse". When I asked them why, they replied that there is no use questioning such a large corporation. That is the feeling of those who know the risks of speaking out against the firms your association represents. An unfair, partial, and bullying response is what they expected. So they remained silent. I still have copies of their statements to prove the double dipping.

The other retired individual, whose account I have copy of, also was charged fees on top of commissions already paid, with no subsequent improvement or change in her investments, just an additional fee to the advisor. When I wrote in my complaint about this, the RBC response was mixed:

1) First RBC responded by saying that double dipping is a bad practice and that they "frown" on it.
2) Second RBC response was to point out that the fine print in the account opening documents clients sign allow such additional charges to be placed on accounts.
3) Third response was that if the client was given a discount, or a reduced fee on top of the already paid commission, then they were actually saving money.

The second retiree tells me that her response to her complaint (from the IDA, no less) was the third one. They made her feel like a fool for having complained. Told her that, in fact her advisor charged her an additional fee of less that he could have, and therefore, she was the beneficiary of his generosity. End of complaint. IDA bows out.

She could have pursued this complaint (as I hope you now will have the will to) but she also was resigned to the fact that the large corporation, as well as the carefully made up protective agency (IDA) would not be worth fighting with, as she was retired and did not have the emotional energy to engage them if they were unwilling to admit to wrongs of their salespersons.


My problem with the retired client who was charged at least twice, is that the IDA ignored the fact that a trusted investment firm claiming trusted advisor status with this person, just added an additional cost to this persons account, without adding any benefit to the client. This appears to me to be a clear violation of the Securities Act, in so many ways. To be specific, a violation of the portion of the act that states that each and every transaction must be for the benefit of the client. How could the IDA look the other way, and in fact participate in such a response to such an action?

I only hope that the changes now made at the IDA have ensured that this kind of "paid industry enforcer" behavior does not occur in future, and that your newly polished organization is now prepared to actually investigate the cases and the complaints that are brought to your attention. I copy this letter to some interested senators and others in media and government in hope of renewing an investigation into these double dipping allegations, and if necessary, investigation into the objectivity and benefit to the public interest of the IDA itself as a self regulatory agency. That is exactly what was called for by the Ontario Standing Committee on Finance and I look forward to an open and transparent investigative process of your organization.

Thank you for taking the time to assure myself and others, of the intentions and the actions that the IDA is willing to take in this matter. (double dipping complaint by RBC representatives and client examples of same discovered after leaving firm)

Below is a request for proper investigation into my original allegations of double dipping against RBC, as well as some industry relevant questions that have arisen from IDA actions since.
Now that the IDA has separated it's regulatory function from it's lobby association, I feel slightly more confident that an objective investigation may be made into a case of investment firm wrongdoing that I complained of originally. I have also had time to better understand the process by which you operate and the system, and I enclose additional questions as a result. I would appreciate it if your organization could respond to this inquiry and these questions.

The original complaint was given to you in 2002, and was handled at that time by a Steve Quinn. I felt it was not handled in proper manner for several reasons. I could be wrong on any of them, but I did have the feeling none-the-less.

First, my complaints to the Alberta Securities Commission about what I felt to be clear violations of several sections of the Securities Act, were seemingly ignored by the ASC, and the issue was referred to you, the IDA. I am told that is standard industry practice, but my reading and my research indicate to me that this practice may not be proper according to the securities act. I understand that provincial securities commissions are responsible for policing the securities act, and that the IDA responsibilities may be limited to capital requirements, registration requirements, and other areas of self-policing of IDA member behavior and standards.

Question # 1. Can the IDA tell me with any clarity; exactly what powers are granted to it, and what powers are not granted to it as a self-regulatory agency? I am unclear on where securities act violations should be directed, or complaints about investment people, or investment firms. Can you tell me when a provincial securities commission is responsible for a complaint, and when the IDA takes responsibility? I would appreciate a reply as simple and concise as possible for the benefit of public clarity on this matter. Although I worked in the industry for twenty years, it was never made clear to me.

Another assumption I made was that the IDA was industry funded, industry based and industry focused, and therefore was not the most appropriate or the most objective organization to make complaint to about the industry. I felt that the obvious conflict of interest in complaining about abuses to the association of your abuser would be easily recognized and professionally admitted by your association.

