The IDA is announcing plans to work toward investor restitution. In addition they seek to merge with other quasi-regulators in an effort to increase credibility and or to gain greater authority than they currently have.
To allow the IDA to continue to mislead the public, as well as provincial securities commission is a disservice to Canada in my opinion. Here is why I feel this way.
They have done very little for investors during the last two decades, and have done everything to represent the interests of the industry. They are, after all, a registered lobby group for the investment industry.
It is only in the last two or so years, that they IDA has been jolted into the 21st century by a more informed public, and this jolt has them making every change they can scramble to make in order to retain some degree of credibility. Too little, too late, too.
They have failed to admit and come to grips with the Income Trust insider trading problem that resulted after you met with then finance minister Ralph Goodale. That same day IDA members met with him, investment dealers (whom they represent) were responsible for large enough blocks of trades in these very investments to cause alarm bells to ring and accusations to fly. Where areIDA responsibilities to the public? Why are they claiming an authority of any kind, much less an ethical or moral authority to call themselves a regulator?
In a recent book "Wall Street vs America", the author states that, "self regulation has not protected the public from the investment industry, rather it has protected the investment industry from the public". I feel that the IDA has participated in this same misleading and misrepresenting behavior.
For example. The IDA refuses to answer the question of where its quasi regulator powers begin and where they end. I feel they have taken far too much authority, and gone beyond what the law (Securities Act) allows. The agency refuses to state clearly whether they have authority over the securities act, or just over membership issues. Both statements have come from the agency at various times. How can we as the public trust the IDA as a "regulator", when it refuses to speak cleanly and clearly on it's role, as well as it's authority?
The Ontario Standing Committee on Finance, clearly recognized the conflicts of interest in it's role as industry representative, and quasi regulator, and recommended that it's role in this area should be investigated. This investigation into the IDA is still required prior to any further moves by the IDA to gain power.
Combining people who have ability to manage or control money, with the ability to also write and review the rules about these practices is both foolish and outdated. Please recognize this and stop trying to "infiltrate" both areas now, despite IDA ability to change names or titles of your organization. IDA costume changes remind me of an old Vancouver stock market company practice of being a gold mine one day, and the next day claiming to be a biotech company, depending on the investment climate.
The practice of misinforming the public of a stated role of investor protection, while commonly representing the side and the interests of the industry has resulted in more than one complaint of violating the misleading advertising portions of the Competition Act. Industry Canada will not comment on an ongoing investigation, but this is something that also needs to be clearly explored during the investigation into the role of the IDA.
Other issues I have found when dealing with "self regulators", is the ability or the tendency to overlook some rules which may be in the interests of the public, while enforcing all rules which may be in the interests of the "self" part. An example of this selective overlooking of rules would be the simple "title inflation" that allows thousands upon thousands of registered investment salespersons in Canada to go about calling themselves "advisors". I understand from the IDA and the law (Securities Act) that this title is not approved unless full qualifications are met, and yet the IDA seems to look the other way, or to fail to explain properly why you allow this oversight to exist. How many other examples of "looking the other way" at member violations exsist, and what is the cost of misleading the public into thinking they are protected?
I apologize if I am under mistaken impressions on any of these topics. I have had twenty years experience under IDA, "self regulation", and at no time has the IDA found the time to answer these questions when posed to you. Please feel free to correct any misunderstandings I may be under.
Thanks for your time.
Larry Elford
further examples and research at:
www.investorvoice.ca
www.investoradvoates.ca
contact:
investoradvocate@shaw.ca
visit breachoftrust.ca for BREACH OF TRUST film info
E-MAIL us at investoradvocate@shaw.ca
IDA spends it's credibility, changes its name to IIROC
56 posts • Page 3 of 4 • 1, 2, 3, 4
by admin » Sun Jun 04, 2006 10:00 pm
The ida wants greater powers?
The IDA should be under an RCMP investigation into insider trading by IDA members, based on inside information given to IDA members, by then finance minister Ralph Goodale. "Somebody", made a tremendous amount of trades, on the day of the positive news announcement on income trusts. Those trades were made through IDA members. Look for the results of the RCMP investigation to be released on the 12th. The 12th of never.
IDA finally admits to decades of conflict of interest, and misleading the public, when it splits apart its operation into two parts. One part is the lobby group and trade association that was the reason the IDA was started. The second part is the self regulator. For the twenty years I worked in the industry the IDA wanted (and got) it both ways. They were able to pretend a role of helpers and protectors of the public, while doing nothing to help or protect the public. The underlying motive for the IDA was to help and protect the industry. It is unfortunate for the hundreds, if not thousands of abused investors who trusted the system, and were referred to the IDA for help and protection, only to be misled once again, and told they had no case against the firm they complained of.
Most industry experts are starting to come to the realization that self regulation, in the hands of money and investment people, simply means that they write (or interpret) the rules in favor of the people in the industry, not in favor of the people they serve.
See John Lawrence Reynolds books, "FREE RIDER", or "THE NAKED INVESTOR", neither of which are works of fiction, to see examples of how poorly served and protected Canadians are when it comes to financial malfeasance. See "WALL STREET VERESES AMERICA", for further reading on how self regualtors use the rules to protect wall street from YOU. Not to protect you from wall street. The system is backwards. The system is flawed. The system is broken.
We need a single regulator, and effective regulator, an independant (from the industry) investor protective regulator. We do not need another self interested, self serving bunch of keystone cops, acting and posing as serving the public, when they are paid by industry, came from industry, or expect their next job to be back in the industry.
Ex Scotia man David Wilson, chair of the Ontario Securities Commission, cannot even find it possible to investigate income trusts, insider trading on same, or several other issues and cases where laws may have been broken. Reason. He worked in the business for so long that he has a conflict of interest on too many of the situations that come to his regulator (the OSC) that he has to pass on many of them. Imagine having to investigate income trusts that he himself was involved with when he was in the industry.
It is time to put these self serving, self regulators to bed. Once and for all. Time to stop pretending that a bunch of Bay Street types give a hoot about the reputation of the industry or the protection of the public. Follow the money, not the words. The record indicates that we expected too much when we put our hopes and our expectations on people who said "trust us", we can regulate ourselves. We were lied to. We were misled. We were duped.
If anyone, with any sense of the industry, actually considers giving the Investment Dealers Association, or whatever they are calling themselves, or posing as today, increased regulatory powers, it should be remembered that the Ontario Standing Committee on Finance and Economics, from August of 2004 recommendations was that the IDA itself should be investigated. That the IDA should be studied to determine if it was in fact acting as a regulator, and if it should be allowed to continue in this role.
I say no. Let the investigation begin before we listen to IDA talk of greater IDA powers.
The IDA should be under an RCMP investigation into insider trading by IDA members, based on inside information given to IDA members, by then finance minister Ralph Goodale. "Somebody", made a tremendous amount of trades, on the day of the positive news announcement on income trusts. Those trades were made through IDA members. Look for the results of the RCMP investigation to be released on the 12th. The 12th of never.
IDA finally admits to decades of conflict of interest, and misleading the public, when it splits apart its operation into two parts. One part is the lobby group and trade association that was the reason the IDA was started. The second part is the self regulator. For the twenty years I worked in the industry the IDA wanted (and got) it both ways. They were able to pretend a role of helpers and protectors of the public, while doing nothing to help or protect the public. The underlying motive for the IDA was to help and protect the industry. It is unfortunate for the hundreds, if not thousands of abused investors who trusted the system, and were referred to the IDA for help and protection, only to be misled once again, and told they had no case against the firm they complained of.
Most industry experts are starting to come to the realization that self regulation, in the hands of money and investment people, simply means that they write (or interpret) the rules in favor of the people in the industry, not in favor of the people they serve.
See John Lawrence Reynolds books, "FREE RIDER", or "THE NAKED INVESTOR", neither of which are works of fiction, to see examples of how poorly served and protected Canadians are when it comes to financial malfeasance. See "WALL STREET VERESES AMERICA", for further reading on how self regualtors use the rules to protect wall street from YOU. Not to protect you from wall street. The system is backwards. The system is flawed. The system is broken.
We need a single regulator, and effective regulator, an independant (from the industry) investor protective regulator. We do not need another self interested, self serving bunch of keystone cops, acting and posing as serving the public, when they are paid by industry, came from industry, or expect their next job to be back in the industry.
Ex Scotia man David Wilson, chair of the Ontario Securities Commission, cannot even find it possible to investigate income trusts, insider trading on same, or several other issues and cases where laws may have been broken. Reason. He worked in the business for so long that he has a conflict of interest on too many of the situations that come to his regulator (the OSC) that he has to pass on many of them. Imagine having to investigate income trusts that he himself was involved with when he was in the industry.
It is time to put these self serving, self regulators to bed. Once and for all. Time to stop pretending that a bunch of Bay Street types give a hoot about the reputation of the industry or the protection of the public. Follow the money, not the words. The record indicates that we expected too much when we put our hopes and our expectations on people who said "trust us", we can regulate ourselves. We were lied to. We were misled. We were duped.