Question # 2 Can the IDA outline what steps have been taken to restore the credibility of the IDA as an impartial, unbiased, self regulatory agency, and specifically, how my complaint, (or other members of the public) against the industry will be handled in future? I am sure you are aware of a general feeling among the industry, that the IDA has acted in the past as a "paid enforcer" of the industry. I can point to several public cases where the IDA has appeared to acting more in this type of role, than in the role of protector of the public. Is there an independent, documented, professional process being now followed, or are files handled in a manner similar to the arbitrary, selective and haphazard manner that the Alberta Securities Commission practiced, as suggested by our auditor general in Alberta?

Question #3 I will repeat, and re-issue my complaint about RBC investment practices which were not in the spirit or the letter of the securities act to you, and ask that you undertake proper investigation into them at this time, instead of your previous response on the matter. I felt your previous response was to turn responsibility back on myself to do my own investigation and make the case for you, and that would be both difficult and illegal for me to access the internal records of RBC. I feel you can and should be doing the investigation yourself, in response to allegations of fraudulent or criminal activity. Again, I apologize if I am mistaken, but the IDA history of being both self regulator (without clearly defining these roles), and industry lobby group, has, as I am sure you will recognize, tainted your claims of objectivity in the past.

Question #4 What, if any, investigation was undertaken by the IDA into my allegations of double dipping and self dealing, and failure to follow codes, laws and practices, in effect failure to follow the spirit or the letter of the securities act when I made complaint about RBC practices. In general my complaints revolved around a firm that promises daily to the public that they will place "YOU FIRST", and from my position inside the firm I found this promise was somewhat empty when ethics and money making came into conflict (by some specific investment salespeople).

Question #5 Can the IDA clarify for me how it is legal for investment salespeople, who are registered as investment salespeople under the law of the Securities Act, and qualified as investment salespeople, to be able under IDA oversight, to advertise themselves as investment advisors, which I understand has a separate and distinct set of educational and experience requirements under the securities act that many of these (90% or more) simply do not meet? I notice my local Toyota dealership advertising that its salespersons are no longer called salespersons, but rather, "product advisors" for marketing reasons. Is there legal precedent to allow this same kind of "marketing label" to be made up for investment people, and is this allowed under the law? Is allowing a salesperson to misrepresent themselves allowed under the securities act. If this practice is not specifically allowed under the law, why would it be allowed under IDA supervision?

Question #6 Does the IDA participate in the Freedom Of Information Act, and if so, will they consent to release the files associated with this complaint, and evidence of any and all actions they have taken as a result of this complaint?

Question #7 What is the appeal process and how does one access it, in matters where the IDA has made a decision than a person feels should be handled more independently?

Thank you for taking the time to clear up some matters of public interest.
I look forward to you early reply.
Regards

Larry Elford
#214, 905 – 1 Ave South
Suite #312
Lethbridge AB T1J 4M7
www.investoradvocates.ca

Cc: The Centre for the Financial Services OmbudsNetwork
20 Toronto Street, Suite 710
Toronto, Ontario M5C 2B8

Hon. Gerry Phillips
Minister of Government Services
12th Floor, Ferguson Block
77 Wellesley Street West
Toronto, Ontario
M7A 1N3

Hon. Dalton McGuinty, Premier of Ontario
Hon. Dwight Duncan, Ontario Minister of Finance
Hon. Jim Flaherty, Federal Minister of Finance
John Tory, Leader, Official Opposition
Howard Hampton, Leader, NDP Party

Financial Media

Investor Advocates

[admin]

April 2006

Advisors must answer to two authorities


Nova Scotia court rules securities commission can investigate allegations in case arising from Portus

By Donalee Moulton


In a decision that sets a precedent in Canada, the Nova Scotia Court of Appeal has ruled that the province’s securities commission has as much authority to investigate and discipline a member of the Mutual Fund Dealers Association as does the MFDA itself.

“To the best of my knowledge, this is the first time a court of appeal in Canada has dealt with the question of exclusivity of jurisdiction of a self-regulatory organization,” says Nick Pittas, director of the Nova Scotia Securities Commission in Halifax.