If anyone, with any sense of the industry, actually considers giving the Investment Dealers Association, or whatever they are calling themselves, or posing as today, increased regulatory powers, it should be remembered that the Ontario Standing Committee on Finance and Economics, from August of 2004 recommendations was that the IDA itself should be investigated. That the IDA should be studied to determine if it was in fact acting as a regulator, and if it should be allowed to continue in this role.
I say no. Let the investigation begin before we listen to IDA talk of greater IDA powers.
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by admin » Mon Jun 05, 2006 11:23 pm
In response to the Investment Dealers Association, changing cloak, and seeking an increase in regulatory powers with which to “self-govern” the investment industry:
1. In 1999/2000 the OSC had an audit of the IDA carried out, which it tried valiantly to keep hidden, but after several court challenges, it finally gave in and allowed the public to see what independent experts were finding at the Investment Dealers Association. The audit found that at times IDA departments did not follow formal policies, were not complying with the terms of it’s recognition orders in several respects, and made recommendations on how the IDA should deal with the conflicts of interest inherent in being a lobby group for an industry, while simultaneously leading the public to believe they were an impartial and unbiased “self regulator”.
2. The enforcement side was particularly lacking: findings of a growing backlog of enforcement cases, no screening process for complaints, a bloated case review process. Further review found 48 areas where there was room for improvement. This from an agency that was (perhaps improperly) claiming status as Canada’s only national regulator of securities.
3. Then the Ontario government asked for input from industry members and the public. The Standing Committee on Finance and Economic Affairs in August of 2004, concluded after hearing dozens of tales from the industry, that there should be a review of the role of self regulators (the IDA) in the securities industry, as there is clearly a lack of faith in the integrity of self regulators (the IDA).
4. The IDA refuses to publicly state what self-regulatory status it holds under the securities Act, and prefers instead to mislead the public into believing that they have more authority than they in fact carry. This breach of trust creates an interesting opening for class action litigators who may in fact hold the IDA to the level of accountability they have been claiming. Whilst most decisions by the IDA have in fact served to dissuade investors who may have legitimate claims against investment dealers, and served to protect the investment dealers whom the association is named and funded by.
5. The IDA allows registrants and those who have “salesperson” title, and “registered representative” title and qualifications to misuse and mislead the public for marketing purposes and call themselves “advisor”, which denotes a totally different and distinct set of rules, requirements, and responsibilities to the public. IDA bulletin member regulation notice “MR0349" refers to officers and members of firms who call themselves a title that they are not in fact registered or entitled to call themselves. This is an illegal practice as outlined by IDA rules, securities law, not to mention common sense. The IDA looks the other way at this issue, despite it being pointed out to them repeatedly, as it’s members prefer to use titles that have a nicer, “feel” than using the titles of “salesperson”. Public disclosure be damned.
6. The IDA was named as suspect in the recent federal election “income trust insider trading” scandal, whereby Finance Minister at the time Ralph Goodale met with the IDA on the day of a positive announcement on income trust taxation, and within that same day, an increase in trading by IDA members set off investigation alarm bells. The results of this investigation are yet to be announced, but this factor alone would seem reason enough to revoke any self regulatory status granted to the IDA by provincial Securities Commissions.
7. Granting ANY powers of self regulation, to an industry group, is like handing the keys to the henhouse to a group of foxes. Not only will a single, national securities regulator render the current crop of 13 to 17 quasi regulators useless, but “clubs” like the IDA should and will be replaced by groups of investment client representatives who display a greater concern for the public interest than that of the current crop of clubs. They have a proven track record of industry leaning, industry supporting, self serving behavior and that is not in the public interest.
1. In 1999/2000 the OSC had an audit of the IDA carried out, which it tried valiantly to keep hidden, but after several court challenges, it finally gave in and allowed the public to see what independent experts were finding at the Investment Dealers Association. The audit found that at times IDA departments did not follow formal policies, were not complying with the terms of it’s recognition orders in several respects, and made recommendations on how the IDA should deal with the conflicts of interest inherent in being a lobby group for an industry, while simultaneously leading the public to believe they were an impartial and unbiased “self regulator”.
2. The enforcement side was particularly lacking: findings of a growing backlog of enforcement cases, no screening process for complaints, a bloated case review process. Further review found 48 areas where there was room for improvement. This from an agency that was (perhaps improperly) claiming status as Canada’s only national regulator of securities.
3. Then the Ontario government asked for input from industry members and the public. The Standing Committee on Finance and Economic Affairs in August of 2004, concluded after hearing dozens of tales from the industry, that there should be a review of the role of self regulators (the IDA) in the securities industry, as there is clearly a lack of faith in the integrity of self regulators (the IDA).
4. The IDA refuses to publicly state what self-regulatory status it holds under the securities Act, and prefers instead to mislead the public into believing that they have more authority than they in fact carry. This breach of trust creates an interesting opening for class action litigators who may in fact hold the IDA to the level of accountability they have been claiming. Whilst most decisions by the IDA have in fact served to dissuade investors who may have legitimate claims against investment dealers, and served to protect the investment dealers whom the association is named and funded by.
5. The IDA allows registrants and those who have “salesperson” title, and “registered representative” title and qualifications to misuse and mislead the public for marketing purposes and call themselves “advisor”, which denotes a totally different and distinct set of rules, requirements, and responsibilities to the public. IDA bulletin member regulation notice “MR0349" refers to officers and members of firms who call themselves a title that they are not in fact registered or entitled to call themselves. This is an illegal practice as outlined by IDA rules, securities law, not to mention common sense. The IDA looks the other way at this issue, despite it being pointed out to them repeatedly, as it’s members prefer to use titles that have a nicer, “feel” than using the titles of “salesperson”. Public disclosure be damned.
6. The IDA was named as suspect in the recent federal election “income trust insider trading” scandal, whereby Finance Minister at the time Ralph Goodale met with the IDA on the day of a positive announcement on income trust taxation, and within that same day, an increase in trading by IDA members set off investigation alarm bells. The results of this investigation are yet to be announced, but this factor alone would seem reason enough to revoke any self regulatory status granted to the IDA by provincial Securities Commissions.
7. Granting ANY powers of self regulation, to an industry group, is like handing the keys to the henhouse to a group of foxes. Not only will a single, national securities regulator render the current crop of 13 to 17 quasi regulators useless, but “clubs” like the IDA should and will be replaced by groups of investment client representatives who display a greater concern for the public interest than that of the current crop of clubs. They have a proven track record of industry leaning, industry supporting, self serving behavior and that is not in the public interest.
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by admin » Tue May 15, 2007 7:51 am
ROTTWEILERS WELCOME SECURITIES LEADERS TO SUTTON PLACE
Toronto, May 15 - Kane and Kitana, two Rottweilers, will be outside in front of the Sutton Place Hotel located at 955 Bay Street between 11:40 am and 12:40 pm where Investment Dealers Association of Canada President Joe Oliver is speaking to the Canadian Club. The hounds signify small investor advocates determination to curtail the self-regulatory organizations (SRO) influence on the securities commissions whose mandate is to protect investors. At the demonstration there will be a sign on the sidewalk that says “Investor Watchdog”
The IDA has been likened to the fox guarding the henhouse for its role in enforcement. The SROs, securities commissions and RCMP address less than 5% of complaints received according to a report released by an independent analyst and three associations representing over 1 million seniors who have requested an inquiry on the malfunctioning securities system (see attachment). Thousands of investment advisors have serious complaints filed against them with the IDA which covered up the data, none of which it appears have been forwarded to the RCMP. It is widely believed the Ontario Securities Commission (OSC) with statutory authority to enforce the securities act “delegates,” without receiving or recording complaints, to the SROs which in turn stonewall until investors give up or have passed the recently reduced limitation period in court.
A report on the IDA by the OSC that was not made public by the regulator till it was ordered to years later found the IDA and its investigators were not addressing a growing backlog of investor complaints. "With the passage of time and the resources we'd need on the file, we decided to discontinue the judicial review we had under way," an OSC spokesperson said to the Toronto Star.
White collar securities crime and offences are rampant. Canada exhibits illegal insider trading before 63% of its acquisition announcements compared to 25% in the U.K., says a study by Measuredmarkets. “Insider trading goes on all the time, there's no real surveillance,” says Stephen Jarislowsky a money manager. Market Regulation Services Inc. is the SRO which monitors trading on the TSX. Mr. Oliver sits on its board whose directors like the IDA and OSC Commissioners all have ties to the investment industry.
Investor losses caused by white collar securities crime and excessive fund fees are estimated in the seniors report to be at least $18 billion annually. In an Investment Executive poll 79% responded “No” to the question, “Do securities regulators do a good job of protecting the interests of small investors?”
investoractivist@rogers.com
Toronto, May 15 - Kane and Kitana, two Rottweilers, will be outside in front of the Sutton Place Hotel located at 955 Bay Street between 11:40 am and 12:40 pm where Investment Dealers Association of Canada President Joe Oliver is speaking to the Canadian Club. The hounds signify small investor advocates determination to curtail the self-regulatory organizations (SRO) influence on the securities commissions whose mandate is to protect investors. At the demonstration there will be a sign on the sidewalk that says “Investor Watchdog”
The IDA has been likened to the fox guarding the henhouse for its role in enforcement. The SROs, securities commissions and RCMP address less than 5% of complaints received according to a report released by an independent analyst and three associations representing over 1 million seniors who have requested an inquiry on the malfunctioning securities system (see attachment). Thousands of investment advisors have serious complaints filed against them with the IDA which covered up the data, none of which it appears have been forwarded to the RCMP. It is widely believed the Ontario Securities Commission (OSC) with statutory authority to enforce the securities act “delegates,” without receiving or recording complaints, to the SROs which in turn stonewall until investors give up or have passed the recently reduced limitation period in court.
A report on the IDA by the OSC that was not made public by the regulator till it was ordered to years later found the IDA and its investigators were not addressing a growing backlog of investor complaints. "With the passage of time and the resources we'd need on the file, we decided to discontinue the judicial review we had under way," an OSC spokesperson said to the Toronto Star.
White collar securities crime and offences are rampant. Canada exhibits illegal insider trading before 63% of its acquisition announcements compared to 25% in the U.K., says a study by Measuredmarkets. “Insider trading goes on all the time, there's no real surveillance,” says Stephen Jarislowsky a money manager. Market Regulation Services Inc. is the SRO which monitors trading on the TSX. Mr. Oliver sits on its board whose directors like the IDA and OSC Commissioners all have ties to the investment industry.
Investor losses caused by white collar securities crime and excessive fund fees are estimated in the seniors report to be at least $18 billion annually. In an Investment Executive poll 79% responded “No” to the question, “Do securities regulators do a good job of protecting the interests of small investors?”
investoractivist@rogers.com
Last edited by admin on Tue Oct 23, 2007 7:56 am, edited 1 time in total.
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IDA, Incestuous Dealers Association
by admin » Tue Jul 10, 2007 9:36 am
Subject: IDA Don Little case - the appreciative senior
http://www.ida.ca/RelatedDocuments_en.asp?ID=467
This one’s for the books –Mr. Ripley we’ve got one for you
Don Moffat Little was an adviser at TD Waterhouse’s London , Ontario Branch.. On or about March 9, 2006, Mr. Little’s client, LJH, (who was at the time a widow with no close family and who was over the age of 90 years), gave Mr. Little a cheque, from her account at an unrelated bank, in the amount of $500,000 payable to him personally. He then liquidated securities in the client’s account in order to cover the cheque, and then deposited the cheque into his personal bank account without the knowledge or consent and contrary to the internal policies of TD Waterhouse.
An IDA hearing panel, using its extensive knowledge of psychology, concluded that there was no evidence of any victimization of the client as the evidence indicated the client had full command of her mental facilities at the time the gift was given. The client had signed a statutory declaration stating that she intended to make a substantial gift to Little and that she was not under duress or unduly influenced at the time she made the gift He was fined $15,000 and must pay costs in the amount to be fixed by the panel at a future date. As usual , he must also successfully complete the Conduct and Practices Handbook exam prior to any subsequent registration with an IDA member firm. TD Waterhouse had also required Little to reimburse the firm for the $45,000 in DSC fees, which had been charged to the client’s account resulting from his liquidation of her mutual funds and for which TD Waterhouse had repaid the client. To read more of this fantastic story visit http://www.ida.ca/RelatedDocuments_en.asp?ID=467
http://www.ida.ca/RelatedDocuments_en.asp?ID=467
This one’s for the books –Mr. Ripley we’ve got one for you
Don Moffat Little was an adviser at TD Waterhouse’s London , Ontario Branch.. On or about March 9, 2006, Mr. Little’s client, LJH, (who was at the time a widow with no close family and who was over the age of 90 years), gave Mr. Little a cheque, from her account at an unrelated bank, in the amount of $500,000 payable to him personally. He then liquidated securities in the client’s account in order to cover the cheque, and then deposited the cheque into his personal bank account without the knowledge or consent and contrary to the internal policies of TD Waterhouse.
An IDA hearing panel, using its extensive knowledge of psychology, concluded that there was no evidence of any victimization of the client as the evidence indicated the client had full command of her mental facilities at the time the gift was given. The client had signed a statutory declaration stating that she intended to make a substantial gift to Little and that she was not under duress or unduly influenced at the time she made the gift He was fined $15,000 and must pay costs in the amount to be fixed by the panel at a future date. As usual , he must also successfully complete the Conduct and Practices Handbook exam prior to any subsequent registration with an IDA member firm. TD Waterhouse had also required Little to reimburse the firm for the $45,000 in DSC fees, which had been charged to the client’s account resulting from his liquidation of her mutual funds and for which TD Waterhouse had repaid the client. To read more of this fantastic story visit http://www.ida.ca/RelatedDocuments_en.asp?ID=467
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by admin » Mon Jul 30, 2007 11:43 pm
ASC Releases Oversight Review of IDA Prairie Office
11 June 2007
"Throughout the report we have highlighted certain deficiencies as significant. Significant deficiencies are findings that fit into one of the following categories:
Contravention of the terms of the delegation or recognition orders
Items that may effect the IDA's ability to continue to meet the terms of the delegation or recognition orders
Significant procedural deficiencies
Repeat findings that the IDA has not sufficiently addressed
Supervisory issues"
11 June 2007
"Throughout the report we have highlighted certain deficiencies as significant. Significant deficiencies are findings that fit into one of the following categories:
Contravention of the terms of the delegation or recognition orders
Items that may effect the IDA's ability to continue to meet the terms of the delegation or recognition orders
Significant procedural deficiencies
Repeat findings that the IDA has not sufficiently addressed
Supervisory issues"
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by admin » Tue Jul 31, 2007 2:16 pm
The Alberta Securities Commission Audit of the Investment Dealers Association Prairie Region 2007 dated June 11, 2007 , was released by the ASC yesterday, July 30, 2007. The IDA Prairie Region 's Enforcement Division has the same serious deficiencies as Alberta Auditor General Fred Dunn found at the the ASC itself.
On April 26, 2007, the National Pensioners & Senior Citizens Federation (450 clubs and chapters with 1,000,000 members), the United Senior Citizens of Ontario (1000 clubs with 300,000 members) and the Small Investors Protection Association jointly requested a national inquiry on the malfunctioning of Canada's securities and accounting regulation and white collar crime enforcement system.
Diane Urquhart
Independent Analyst
Tel: (905) 822-7618
Cell: (416) 505-4832
See these sections of the ASC Audit of IDA Prairie Region 2007:
5.0 Case Assessment
5.1 Issue Identification (Significant Deficiency)
During the review period, the ASC referred a significant file to the IDA regarding a gatekeeping issue. ASC correspondence was addressed to the Investigations branch, due to the nature of the allegations involved. Upon receipt, Investigations sent the file to Case Assessment for review. After reviewing the file, a decision was made at the Case Assessment level to issue a caution letter and close the file. This decision did not seem appropriate given the circumstances of the case and the nature of the information provided to the IDA. The case appeared to warrant further investigation and attention.
We request that the IDA explain what steps are being taken to ensure that files referred by ASC staff are given sufficient attention in the Enforcement department.
5.2 Failure to Notify ASC Regarding Outcomes (Significant Deficiency)
We reviewed all four files that the ASC referred to the IDA during the review period. It was noted that when the significant file listed above was concluded, no notification was sent to ASC staff. Pursuant to the recognition order, the IDA is required to report any decisions, orders or rulings that arise from complaints or referrals of complaints from residents of Alberta to ASC staff in a timely manner.
The IDA should review its procedures for notifying referring regulators when matters are concluded.
5.3 Lack of Documentation
During the course of the review, we noted several instances where files had information gaps due to lack of documentation, including documentation of significant verbal conversations. Concluded Case Assessment files should stand alone, offering a complete and accurate record of the reasons for taking action or closing a file.
We request that the IDA revisit its policy on documenting files, including verbal conversations, and report any changes that will be implemented to address this concern.
6.3 Consistency of Settlement Agreements -- Forgery (Significant Deficiency)
According to IDA documentation, eight forgery files were prosecuted during the review period. We reviewed two of these concluded litigation files and another file that was concluded after the completion of our fieldwork. In one file, the individual entered into a settlement agreement with Enforcement Counsel which included a reprimand and costs of the investigation as terms. This settlement agreement was rejected by the Hearing Panel for being too lenient. The Panel determined that the settlement did not correlate with the
severity of the charge. Counsel negotiated and agreed upon a new settlement that included a penalty, close supervision and costs of the investigation. The Hearing Panel accepted this re-negotiated settlement agreement.
In another file involving similar circumstances, the ultimate designated person of a firm forged a signature and misled IDA staff. The IDA issued a warning letter and closed the file.
These two cases had similar fact patterns and yet the action taken by the IDA was inconsistent from one case to the next. Only one of these cases was brought before a hearing panel and the settlement reached in this case did not fall with the IDAs prescribed guidelines for Forgery. Given that these guidelines were not followed we request that the IDA explain the purpose of the guidelines, how often settlements stray from these guidelines and what action is taken when negotiated settlements do not fall within the guidelines.