For financial advisors, the court ruling means at least two organizations have the legal authority to take action at the same time against an individual who is alleged to have broken the rules of his or her SRO, whether the SRO is the MFDA or the Investment Dealers Association of Canada.

Jeff Kehoe, director of enforcement litigation at the IDA, notes that while the decision doesn’t change anything, “It reinforces the commission’s power.”

At issue in the case before the appeal court were the activities of Bruce Schriver, a registered salesperson who worked for Select Money Strategies Inc. , a member of the MFDA. Schriver was alleged to have entered into a referral arrangement with Portus Alternative Asset Management Inc. unbeknownst to Select. Doing this type of work on the side is contrary to MFDA rules.

NSSC staff argued that by breaking MFDA rules, Schriver also breached the Nova Scotia Securities Act, so the commission moved to take action. Schriver blocked that action by claiming the commission did not have the authority to determine whether he had contravened the MFDA’s rules. He contended only the MFDA could do that. He could not, however, find a court that agreed with him.

For its part, the Nova Scotia Court of Appeal found that the NSSC was not seeking to enforce the rules of another organization, specifically the MFDA, but rather its own.

And duplication was a moot point in this case. Only the NSSC was investigating Schriver. “There was nothing going on on the SRO side,” says Pittas. “The court case was a legal effort to avoid our proceedings. It failed.”

The court, however, went beyond looking at just one question. It also explored two related issues, and made significant determinations. First, the Court of Appeal reversed a lower court’s finding and determined that the “standard of review,” a legal term that describes the extent to which an organization or individual should be held accountable, is “reasonableness” not “correctness.”

Correctness is the harder standard to meet.

This means the NSSC only has to show that a decision it makes is reasonable. It does not have to demonstrate that the decision is right.

This has significant ramifications, says Pittas, because it shows the level of deference that should be paid to the commission. Nova Scotia Appeal Court Justice Thomas Cromwell clearly spelled out in his decision just how deferential the courts should be: “The Supreme Court of Canada has consistently recognized the considerable expertise of securities commissions. And, given the broad policy context within which securities commissions operate, courts have been held to have less expertise relative to the commissions in determining what is in the public interest in the regulation of financial markets and in interpreting their constituent statutes.”

Says Pittas: “This sends a powerful message to the [financial services] industry.”

The second issue dealt with an argument by Schriver that because a recognition order had been granted to the MFDA by the commission under the securities act, this constituted an implied delegation of authority to the MFDA. Not so, said the court. Any such delegation, it found, must be an express delegation in writing.

“This hasn’t been done in any jurisdiction in Canada,” says Pittas. “No securities commission has delegated any of its enforcement powers.”

Nor is that likely to happen.

And it appears to be business as usual. In Nova Scotia, the winding legal road has at last come to an end. Now the securities commission must return to where the journey began: investigating the allegations against Schriver.

“The matter will have to be brought back for a hearing,” Pittas says.

That process is just fine by the MFDA. “The securities commissions always retain and will always retain their legal authority to deal with issues directly,” says Shaun Devlin, vice president of enforcement at the MFDA.

The IDA holds the same viewpoint. “The commissions all have the statutory power to do exactly what we do, but they have allowed us to do a lot of the front-line work,” says Kehoe.

“There is truly overlap in jurisdiction,” he adds. “We recognize that, but we complement one another.”

They also work well together, which is why there is little duplication of effort or butting of heads. “As a practical matter, not every issue is going to give rise to dual proceedings,” says Pittas, adding that the statutory regulator will have to consider whether it needs to act if there is already a pending proceeding or investigation underway by an SRO.

Indeed, according to Devlin, the organizations are adept at co-ordinating activities: “We work closely with commission staff. On some occasions, we both review a case, but this is the rare exception.” IE

(advocate comments............In this story, the misdirection that the IDA is using is that they "complement one another". In practice, I have found the IDA to be the paid enforcers of the industry. They have been willing to look the other way at investment practices that seriously hurt investors.