On April 26, 2007, the National Pensioners & Senior Citizens Federation (450 clubs and chapters with 1,000,000 members), the United Senior Citizens of Ontario (1000 clubs with 300,000 members) and the Small Investors Protection Association jointly requested a national inquiry on the malfunctioning of Canada's securities and accounting regulation and white collar crime enforcement system.
Diane Urquhart
Independent Analyst
Tel: (905) 822-7618
Cell: (416) 505-4832
See these sections of the ASC Audit of IDA Prairie Region 2007:
5.0 Case Assessment
5.1 Issue Identification (Significant Deficiency)
During the review period, the ASC referred a significant file to the IDA regarding a gatekeeping issue. ASC correspondence was addressed to the Investigations branch, due to the nature of the allegations involved. Upon receipt, Investigations sent the file to Case Assessment for review. After reviewing the file, a decision was made at the Case Assessment level to issue a caution letter and close the file. This decision did not seem appropriate given the circumstances of the case and the nature of the information provided to the IDA. The case appeared to warrant further investigation and attention.
We request that the IDA explain what steps are being taken to ensure that files referred by ASC staff are given sufficient attention in the Enforcement department.
5.2 Failure to Notify ASC Regarding Outcomes (Significant Deficiency)
We reviewed all four files that the ASC referred to the IDA during the review period. It was noted that when the significant file listed above was concluded, no notification was sent to ASC staff. Pursuant to the recognition order, the IDA is required to report any decisions, orders or rulings that arise from complaints or referrals of complaints from residents of Alberta to ASC staff in a timely manner.
The IDA should review its procedures for notifying referring regulators when matters are concluded.
5.3 Lack of Documentation
During the course of the review, we noted several instances where files had information gaps due to lack of documentation, including documentation of significant verbal conversations. Concluded Case Assessment files should stand alone, offering a complete and accurate record of the reasons for taking action or closing a file.
We request that the IDA revisit its policy on documenting files, including verbal conversations, and report any changes that will be implemented to address this concern.
6.3 Consistency of Settlement Agreements -- Forgery (Significant Deficiency)
According to IDA documentation, eight forgery files were prosecuted during the review period. We reviewed two of these concluded litigation files and another file that was concluded after the completion of our fieldwork. In one file, the individual entered into a settlement agreement with Enforcement Counsel which included a reprimand and costs of the investigation as terms. This settlement agreement was rejected by the Hearing Panel for being too lenient. The Panel determined that the settlement did not correlate with the
severity of the charge. Counsel negotiated and agreed upon a new settlement that included a penalty, close supervision and costs of the investigation. The Hearing Panel accepted this re-negotiated settlement agreement.
In another file involving similar circumstances, the ultimate designated person of a firm forged a signature and misled IDA staff. The IDA issued a warning letter and closed the file.
These two cases had similar fact patterns and yet the action taken by the IDA was inconsistent from one case to the next. Only one of these cases was brought before a hearing panel and the settlement reached in this case did not fall with the IDAs prescribed guidelines for Forgery. Given that these guidelines were not followed we request that the IDA explain the purpose of the guidelines, how often settlements stray from these guidelines and what action is taken when negotiated settlements do not fall within the guidelines.
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by admin » Wed Aug 01, 2007 5:28 pm
ASC audit reveals IDA deficiencies
July 31, 2007 | Bryan Borzykowski
Normally, the Investment Dealers Association of Canada cracks down
on industry rule-breakers, but what if it's the association that needs a
reprimand? On Monday the Alberta Securities Commission released a
report outlining deficiencies with the prairie region IDA's practices.
Everything from registration to staff turnover and enforcement issues
was covered in the audit, which is usually conducted every three
years. While most of these issues are serious, Diane Urquhart, an
independent analyst who has been studying regulation issues for
three years, says a few are more concerning than others.
Urquhart is alarmed by the section titled "Consistency of Settlement Agreements — Forgery."
In that part of the report, the ASC says that one forgery case originally resulted in a
reprimand, while another, which involved a designated person forging a signature and
misleading the IDA, ended with a warning letter.
"Forgery is a breach of the Canadian Criminal Code," says Urquhart, who added that this was
the most alarming part of the report. "Forgery is a criminal matter. This shouldn't have even
been looked at within the IDA system. It should have been referred to the RCMP."
The ASC says the IDA violated its own rules in this case. "Only one of these cases was
brought before a hearing panel," says the report, "and the settlement reached in this case did
not fall within the IDA's prescribed guidelines for forgery."
Warren Funt, the IDA's vice-president for Western Canada, says any criminal matters are
passed on to the police. "When a criminal offence occurs, we refer the matter. We do so even
though in certain circumstances we would be surprised if police acted."
Funt adds that there are two types of forgery issues — one that involves fraud and another
that is simply a case of a dealer filling in a missed signature for his or her client — and that
the two are dealt with differently. "A forgery is not always a forgery," he says. "It's not that
simple in most circumstances."
Other than forgery issues, the ASC says that it found many case assessment files with
missing information. The commission says case assessments should "stand alone" and offer
a complete record of why an action occurred.
Another concern deals with inconsistent punishments. Under the title "Issue Identification,"
the ASC says in one particular case, the IDA's decision, which involved issuing a letter and
then closing the file, was not "appropriate given the circumstances of the case and the nature
of the information provided to the IDA. The case appeared to warrant further investigation and
attention."
Funt says that while every case is different, the organization does try to keep things
consistent. When coming to an enforcement decision, he says, the IDA relies on precedence,
and it refers to its discipline guidelines.
Still, Urquhart doesn't think enough is being done to crack down on corruption. She says selfregulation
doesn't work. "You've got the IDA conducting investor protection enforcement in
the name of public interest, but their primary goal is to protect the reputation of the industry."
Funt admits that the IDA has issues that need to be addressed, but it's working toward
resolving the ASC's complaints. He says more communication with the ASC will help and that
the "more fundamental areas we have been working on regardless."
The ASC and IDA have also agreed to hold quarterly meetings, at which they're likely to
address audits and other pressing issues.
Filed by Bryan Borzykowski, Advisor.ca, bryan.borzykowski@advisor.rogers.com
July 31, 2007 | Bryan Borzykowski
Normally, the Investment Dealers Association of Canada cracks down
on industry rule-breakers, but what if it's the association that needs a
reprimand? On Monday the Alberta Securities Commission released a
report outlining deficiencies with the prairie region IDA's practices.
Everything from registration to staff turnover and enforcement issues
was covered in the audit, which is usually conducted every three
years. While most of these issues are serious, Diane Urquhart, an
independent analyst who has been studying regulation issues for
three years, says a few are more concerning than others.
Urquhart is alarmed by the section titled "Consistency of Settlement Agreements — Forgery."
In that part of the report, the ASC says that one forgery case originally resulted in a
reprimand, while another, which involved a designated person forging a signature and
misleading the IDA, ended with a warning letter.
"Forgery is a breach of the Canadian Criminal Code," says Urquhart, who added that this was
the most alarming part of the report. "Forgery is a criminal matter. This shouldn't have even
been looked at within the IDA system. It should have been referred to the RCMP."
The ASC says the IDA violated its own rules in this case. "Only one of these cases was
brought before a hearing panel," says the report, "and the settlement reached in this case did
not fall within the IDA's prescribed guidelines for forgery."
Warren Funt, the IDA's vice-president for Western Canada, says any criminal matters are
passed on to the police. "When a criminal offence occurs, we refer the matter. We do so even
though in certain circumstances we would be surprised if police acted."
Funt adds that there are two types of forgery issues — one that involves fraud and another
that is simply a case of a dealer filling in a missed signature for his or her client — and that
the two are dealt with differently. "A forgery is not always a forgery," he says. "It's not that
simple in most circumstances."
Other than forgery issues, the ASC says that it found many case assessment files with
missing information. The commission says case assessments should "stand alone" and offer
a complete record of why an action occurred.
Another concern deals with inconsistent punishments. Under the title "Issue Identification,"
the ASC says in one particular case, the IDA's decision, which involved issuing a letter and
then closing the file, was not "appropriate given the circumstances of the case and the nature
of the information provided to the IDA. The case appeared to warrant further investigation and
attention."
Funt says that while every case is different, the organization does try to keep things
consistent. When coming to an enforcement decision, he says, the IDA relies on precedence,
and it refers to its discipline guidelines.
Still, Urquhart doesn't think enough is being done to crack down on corruption. She says selfregulation
doesn't work. "You've got the IDA conducting investor protection enforcement in
the name of public interest, but their primary goal is to protect the reputation of the industry."
Funt admits that the IDA has issues that need to be addressed, but it's working toward
resolving the ASC's complaints. He says more communication with the ASC will help and that
the "more fundamental areas we have been working on regardless."
The ASC and IDA have also agreed to hold quarterly meetings, at which they're likely to
address audits and other pressing issues.
Filed by Bryan Borzykowski, Advisor.ca, bryan.borzykowski@advisor.rogers.com
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by admin » Wed Aug 08, 2007 4:56 pm
What happens to those like Gordon Simpson (an ex-firefighter from Calgary) when the IDA breaches their recognition order in Alberta?
Mr. Simpson was an investor who felt that he had been wronged by an investment firm. In particular, Mr. Simpson felt that there had been commission “churning”. He made a complaint to the IDA. The IDA purported to look into the matter but it is unclear from the case as to whether any investigation whatsoever was conducted. The process appears to have been very brief. Mr. Simpson’s original complaint letter was written April 26, 2004, and on May 7, 2004, the IDA staff wrote a letter to Mr. Simpson:
“After due consideration of the facts under review, IDA enforcement staff determined that no further action would be taken. Accordingly, our file in respect of this matter has been closed”.
Section 73 of the Securities Act provides for an appeal from a decision of a self-regulatory organization such as the IDA. The appeal is to the Commission. Mr. Simpson wanted to appeal the fact that the IDA took no action on the matter. One would think from a common sense perspective that would be a normal type of issue for an appeal.
Interestingly, and by way of further correspondence, the IDA wrote to Mr. Simpson:
“Please be advised that as a not for profit organization with limited resources, the IDA cannot formally investigate all complaints brought to its attention”.
This should be contrasted with the conditions regarding the recognition of the IDA and its obligation to maintain a staff complement sufficient to ensure proper investigations.
Mr. Simpson attempted to carry on with his appeal but the IDA argued that a refusal to carry on with investigating a complaint was not actually a “decision” and therefore could not be appealed. The Commission accepted that argument and refused to hear Mr. Simpson’s appeal. I have seen no indication that this decision was challenged further in Court. If it is correct, it would effectively mean that any refusal of the IDA to move forward with a complaint could never be appealed to the Commission and could only be challenged by way of a process called “judicial review”, which is essentially asking the Court to exercise supervisory jurisdiction over the IDA. The difficulty with a judicial review application is that the Court normally shows great deference to the tribunal involved believing that the tribunal has substantial expertise in the area in question. Accordingly, challenges would not likely be successful unless something as extreme as perhaps bad faith or an actual bias or conflict of interest could be shown.
When the IDA breached the terms of its Recognition Order in Alberta - the only Order by which they derive any authority at all - there are many that suffer, like Mr. Simpson and yet everyone seems to overlook the numerous victims and the damages that flow from such a breach.
Will the ASC, having concurrent jurisdiction, investigate Mr. Simpson's complaint since the IDA seemingly failed to do so, and in so doing, breached their recognition Order.
Who is looking after retail investors in Alberta if it is not the IDA? Will the ASC revoke the IDA's recognition and, if not, why not?
Furthermore, why should Mr. Simpson - and investors in general - suffer the consequences of the IDA's breach? Just because the IDA hires more staff, to re-attain the conditions of recognition, it does not remedy the improper actions of the IDA or those damages which flow from that breach.
What is the ASC prepared to do remedy the above?
Regards,
Robert Kyle
Founder & Chair
InvestorVoice.ca
Mr. Simpson was an investor who felt that he had been wronged by an investment firm. In particular, Mr. Simpson felt that there had been commission “churning”. He made a complaint to the IDA. The IDA purported to look into the matter but it is unclear from the case as to whether any investigation whatsoever was conducted. The process appears to have been very brief. Mr. Simpson’s original complaint letter was written April 26, 2004, and on May 7, 2004, the IDA staff wrote a letter to Mr. Simpson:
“After due consideration of the facts under review, IDA enforcement staff determined that no further action would be taken. Accordingly, our file in respect of this matter has been closed”.
Section 73 of the Securities Act provides for an appeal from a decision of a self-regulatory organization such as the IDA. The appeal is to the Commission. Mr. Simpson wanted to appeal the fact that the IDA took no action on the matter. One would think from a common sense perspective that would be a normal type of issue for an appeal.
Interestingly, and by way of further correspondence, the IDA wrote to Mr. Simpson:
“Please be advised that as a not for profit organization with limited resources, the IDA cannot formally investigate all complaints brought to its attention”.
This should be contrasted with the conditions regarding the recognition of the IDA and its obligation to maintain a staff complement sufficient to ensure proper investigations.
Mr. Simpson attempted to carry on with his appeal but the IDA argued that a refusal to carry on with investigating a complaint was not actually a “decision” and therefore could not be appealed. The Commission accepted that argument and refused to hear Mr. Simpson’s appeal. I have seen no indication that this decision was challenged further in Court. If it is correct, it would effectively mean that any refusal of the IDA to move forward with a complaint could never be appealed to the Commission and could only be challenged by way of a process called “judicial review”, which is essentially asking the Court to exercise supervisory jurisdiction over the IDA. The difficulty with a judicial review application is that the Court normally shows great deference to the tribunal involved believing that the tribunal has substantial expertise in the area in question. Accordingly, challenges would not likely be successful unless something as extreme as perhaps bad faith or an actual bias or conflict of interest could be shown.
When the IDA breached the terms of its Recognition Order in Alberta - the only Order by which they derive any authority at all - there are many that suffer, like Mr. Simpson and yet everyone seems to overlook the numerous victims and the damages that flow from such a breach.
Will the ASC, having concurrent jurisdiction, investigate Mr. Simpson's complaint since the IDA seemingly failed to do so, and in so doing, breached their recognition Order.
Who is looking after retail investors in Alberta if it is not the IDA? Will the ASC revoke the IDA's recognition and, if not, why not?
Furthermore, why should Mr. Simpson - and investors in general - suffer the consequences of the IDA's breach? Just because the IDA hires more staff, to re-attain the conditions of recognition, it does not remedy the improper actions of the IDA or those damages which flow from that breach.
What is the ASC prepared to do remedy the above?
Regards,
Robert Kyle
Founder & Chair
InvestorVoice.ca
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by admin » Sat Dec 08, 2007 11:59 am
Breach of privacy complaint goes nowhere
December 01, 2007
TYLER HAMILTON
BUSINESS REPORTER TORONTO STAR
Industry whistleblower James MacDonald says he was betrayed.
At a recent public forum in Toronto, MacDonald took the opportunity to tell David Wilson, chair of
the Ontario Securities Commission, why the system let him down.
The former BMO Nesbitt Burns investment adviser discovered evidence of what he described as
"alleged illegal activity" by a senior person within the industry. He said he dutifully reported his
findings by phone – in a voicemail – to the Investment Dealers Association (IDA), a selfregulatory
organization accountable to the OSC.
Within hours of that message being left, he said he received an email message from his branch
manager at the bank asking MacDonald why he contacted the IDA. MacDonald was shocked to
learn that his confidential message had been brought to his employer's attention.
"As an employee, I was trying to do my part and I was betrayed," MacDonald, microphone in
hand, told Wilson.
MacDonald continued, explaining he had written two letters to Wilson to complain about this
breach of confidentiality. Both times he received a reply from someone else at the OSC who
advised MacDonald to deal directly with the IDA, which was the subject of his complaint. "You've
washed your hands totally of this," MacDonald said to Wilson.
Wilson advised MacDonald that if the IDA can't resolve his issue he should feel free to phone the
OSC contact centre and file a complaint. "Or," added Wilson, "write me a letter."
MacDonald later told the Star he has little confidence in the ability of Canadian enforcement
agencies to adequately protect investors. "Canadians would be better off if we just disband
everything and subcontract the work to Eliot Spitzer and the U.S. Securities and Exchange
Commission."
TheStar.com - Business - Breach of privacy complaint goes nowhere Page 1 of 1
http://www.thestar.com/printArticle/281623 12/1/2007
December 01, 2007
TYLER HAMILTON
BUSINESS REPORTER TORONTO STAR
Industry whistleblower James MacDonald says he was betrayed.
At a recent public forum in Toronto, MacDonald took the opportunity to tell David Wilson, chair of
the Ontario Securities Commission, why the system let him down.
The former BMO Nesbitt Burns investment adviser discovered evidence of what he described as
"alleged illegal activity" by a senior person within the industry. He said he dutifully reported his
findings by phone – in a voicemail – to the Investment Dealers Association (IDA), a selfregulatory
organization accountable to the OSC.
Within hours of that message being left, he said he received an email message from his branch
manager at the bank asking MacDonald why he contacted the IDA. MacDonald was shocked to
learn that his confidential message had been brought to his employer's attention.
"As an employee, I was trying to do my part and I was betrayed," MacDonald, microphone in
hand, told Wilson.
MacDonald continued, explaining he had written two letters to Wilson to complain about this
breach of confidentiality. Both times he received a reply from someone else at the OSC who
advised MacDonald to deal directly with the IDA, which was the subject of his complaint. "You've
washed your hands totally of this," MacDonald said to Wilson.
Wilson advised MacDonald that if the IDA can't resolve his issue he should feel free to phone the
OSC contact centre and file a complaint. "Or," added Wilson, "write me a letter."
MacDonald later told the Star he has little confidence in the ability of Canadian enforcement
agencies to adequately protect investors. "Canadians would be better off if we just disband
everything and subcontract the work to Eliot Spitzer and the U.S. Securities and Exchange
Commission."
TheStar.com - Business - Breach of privacy complaint goes nowhere Page 1 of 1
http://www.thestar.com/printArticle/281623 12/1/2007
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by admin » Wed Jan 16, 2008 11:46 pm
particularly noteworthy are the educational requirements for new recruits at the IDA in Alberta: "would you like fries with that?"