It is no wonder, when you recognize that they are a trade organization and lobby group for the industry. They are paid by the industry. Staffed from the industry. They may claim they serve two masters well, but I claim that they serve the master with the money and only pretend to serve the other.
I am gratified to see provincial securities commissions finally coming to recognize IDA failure to be impartial, and starting to take away some of the powers that they never should have had to begin with)

[admin]

April 3, 2006

To: Letters to the Editor

From: Larry Elford
Lethbridge, Alberta

Re: Investment fraud and misrepresentation condoned by industry and regulators.

Now that the Nova Scotia court of appeal has confirmed that the provincial securities commission has not only the right, but the requirement to enforce the Securities Act of that province, it becomes clearer that what the Investment Dealers Association and other industry sponsored “self” regulators have been doing is either illegal, or at very least misrepresentation to the public.

What they have been doing for at least twenty years that I am aware of, is claming the status of a protector of the public, and an enforcer of securities law. The Provincial Securities Commissions have been complicit in this in that they have gone along with the deception as a matter of convenience. It has simply been easier for them to “delegate all matters” to the IDA, rather than to recall that the IDA simply does not have the power nor the mandate to enforce the law. There is no legal right for a securities commission to delegate legal matters of securities law to an industry lobby group. This is akin to the police delegating all crack dealing offenses to the Hells Angels.

The IDA is what I might call a “paid enforcer” for the industry. They are registered in Ottawa as a lobbyist for the Investment Dealers they represent. For them to claim any for of regulatory status with regard to public protection is deceiving, as they are pretending to serve two masters at the same time.

Now (as recent as December 2005) the IDA is starting to admit to the serving of two masters, and has voted to split into two parts. One part as self-regulator, and a second part as the industry trade and lobby group. Time will tell if this move is sincere, or simply another change of costume for this organization.

Saskatchewan Financial Securities Commission has also recently come out with a decision recognizing the impropriety of many of the powers that the IDA assumed, or claimed. Maybe things will get better for members of the public.

But what of all the damaged, defrauded, or financially abused members of the Canadian public who have made the effort to complain in the last twenty years? Where do they get a fair hearing for the wrongs done them? In the past, (and perhaps today still) if they wrote to a provincial securities commission about bad investment practices at an IDA member firm, the securities commission referred the complaint directly to the IDA to investigate. Not that they had the legal authority to do so, but it seemingly was a matter of greater convenience to the provincial commissions. It would be like complaining of abuse, and being referred to the very group who abused you to seek a fair hearing. The conflicts of interest are huge. The legal ramifications of each commission dropping their responsibility for the law (Securities Act) are bigger.

Will there be civil actions? Should anyone who has complained to a provincial securities commission on a matter pertaining to an IDA firm protest? Or should the IDA have it’s day in criminal court and be held to the standards of the public officials that they pretend they are. Should criminal breach of trust (section 122) be considered for the duplicity and misrepresentation they have dealt in for years. Does breach of trust apply to the provincial securities commissions for looking the other way when charged with enforcing the law? I feel all of the above should be considered based on the history of financial violence the industry has wrought in the name of profits. The competition Act protects the public from misrepresentation. Perhaps the Competition Bureau will take the time to investigate.

I look for an open, honest airing of the issue, and for the provincial securities commissions to immediately cease improper delegation of the Securities Act to industry sponsored, industry paid, and industry leaning organizations of all stripe, and to start enforcing the Securities Act, rather than ignoring it.

I am Larry Elford, and I worked in the industry for twenty years. I earned the designations, CFP, CIM, FCSI, Associate Portfolio Manager, as well as the angst of several of my industry colleagues for my views about putting clients interests first. For more reading on this topic visit, www.investoradvocates.ca or www.investorvoice.ca

Lethbridge, Alberta
investoradvocate@shaw.ca

[admin]

The IDA is now in a marathon to re-capture any credibility they may have once had. It will be an uphill battle due to the record of failure by the IDA to walk the talk for so long. Below is a new release as evidence of the efforts of the organization to try and merge their way back into the game. The MFDA wisely declined a marraige proposal by the IDA, and now it seems they have finally found a partner.

In the post following I will copy a letter sent twice to the IDA for answers on legal and policy issues that they refuse to disucss so far. If they continue to refuse dialogue on issues of interest and importance to the public, they will unfortunately have to remain in the backwash. The only way for this organization to move forward is to address the wrongs of the past, admit them, and take whatever steps to correct them. It seems we all must do this at some time. I look forward to some honest admissions or at very least some credible answers from the IDA.



IDA and RS announce merger approval


New entity to provide stronger, streamlined regulation


Wednesday, April 26, 2006


By IE Staff


The Boards of Directors of the Investment Dealers Association of Canada and Market Regulation Services Inc. announced today that they have approved in principle a proposal to create a new self-regulatory organization to succeed the IDA and RS.

A joint-steering committee has been established by the IDA and RS — which will work closely with the relevant oversight bodies, Canadian securities administrators in particular, as well as capital markets stakeholders. The committee’s responsibility is to develop a detailed implementation plan for approval. The detailed merger plan will be subject to various regulatory approvals and by IDA membership and RS shareholders.

“The new organization will further strengthen self-regulation within the Canadian securities industry and enhance the already strong levels of investor protection and market integrity,” says Bill Moriarty, RS chairman.

The unified SRO will create greater clarity for investors and further improve regulatory effectiveness by eliminating duplication and gaps. The new entity will contribute to better coordination of policies and procedures for overall regulation. In addition, the improved capacity and single profile will allow it to attract and retain talent. It will also participate more effectively in domestic policy initiatives and help enhance the global status of the Canadian capital markets.

“Combining member and market regulation will enhance the quality of self regulation in Canadian markets,” says Brian Porter, past IDA chairman. “The initiative is timely, given the recent reorganization of the IDA, the review of the SRO structure by Canadian and U.S. securities regulators and the ongoing national discussion about the need to harmonize Canada’s regulatory system.”

The new entity would be expected to operate on a not-for-profit basis. Stakeholders would initially include all those currently regulated by the IDA or RS, as well as marketplaces that have contracted with RS for outsourced regulation services. The governance structure is intended to be sufficiently robust to facilitate a broader range of responsibilities for the new entity over time, should other industry groups choose to participate.

[admin]

March 27, 2006
To: Investment Dealers Association
Industry Self Regulating side, not Trade Association please

Suite 1600, 121 King Street West ,
Toronto , Ontario M5H 3T9
Tel:(416) 364-6133 Fax:(416) 364-0753
Enforcement Matters Only: Fax (416) 364-2998

Dear Sir or madam,


I have learned a great deal since making my initial complaint about self-dealing practices such as double dipping, charging commissions on top of fee accounts, and or charging fees on top of commission accounts. I have since seen two account statements from separate retired people where they paid commission on investment products, only to be convinced later that a fee based account was in their best interest. The account was changed into fee based and they were dealt an additional cost, over and above what they had already paid. Why? In whose interest would this change be?

The one retired couple, when pointed out what had just occurred to them, said they were resigned to accept this kind of "financial abuse". When I asked them why, they replied that there is no use questioning such a large corporation. That is the feeling of those who know the risks of speaking out against the firms your association represents. An unfair, partial, and bullying response is what they expected. So they remained silent. I still have copies of their statements to prove the double dipping.

The other retired individual, whose account I have copy of, also was charged fees on top of commissions already paid, with no subsequent improvement or change in her investments, just an additional fee to the advisor. When I wrote in my complaint about this, the RBC response was mixed:

1) First RBC responded by saying that double dipping is a bad practice and that they "frown" on it.
2) Second RBC response was to point out that the fine print in the account opening documents clients sign allow such additional charges to be placed on accounts.
3) Third response was that if the client was given a discount, or a reduced fee on top of the already paid commission, then they were actually saving money.

The second retiree tells me that her response to her complaint (from the IDA, no less) was the third one. They made her feel like a fool for having complained. Told her that, in fact her advisor charged her an additional fee of less that he could have, and therefore, she was the beneficiary of his generosity. End of complaint. IDA bows out.