IDA staffing shortages concern CSA
January 16, 2008 | Mark Noble
Canada's provincial security regulators collectively released their respective audits of the Investment Dealers Association (IDA) on Tuesday. While it was a much more complimentary report than a June audit released by the Alberta Securities Commission (ASC), it still highlighted some core areas in which the IDA needs to improve, particularly in staffing and resources.
Tuesday's report was compiled by the Canadian Securities Administrators (CSA) and included the audits of the IDA's three offices, located in Toronto, Montreal, and Vancouver, by the Autorité des marchés financiers (AMF), British Columbia Securities Commission (BCSC), Nova Scotia Securities Commission (NSSC) and Ontario Securities Commission (OSC). The audits were conducted in September and October of 2006.
Although the IDA is a national regulator, each of its offices falls under the jurisdiction of different provincial regulators, which can have slightly different regulation philosophies and each levy its own registration fees.
Overall, the commissions offered only a handful of recommendations that they classified as high priority. There was a consistent concern about a decrease in IDA's productivity, often due to limited staffing.
Staffing was a big issue for the OSC's audit of the Toronto head office. According to the OSC, the IDA has a high turnover of staff, which is having a detrimental impact on its performance.
"The OSC staff noted high staff turnover levels during the period under review, due to several factors, including sales compliance officers accepting positions with member firms, resulting in delays in issuing sales compliance review reports and preventing the sales compliance department from completing all the reviews scheduled," the report says.
R elated Stories
CSA report finds IDA deficiencies
ASC audit reveals IDA deficiencies
The OSC says 81% and 79% of the sales compliance review reports issued in 2004 and 2005, respectively, were issued within 15 weeks of the completion of field work; however, only 33% of reports issued between January 1 and August 31, 2006, were completed within 15 weeks.
The IDA wrote in its response that it is trying to actively recruit more qualified people.
With respect to retaining staff, steps were taken to identify and rectify compensation disparities in individual circumstances, and various automation projects and procedural changes have been and are being introduced to assist staff to operate more efficiently, the IDA wrote. "In addition, a recommendation for three additional sales compliance managers was approved for the 2007–08 budget year."
Staffing was also identified as an issue for the regional offices. The AMF noted the IDA is falling behind in meeting its performance benchmarks on the sales compliance side. The AMF wants to see the IDA increase staffing for the Montreal office by at least one sales compliance officer. In its view, this would allow the IDA to review a greater number of branches and have sufficient staffing in place in case of an emergency.
Sagging sales compliance performance was the only high priority concern of the BCSC of the IDA's Vancouver office.
"BCSC staff are concerned about the low productivity of the Vancouver sales compliance department. As a result, there is some delay in the coverage of its membership, especially some of its higher risk B.C. members," the report noted.
Unlike the AMF, the BCSC believed a review of IDA processes and productivity should suffice, rather than hiring on new staff.
On the enforcement side, the AMF said the IDA needs to allocate more resources to its Montreal office to deal with the loss of one of its three enforcement counsels, who is on sick leave and left 10 open cases on hiatus. The AMF noted the Montreal office was still exceeding its benchmark of having 60% of cases processed within 10 months.
Of course, staffing was also a recurring theme of the ASC's audit of the Calgary office, which was released in June, but that report was much more vocal in its criticisms. The ASC acknowledged there is a labour shortage in Alberta, but it still found some of the IDA's employees ill-equipped to do their jobs.
"Interviews with registration officers identified a wide range of proficiency and knowledge among the individuals. The knowledge gap was not due, entirely, to different levels of experience in the position," the ASC wrote. "When asked about specific submission types, the individuals who did not fully understand the registration process continually referred to checklists in order to answer the questions. This highlights both a lack of staff proficiency and the shortcomings of the department's training program."
The ASC took exception to the IDA's hiring qualifications — for example, the job description for a registration officer requires high school and/or community college diploma and "one year's progressive, related experience within the securities industry."
"The IDA should not expect a high school graduate with one year of experience to read and fully understand complex IDA bylaws and multilateral instruments," the ASC wrote.
The IDA defends its hiring practices, though.
"Generally, we believe we are hiring the right level of qualification and experience. Our education requirements for registration officers are the same as the provincial securities commissions'. We agree staff should have an understanding of high-level registration concepts; however, we do not believe these concepts are difficult to understand," the IDA wrote in its response.
Not only did the ASC want the IDA to address the high level of turnover and poor quality of employees, but it also wants the regulator to increase the numbers of dedicated managers overseeing the office.
The ASC took offence to the fact that the Calgary office was essentially a sub-office to the IDA's Vancouver office. The IDA appointed the Vancouver-based vice-president of Western Canada as head of the Prairie Region office.
"ASC staff were concerned when, during an interview, the vice-president, Western Canada, opined that he does not add value to the registration department and generally refers difficult registration questions to the vice-president, sales compliance and registrations, or the director, registrations, both of whom are based in Toronto," the ASC audit said.
The ASC wants assurances that regulatory decisions that concerned Alberta were being made by staff who deal directly with the Prairie Region office. The IDA tried to remedy this situation by hiring a director of the Calgary office in July.
It should be noted, the IDA plays a much more active role in enforcement in Alberta than it does in other jurisdictions. The regulatory stakes are higher. For instance, the IDA has the authority in Alberta to file disciplinary decisions with the courts so that they have the same effect as if they were orders of the court, as well as the power to compel third parties and third-party witnesses to produce documents and attend disciplinary hearings.
The IDA has plans to meet all of the recommendations from the CSA. Paul Bourque, senior vice president of member regulation for the IDA says the SRO started to hire people as early as November 2006.
"Our response to this kind of thing is two-fold. We either hire more staff or we put in place more efficient processes. I believe we have the staff we need to do the job here," Bourque says.
"I don't we think we have a turnover problem at the IDA generally. I think we have them in different departments and in different cities," he continued. "For example, we are having a tough time recruiting financial and compliance examiners in Calgary. So is everybody else. It's hard to single out the IDA for those sort of issues. Our turnover at the IDA has basically been about 10 to 20%. I'm quite comfortable with that."
Filed by Mark Noble, Advisor.ca, mark.noble@advisor.rogers.com
(01/16/08)
IDA staffing shortages concern CSA
January 16, 2008 | Mark Noble
Canada's provincial security regulators collectively released their respective audits of the Investment Dealers Association (IDA) on Tuesday. While it was a much more complimentary report than a June audit released by the Alberta Securities Commission (ASC), it still highlighted some core areas in which the IDA needs to improve, particularly in staffing and resources.
Tuesday's report was compiled by the Canadian Securities Administrators (CSA) and included the audits of the IDA's three offices, located in Toronto, Montreal, and Vancouver, by the Autorité des marchés financiers (AMF), British Columbia Securities Commission (BCSC), Nova Scotia Securities Commission (NSSC) and Ontario Securities Commission (OSC). The audits were conducted in September and October of 2006.
Although the IDA is a national regulator, each of its offices falls under the jurisdiction of different provincial regulators, which can have slightly different regulation philosophies and each levy its own registration fees.
Overall, the commissions offered only a handful of recommendations that they classified as high priority. There was a consistent concern about a decrease in IDA's productivity, often due to limited staffing.
Staffing was a big issue for the OSC's audit of the Toronto head office. According to the OSC, the IDA has a high turnover of staff, which is having a detrimental impact on its performance.
"The OSC staff noted high staff turnover levels during the period under review, due to several factors, including sales compliance officers accepting positions with member firms, resulting in delays in issuing sales compliance review reports and preventing the sales compliance department from completing all the reviews scheduled," the report says.
R elated Stories
CSA report finds IDA deficiencies
ASC audit reveals IDA deficiencies
The OSC says 81% and 79% of the sales compliance review reports issued in 2004 and 2005, respectively, were issued within 15 weeks of the completion of field work; however, only 33% of reports issued between January 1 and August 31, 2006, were completed within 15 weeks.
The IDA wrote in its response that it is trying to actively recruit more qualified people.
With respect to retaining staff, steps were taken to identify and rectify compensation disparities in individual circumstances, and various automation projects and procedural changes have been and are being introduced to assist staff to operate more efficiently, the IDA wrote. "In addition, a recommendation for three additional sales compliance managers was approved for the 2007–08 budget year."
Staffing was also identified as an issue for the regional offices. The AMF noted the IDA is falling behind in meeting its performance benchmarks on the sales compliance side. The AMF wants to see the IDA increase staffing for the Montreal office by at least one sales compliance officer. In its view, this would allow the IDA to review a greater number of branches and have sufficient staffing in place in case of an emergency.
Sagging sales compliance performance was the only high priority concern of the BCSC of the IDA's Vancouver office.
"BCSC staff are concerned about the low productivity of the Vancouver sales compliance department. As a result, there is some delay in the coverage of its membership, especially some of its higher risk B.C. members," the report noted.
Unlike the AMF, the BCSC believed a review of IDA processes and productivity should suffice, rather than hiring on new staff.