She could have pursued this complaint (as I hope you now will have the will to) but she also was resigned to the fact that the large corporation, as well as the carefully made up protective agency (IDA) would not be worth fighting with, as she was retired and did not have the emotional energy to engage them if they were unwilling to admit to wrongs of their salespersons.


My problem with the retired client who was charged at least twice, is that the IDA ignored the fact that a trusted investment firm claiming trusted advisor status with this person, just added an additional cost to this persons account, without adding any benefit to the client. This appears to me to be a clear violation of the Securities Act, in so many ways. To be specific, a violation of the portion of the act that states that each and every transaction must be for the benefit of the client. How could the IDA look the other way, and in fact participate in such a response to such an action?

I only hope that the changes now made at the IDA have ensured that this kind of "paid industry enforcer" behavior does not occur in future, and that your newly polished organization is now prepared to actually investigate the cases and the complaints that are brought to your attention. I copy this letter to some interested senators and others in media and government in hope of renewing an investigation into these double dipping allegations, and if necessary, investigation into the objectivity and benefit to the public interest of the IDA itself as a self regulatory agency. That is exactly what was called for by the Ontario Standing Committee on Finance and I look forward to an open and transparent investigative process of your organization.

Thank you for taking the time to assure myself and others, of the intentions and the actions that the IDA is willing to take in this matter. (double dipping complaint by RBC representatives and client examples of same discovered after leaving firm)

Below is a request for proper investigation into my original allegations of double dipping against RBC, as well as some industry relevant questions that have arisen from IDA actions since.
Now that the IDA has separated it's regulatory function from it's lobby association, I feel slightly more confident that an objective investigation may be made into a case of investment firm wrongdoing that I complained of originally. I have also had time to better understand the process by which you operate and the system, and I enclose additional questions as a result. I would appreciate it if your organization could respond to this inquiry and these questions.

The original complaint was given to you in 2002, and was handled at that time by a Steve Quinn. I felt it was not handled in proper manner for several reasons. I could be wrong on any of them, but I did have the feeling none-the-less.

First, my complaints to the Alberta Securities Commission about what I felt to be clear violations of several sections of the Securities Act, were seemingly ignored by the ASC, and the issue was referred to you, the IDA. I am told that is standard industry practice, but my reading and my research indicate to me that this practice may not be proper according to the securities act. I understand that provincial securities commissions are responsible for policing the securities act, and that the IDA responsibilities may be limited to capital requirements, registration requirements, and other areas of self-policing of IDA member behavior and standards.



Question # 1. Can the IDA tell me with any clarity; exactly what powers are granted to it, and what powers are not granted to it as a self-regulatory agency? I am unclear on where securities act violations should be directed, or complaints about investment people, or investment firms. Can you tell me when a provincial securities commission is responsible for a complaint, and when the IDA takes responsibility? I would appreciate a reply as simple and concise as possible for the benefit of public clarity on this matter. Although I worked in the industry for twenty years, it was never made clear to me.

Another assumption I made was that the IDA was industry funded, industry based and industry focused, and therefore was not the most appropriate or the most objective organization to make complaint to about the industry. I felt that the obvious conflict of interest in complaining about abuses to the association of your abuser would be easily recognized and professionally admitted by your association.

Question # 2 Can the IDA outline what steps have been taken to restore the credibility of the IDA as an impartial, unbiased, self regulatory agency, and specifically, how my complaint, (or other members of the public) against the industry will be handled in future? I am sure you are aware of a general feeling among the industry, that the IDA has acted in the past as a "paid enforcer" of the industry. I can point to several public cases where the IDA has appeared to acting more in this type of role, than in the role of protector of the public. Is there an independent, documented, professional process being now followed, or are files handled in a manner similar to the arbitrary, selective and haphazard manner that the Alberta Securities Commission practiced, as suggested by our auditor general in Alberta?

Question #3 I will repeat, and re-issue my complaint about RBC investment practices which were not in the spirit or the letter of the securities act to you, and ask that you undertake proper investigation into them at this time, instead of your previous response on the matter. I felt your previous response was to turn responsibility back on myself to do my own investigation and make the case for you, and that would be both difficult and illegal for me to access the internal records of RBC. I feel you can and should be doing the investigation yourself, in response to allegations of fraudulent or criminal activity. Again, I apologize if I am mistaken, but the IDA history of being both self regulator (without clearly defining these roles), and industry lobby group, has, as I am sure you will recognize, tainted your claims of objectivity in the past.

Question #4 What, if any, investigation was undertaken by the IDA into my allegations of double dipping and self dealing, and failure to follow codes, laws and practices, in effect failure to follow the spirit or the letter of the securities act when I made complaint about RBC practices. In general my complaints revolved around a firm that promises daily to the public that they will place "YOU FIRST", and from my position inside the firm I found this promise was somewhat empty when ethics and money making came into conflict (by some specific investment salespeople).

Question #5 Can the IDA clarify for me how it is legal for investment salespeople, who are registered as investment salespeople under the law of the Securities Act, and qualified as investment salespeople, to be able under IDA oversight, to advertise themselves as investment advisors, which I understand has a separate and distinct set of educational and experience requirements under the securities act that many of these (90% or more) simply do not meet? I notice my local Toyota dealership advertising that its salespersons are no longer called salespersons, but rather, "product advisors" for marketing reasons. Is there legal precedent to allow this same kind of "marketing label" to be made up for investment people, and is this allowed under the law? Is allowing a salesperson to misrepresent themselves allowed under the securities act. If this practice is not specifically allowed under the law, why would it be allowed under IDA supervision?

Question #6 Does the IDA participate in the Freedom Of Information Act, and if so, will they consent to release the files associated with this complaint, and evidence of any and all actions they have taken as a result of this complaint?

Question #7 What is the appeal process and how does one access it, in matters where the IDA has made a decision than a person feels should be handled more independently?

Thank you for taking the time to clear up some matters of public interest.
I look forward to you early reply.
Regards

Larry Elford

[admin]

I am writing to attempt to prevent financial injustice upon Canadians.

The injustice I seek to prevent is the attempt by the Investment Dealers Association of Canada to make cosmetic changes to it’s organization in an attempt to win further powers as a self regulator in the financial services industry.

I have found during a career in the financial services industry that the IDA has masqueraded as “a regulator with an interest in the protection of the public”, when in fact they have been no more than an industry trade association and lobby group, and their true interests have been to protect industry members. As recent as 2005, they have as much as admitted to this charge by agreeing to split apart their organization into an industry lobby group and a separate quasi regulator. This is a costume change in my opinion. They still refuse to answer public questions as to what quasi regulator status they actually have, verses what they represent to the public.

As stated in Gary Weiss’s new book, titled, “Wall Street Versus America: The Rampant Greed and Dishonesty That Imperil Your Investments”;

“Self-regulation doesn’t protect the public from Wall Street,” he writes. “It protects Wall Street from you.”

I found this all too true while I was in the industry for twenty years, and still find it to be the case, even while watching groups like the IDA go through costume change after costume change in an attempt to maintain their “cover”. This quote applies equally as well to Bay Street.

I found clear-cut examples of when the rules where more likely to be overlooked, or more likely to be enforced. They were more likely to be overlooked when the rule was in the protective interest of the public, and they were likely to be never overlooked when they were in the protective interest of the industry. As the industry is self-regulating, they report to no one, and answer to no one. Thus this ability to select which rules to enforce, and which to ignore works to create a perfect environment for abuse.

Given this propensity to succumb to human nature, it would be detrimental to the credibility of Canada’s financial services industry to take the risk of giving greater powers to those who have proven they are unable to handle the conflicts of interest. Please make a fresh start by creating investor protection based not on industry members dressing as protectors of the public. Please base protection of the public on qualified public interests, not on industry interests.


I ask you to do the right thing and open a new investor protection agency. One that is not funded, founded, or based on the people or the needs of the industry. That has proven to be a failure. It is time to establish this new investor protection agency without the continual conflicts of interest that the industry carries with it.

Please take the time to understand the crimes of conflict which have been brought on the public of Canada before you allow the IDA, or any of it’s partners, to infiltrate further into an area they have failed so miserably at.

Thank you

Larry Elford
Alberta

See www.investorvoice.ca and www.investoradvocates.ca for examples and research to support this viewpoint