On the enforcement side, the AMF said the IDA needs to allocate more resources to its Montreal office to deal with the loss of one of its three enforcement counsels, who is on sick leave and left 10 open cases on hiatus. The AMF noted the Montreal office was still exceeding its benchmark of having 60% of cases processed within 10 months.
Of course, staffing was also a recurring theme of the ASC's audit of the Calgary office, which was released in June, but that report was much more vocal in its criticisms. The ASC acknowledged there is a labour shortage in Alberta, but it still found some of the IDA's employees ill-equipped to do their jobs.
"Interviews with registration officers identified a wide range of proficiency and knowledge among the individuals. The knowledge gap was not due, entirely, to different levels of experience in the position," the ASC wrote. "When asked about specific submission types, the individuals who did not fully understand the registration process continually referred to checklists in order to answer the questions. This highlights both a lack of staff proficiency and the shortcomings of the department's training program."
The ASC took exception to the IDA's hiring qualifications — for example, the job description for a registration officer requires high school and/or community college diploma and "one year's progressive, related experience within the securities industry."
"The IDA should not expect a high school graduate with one year of experience to read and fully understand complex IDA bylaws and multilateral instruments," the ASC wrote.
The IDA defends its hiring practices, though.
"Generally, we believe we are hiring the right level of qualification and experience. Our education requirements for registration officers are the same as the provincial securities commissions'. We agree staff should have an understanding of high-level registration concepts; however, we do not believe these concepts are difficult to understand," the IDA wrote in its response.
Not only did the ASC want the IDA to address the high level of turnover and poor quality of employees, but it also wants the regulator to increase the numbers of dedicated managers overseeing the office.
The ASC took offence to the fact that the Calgary office was essentially a sub-office to the IDA's Vancouver office. The IDA appointed the Vancouver-based vice-president of Western Canada as head of the Prairie Region office.
"ASC staff were concerned when, during an interview, the vice-president, Western Canada, opined that he does not add value to the registration department and generally refers difficult registration questions to the vice-president, sales compliance and registrations, or the director, registrations, both of whom are based in Toronto," the ASC audit said.
The ASC wants assurances that regulatory decisions that concerned Alberta were being made by staff who deal directly with the Prairie Region office. The IDA tried to remedy this situation by hiring a director of the Calgary office in July.
It should be noted, the IDA plays a much more active role in enforcement in Alberta than it does in other jurisdictions. The regulatory stakes are higher. For instance, the IDA has the authority in Alberta to file disciplinary decisions with the courts so that they have the same effect as if they were orders of the court, as well as the power to compel third parties and third-party witnesses to produce documents and attend disciplinary hearings.
The IDA has plans to meet all of the recommendations from the CSA. Paul Bourque, senior vice president of member regulation for the IDA says the SRO started to hire people as early as November 2006.
"Our response to this kind of thing is two-fold. We either hire more staff or we put in place more efficient processes. I believe we have the staff we need to do the job here," Bourque says.
"I don't we think we have a turnover problem at the IDA generally. I think we have them in different departments and in different cities," he continued. "For example, we are having a tough time recruiting financial and compliance examiners in Calgary. So is everybody else. It's hard to single out the IDA for those sort of issues. Our turnover at the IDA has basically been about 10 to 20%. I'm quite comfortable with that."
Filed by Mark Noble, Advisor.ca, mark.noble@advisor.rogers.com
(01/16/08)
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by admin » Mon Mar 10, 2008 6:35 pm
1. there are approximately 500 disciplinary bulletins going back to 1999 with the IDA.
2. Of these 500, 10 (ten) applied to the top five banks
3. this is a number equivalent to 2%
How do I correspond that to the statistic that somewhere between 90% and 97% of the financial transactions in Canada flow through the big five banks? When 98% of SRO disciplinary bulletins do not involve these banks? Does that mean that the SRO's are captive to these players, or are these five players several orders of magnitude more honest than their counterparts?? If disciplinary action against the major IDA sponsors (the top banks) were in the 90% range, it would indicate a direct correlation. What the numbers seem to indicate is that either bank firms are 4500% more honest than those small players that get disciplined.................or that the IDA is simply unable to discipline it's top member firms. Those of us who have worked inside the industry know all to well which of these statements is more likely.
(my numbers stand to be corrected, and I look forward to hearing from you, but the numbers are probably only relevant for illustration purposes anyway. The real problem lay elsewhere)
Each time I see another IDA disciplinary action, I cannot help but notice that it is against a small player, a small firm, or a lone broker. Almost never is it against a major firm. Not even a major firm sanctioned when the lone broker works for one of the big firms, and when the firm may in fact be condoning the behavior. It just seems to be that the IDA is a paper tiger who snaps at minnows, while letting the big fish swim free.
http://www.rcmp-grc.gc.ca/organizedcrime/what_e.htm
The UN Convention on Transnational Organized Crime, Article 2 defines "organized criminal group" as follows: a group having at least three members, taking some action in concert (i.e., together or in some co-ordinated manner) for the purpose of committing a ‘serious crime’ and for the purpose of obtaining a financial or other benefit.
2. Of these 500, 10 (ten) applied to the top five banks
3. this is a number equivalent to 2%
How do I correspond that to the statistic that somewhere between 90% and 97% of the financial transactions in Canada flow through the big five banks? When 98% of SRO disciplinary bulletins do not involve these banks? Does that mean that the SRO's are captive to these players, or are these five players several orders of magnitude more honest than their counterparts?? If disciplinary action against the major IDA sponsors (the top banks) were in the 90% range, it would indicate a direct correlation. What the numbers seem to indicate is that either bank firms are 4500% more honest than those small players that get disciplined.................or that the IDA is simply unable to discipline it's top member firms. Those of us who have worked inside the industry know all to well which of these statements is more likely.
(my numbers stand to be corrected, and I look forward to hearing from you, but the numbers are probably only relevant for illustration purposes anyway. The real problem lay elsewhere)
Each time I see another IDA disciplinary action, I cannot help but notice that it is against a small player, a small firm, or a lone broker. Almost never is it against a major firm. Not even a major firm sanctioned when the lone broker works for one of the big firms, and when the firm may in fact be condoning the behavior. It just seems to be that the IDA is a paper tiger who snaps at minnows, while letting the big fish swim free.
http://www.rcmp-grc.gc.ca/organizedcrime/what_e.htm
The UN Convention on Transnational Organized Crime, Article 2 defines "organized criminal group" as follows: a group having at least three members, taking some action in concert (i.e., together or in some co-ordinated manner) for the purpose of committing a ‘serious crime’ and for the purpose of obtaining a financial or other benefit.
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by admin » Sat Mar 15, 2008 5:19 pm
Subject: This is our analysis of IDA position re OBSI Terms of Reference
IDA against expanding OBSI’s role in systemic abuse cases
The IDA doesn’t want OBSI mucking around really big financial assault
issues. We quote from the IDA Comments re proposed changes to OBSI’s Terms
of Reference
https://www.obsi.ca/images/document/up-1IDA.pdf :
“…In the event that OBSI uncovers an issue or course of conduct which
appears to have broad industry-wide implications, we believe that OBSI
should alert the applicable regulator so that the matter can be properly
considered and appropriate regulatory action undertaken…”
And just what responsibility does the IDA say it has to individual investors
when it receives such information? In Sept. 2002 the IDA said this in a News
Release: after an abused investor wanted to sue the IDA for inaction
regarding a brokerage that cost him severe financial losses:
“Today’s court ruling affirms the IDA’s position in this matter. Regulators
must be free to regulate fairly and effectively in the public interest
without fear or concern that they will be subjected to legal action from
individual clients”, said Senior Vice President Member Regulation Paul
Bourque. Today’s decision follows recent Supreme Court of Canada decisions
that while regulators have an obligation to act in the broader public
interest, they do not have a duty of care to individual clients of the
organizations that are regulated. Consequently, individuals do not have
grounds for action against regulators who have acted in good faith and in
the public interest. “
Source:
http://www.ida.ca/IDAWebsite/Files/Medi ... 260_en.pdf
This means, according to the IDA, that OBSI has no duty of care to individual
investors and has NO accountability for investor losses due to negligence,
delay or inaction. So naturally they want OBSI to send pattern complaints to
them. They can’t be held responsible, do not provide restitution and can
refer you to their troubled arbitration system that limits cases to just
$100,000. The IDA says total arbitration costs (including a filing fee, the
arbitrator's hourly rates, room rentals and other disbursements) can be
expected to range between $3,000 to $4,000 [ ho,ho, ho] for a typical
dispute. Costs are generally split equally between the parties, but the
arbitrator can make a different determination. The IDA however warns that,
as with the costs for arbitration, the arbitrator, at his or her discretion,
may assign one party’s legal costs to the other party in the arbitration.
Cost to use OBSI = ZERO. OBSI financial award limit = $350,000
IDA against expanding OBSI’s role in systemic abuse cases
The IDA doesn’t want OBSI mucking around really big financial assault
issues. We quote from the IDA Comments re proposed changes to OBSI’s Terms
of Reference
https://www.obsi.ca/images/document/up-1IDA.pdf :
“…In the event that OBSI uncovers an issue or course of conduct which
appears to have broad industry-wide implications, we believe that OBSI
should alert the applicable regulator so that the matter can be properly
considered and appropriate regulatory action undertaken…”
And just what responsibility does the IDA say it has to individual investors
when it receives such information? In Sept. 2002 the IDA said this in a News
Release: after an abused investor wanted to sue the IDA for inaction
regarding a brokerage that cost him severe financial losses:
“Today’s court ruling affirms the IDA’s position in this matter. Regulators
must be free to regulate fairly and effectively in the public interest
without fear or concern that they will be subjected to legal action from
individual clients”, said Senior Vice President Member Regulation Paul
Bourque. Today’s decision follows recent Supreme Court of Canada decisions
that while regulators have an obligation to act in the broader public
interest, they do not have a duty of care to individual clients of the
organizations that are regulated. Consequently, individuals do not have
grounds for action against regulators who have acted in good faith and in
the public interest. “
Source:
http://www.ida.ca/IDAWebsite/Files/Medi ... 260_en.pdf
This means, according to the IDA, that OBSI has no duty of care to individual
investors and has NO accountability for investor losses due to negligence,
delay or inaction. So naturally they want OBSI to send pattern complaints to
them. They can’t be held responsible, do not provide restitution and can
refer you to their troubled arbitration system that limits cases to just
$100,000. The IDA says total arbitration costs (including a filing fee, the
arbitrator's hourly rates, room rentals and other disbursements) can be
expected to range between $3,000 to $4,000 [ ho,ho, ho] for a typical
dispute. Costs are generally split equally between the parties, but the
arbitrator can make a different determination. The IDA however warns that,
as with the costs for arbitration, the arbitrator, at his or her discretion,
may assign one party’s legal costs to the other party in the arbitration.
Cost to use OBSI = ZERO. OBSI financial award limit = $350,000
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by admin » Sat Mar 15, 2008 5:24 pm
IDA is wide open for suit from individual investors, in the eyes of this reporter:
quote from previous post:
"Consequently, individuals do not have
grounds for action against regulators who have acted in good faith and in
the public interest. “
It may be fairly easy for some clients to show that regulators (like the IDA, or provincial commissions) have at times acted both in bad faith, and also acted contrary to the public interest. That is becoming clearer and clearer as each day goes by. Self regualtory agencies become "captured" by the very industries they regulate, and their public interest mandate becomes self interest when no one is watching.
see reference site www.investorvoice.ca for research
quote from previous post:
"Consequently, individuals do not have
grounds for action against regulators who have acted in good faith and in
the public interest. “
It may be fairly easy for some clients to show that regulators (like the IDA, or provincial commissions) have at times acted both in bad faith, and also acted contrary to the public interest. That is becoming clearer and clearer as each day goes by. Self regualtory agencies become "captured" by the very industries they regulate, and their public interest mandate becomes self interest when no one is watching.
see reference site www.investorvoice.ca for research
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Self Regulation allows desperate interests to self police
by admin » Sat Jul 12, 2008 8:55 am
I will post a few similar but unrelated news items about self regulation here. They are intended to illustrate what history has taught us about self regulation. Effectively, self regulation allows some of the smartest, richest, and often most desperate business people to regulate and police themselves. Instead of serving the public interests, self regulation usually ends up by being morphed over time to serve the interests of those business people who are the most desperate to succeed.
I suggest that financial services is now almost totally captured and morphed into a system which offers little to no protection from predatory financial practices in Canada.
Transport Canada is another example to watch for in the coming years. Do you know that the bureaucracy at Transport is beginning to allow air operators to "inspect" themselves? Wait ten years and see what kinds of horrors that might produce.
Below is an article found recently about the food inspection industry. Thanks fo reading along.
Whistleblower was right about threat to our food
Letter
Friday, July 11, 2008
The A section of Wednesday's newspaper carried an article about a Canadian Food Inspection Agency biologist who had been fired. The reason: After 20 years of reliable service, he had raised an alarm about potential problems if food inspection and labelling were turned over to industry.
How unbelievable that this government agency would consider it appropriate to allow manufacturers and suppliers to safeguard our food supply when we are bombarded with stories of unsafe foods. Self-regulation doesn't work.
Perhaps this man, Luc Pomerleau, should have taken the information not to his union but to the news media, which might have given it more serious attention.
As it is, food inspectors have been reduced in numbers over the years, and it is significant that this idea would germinate as a cost-cutting measure.
What about our health?
Ruth Sherwood
Retired dietitian
North Vancouver
Biologist fired for circulating document
Plans for food inspections found on computer
Kathryn May, Canwest News Service
Wednesday, July 09, 2008
OTTAWA - Confidential documents unsecurely posted on the Canadian Food Inspection Agency's computer network laid out sensitive plans to turn over food inspections and labelling to industry and led to the firing of the scientist who stumbled upon them.
Luc Pomerleau, a biologist with a 20-year "unblemished record" in government, said he was fired last week for "gross misconduct" and breaching security because he sent the documents to his union. Mr. Pomerleau, who is a union steward, was also deemed "unreliable," which means he no longer has the security clearance to do his job or work again in the public service.
The documents appear to involve a reorganizing of food inspection that will shift more of the onus for food safety to the suppliers that manufacture and distribute food and other products. It's a direction the agency has been heading for years and the union has long voiced concerns about the impact of such a shift on jobs and the food safety of Canadians.
The changes are part of the government's strategic review, which requires departments to find savings worth 5% of their operating budgets to be reallocated to priorities of the Harper government. The document, marked confidential, is a letter from Treasury Board secretary Wayne Wouters to CFIA president Carole Swan, explaining that the government approved the proposed cuts, but warned some have "communication risks" so will have to be deferred until a communication plan is ready.
CFIA spokesman J. P. St-Amand, citing privacy reasons, wouldn't comment on the firing except to say "due process was followed," including an investigation into how the documents landed in the hands of a "third party."
In an interview, Mr. Pomerleau said he stumbled on the document on the server in a directory that could be accessed by any of the agency's 6,500 employees. He said he assumed the document couldn't still be confidential or it wouldn't have been scanned and left there for anyone to find. He said the document was marked with a small "confidential" stamp in the right hand corner.
"If the document wasn't there and the people in charge of the document had taken care of it properly, I wouldn't have seen it," he said.
I suggest that financial services is now almost totally captured and morphed into a system which offers little to no protection from predatory financial practices in Canada.
Transport Canada is another example to watch for in the coming years. Do you know that the bureaucracy at Transport is beginning to allow air operators to "inspect" themselves? Wait ten years and see what kinds of horrors that might produce.
Below is an article found recently about the food inspection industry. Thanks fo reading along.
Whistleblower was right about threat to our food
Letter
Friday, July 11, 2008
The A section of Wednesday's newspaper carried an article about a Canadian Food Inspection Agency biologist who had been fired. The reason: After 20 years of reliable service, he had raised an alarm about potential problems if food inspection and labelling were turned over to industry.
How unbelievable that this government agency would consider it appropriate to allow manufacturers and suppliers to safeguard our food supply when we are bombarded with stories of unsafe foods. Self-regulation doesn't work.
Perhaps this man, Luc Pomerleau, should have taken the information not to his union but to the news media, which might have given it more serious attention.
As it is, food inspectors have been reduced in numbers over the years, and it is significant that this idea would germinate as a cost-cutting measure.
What about our health?
Ruth Sherwood
Retired dietitian
North Vancouver
Biologist fired for circulating document
Plans for food inspections found on computer
Kathryn May, Canwest News Service
Wednesday, July 09, 2008
OTTAWA - Confidential documents unsecurely posted on the Canadian Food Inspection Agency's computer network laid out sensitive plans to turn over food inspections and labelling to industry and led to the firing of the scientist who stumbled upon them.
Luc Pomerleau, a biologist with a 20-year "unblemished record" in government, said he was fired last week for "gross misconduct" and breaching security because he sent the documents to his union. Mr. Pomerleau, who is a union steward, was also deemed "unreliable," which means he no longer has the security clearance to do his job or work again in the public service.
The documents appear to involve a reorganizing of food inspection that will shift more of the onus for food safety to the suppliers that manufacture and distribute food and other products. It's a direction the agency has been heading for years and the union has long voiced concerns about the impact of such a shift on jobs and the food safety of Canadians.
The changes are part of the government's strategic review, which requires departments to find savings worth 5% of their operating budgets to be reallocated to priorities of the Harper government. The document, marked confidential, is a letter from Treasury Board secretary Wayne Wouters to CFIA president Carole Swan, explaining that the government approved the proposed cuts, but warned some have "communication risks" so will have to be deferred until a communication plan is ready.
CFIA spokesman J. P. St-Amand, citing privacy reasons, wouldn't comment on the firing except to say "due process was followed," including an investigation into how the documents landed in the hands of a "third party."
In an interview, Mr. Pomerleau said he stumbled on the document on the server in a directory that could be accessed by any of the agency's 6,500 employees. He said he assumed the document couldn't still be confidential or it wouldn't have been scanned and left there for anyone to find. He said the document was marked with a small "confidential" stamp in the right hand corner.
"If the document wasn't there and the people in charge of the document had taken care of it properly, I wouldn't have seen it," he said.
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