what/who this forum is intended to serve

[Guest]

If we could all stand back and let the wheels of justice deal with this case instead of trying it in the court of public opinion I am sure that the results would be fair and enlightening.

If the "wheels of justice" punished wrongdoers in this business, investor advocates would not have to be so outspoken. Who would help small investors? Regulators? We've all seen how effective they are. Corporate criminals have high-powered lawyers. Investors have people like Joe whose "tactics" hurt himself more than anyone else. What about the tactics of a certain company and the resulting losses and suffering to a lot of people. Where is this "fair" justice system when the crime is severe?

[Guest]

Who's going to finance this fund to help investors? Well I’m not the one who’s suggesting it’s a big problem so it seems to me that the ball is in someone else’s court on this but just to show what a sport I am, I’ve suggested elsewhere that judgments against the wrong doers could easily fund this effort. The bad guys should be assessed damages, costs and extra to go into the pot.

Wake up and smell the rotten stuff in the financial industry. Yes, in an ideal world, the bad guys get caught, repay the money they stole with extra bucks to set up this "fund" you suggest (and maybe some jail time). In the real world, investors are probably lucky if they get 50 cents on the dollar never mind legal costs or punitive damages for emotional stress etc. while perpetrators continue their evil ways and regulators sit back and say there's nothing they can do. (And don't forget the gag order). You need to get in touch with reality.

[admin]

good debate, my experience is not anything close to 50 cents on the dollar. It is some low ball offer made by a firm after years and years and years of fighting with the firm to try and make them own up to the wrongdoing. They have fairly large imbalance of financial and legal strength over most consumers, not to mention that the easiest and most attractive consumers are elderly.

Consumers have little no chance to see restitution. If they can go to the ends of the earth, they may finally get offered pennies on the dollar, and then they are forced (if they want/need the settlement) to sign a confidentiality agreement promising to help hide the crime. (yes fraud is a crime, and some abuses can be called fraud)

(I have copy of a court case, Blackburn V Midland a while back that gave a pretty good legal definition of fraud. I can post it if anyone would like the reference.)

cheers
advocate

PS. During all this the regulators stand aside and claim "too busy" checking paperwork and other things to get involved on behalf of the
client. (just experiences I have observed) (or they turn 100% of cases over to the local industry association to self police, again without satisfaction to the client)

[Guest]

Finally, where is all of the outrage surrounding the sale of proprietary product by the banks and brokerages to say nothing of all the rest?

good comment, we will try that one in due time. It appears a precedent could be for the others if we can get regulators and judges to recognize here in Canada that some of these deals are misleading and taking advantage of clients. The US is fining and forcing restitution for such self serving advice.

That does not inheirently make it evil. If there is proper disclosure of the conflict, compensation and competency

I agree. I have yet to see disclosure (true, plain and clear) when salespersons find a way to generate additional revenue from an account. Most bad salesmen pass this self serving advice on the client under the label of investment advice. The client has no way of knowing what is trusted advice and what is a sales pitch in disguise.

One reason that good advisors are not marching in the streets against such misrepresentation is that greater than 80% of products get sold by methods that produce the highest possible costs to the client, even when less expensive and identical choices exist. Is that trusted advice.

Further, I will say that less than 2% of persons in Canada calling themselves "investment advisors" meets the educational requirements as set out in the Securities Act that is required to be legally registered as an advisor.
cheers
advocate

[Guest]

Finally, where is all of the outrage surrounding the sale of proprietary product by the banks and brokerages to say nothing of Investors, Edward Jones and all the rest?

good comment, we will try that one in due time. It appears a precedent could be for the others if we can get regulators and judges to recognize here in Canada that some of these deals are misleading and taking advantage of clients. The US is fining and forcing restitution for such self serving advice.

That does not inheirently make it evil. If there is proper disclosure of the conflict, compensation and competency

I agree. I have yet to see disclosure (true, plain and clear) when salespersons find a way to generate additional revenue from an account. Most bad salesmen pass this self serving advice on the client under the label of investment advice. The client has no way of knowing what is trusted advice and what is a sales pitch in disguise.

One reason that good advisors are not marching in the streets against such misrepresentation is that greater than 80% of products get sold by methods that produce the highest possible costs to the client, even when less expensive and identical choices exist. Is that trusted advice.

Further, I will say that less than 2% of persons in Canada calling themselves "investment advisors" meets the educational requirements as set out in the Securities Act that is required to be legally registered as an advisor.
cheers
advocate

[Guest]

Please provide the source for your 80% of products placed and your less than 2% are qualified. If these are simply numbers that you picked out of the air then I guess that's a tactic that can be applied to a whole bunch of topics. From my perspective, 90% of the investor advocate crowd are whiners. 95% of politicians should be in jail. less than 2% of dog owners are responsible when it comes to cleaning up after their dogs (i run in the park). I think you get the picture.

Sure some product is placed by checking the compensation first and the applicability second but 80%? Seems awfully high to me. From my perspective it's probably in the low fifties (still too damn high). As far as qualifications go, there are about 17,000 CFPs, 6,000 CLU/CHFCs, another 2,000 CFAs and about 4,000 other designations and degrees that would qualify an individual to provide advice. There are at least another 10,000 individuals who are in the process of obtaining a credible designation/degree. Out of, say, 75,000 registered advisors, this is about 55% (still too damn low) but that's a far cry from 2%.

Regards

[admin]

Please provide the source for your 80% of products placed and your less than 2% are qualified. If these are simply numbers that you picked out of the air then I guess that's a tactic that can be applied to a whole bunch of topics.

thanks for your good question. The source for the 80% of products sold at highest cost to client and highest comp to salesman (under guise of advice) is from mutual fund sales stats (over last decade or so) held at various places like the MFDA web site (for one). Further details on this manner of taking advantage of the position of a trusted advisor and using it to line ones own pockets more deeply can be found at the NASD web site under fraud alerts and scams, title, Class B shares.

As far as the 2% of Canadians calling themselves the wrong title, that was purely a guess, since in my two decades in the industry I have yet to meet a CFA in the role of a salesperson. My understanding of section 34 of the Securities Act requires a CFA prior to a person being allowed to register as an advisor.

I could be wrong, but that's the way I see it.

thanks for the educational debate guys
advocate

[Guest]

The CFA website says there are 9897 CFA's in Canada. It also says that 14% operate as "investment advisers".

So if you think that you need a CFA to act as an advisor, WOW these 1385 Canadian CFA's are going to be busy being the only financial advisors in Canada! If you are interested in small investor protection, a move like that would effectively cut out any client under $20MM from having an "advisor", don't you think?

Why, in your opinion, does a CFP not count as a financial advisory designation?

[admin]

I am simply going by the law as written in the Securities Act. Section 34 says to be registered as an advisor you need a CFA. I have not yet met a CFA who is selling securities in Canada, although out of the thousands selling, I know there will be a few (dozens maybe even) . Most CFA's I have met are in research or analysis.

Interestingly CFA's have the lowest record of compliance or customer complaints in the industry. (I am not a CFA by the way, so I am not beating my own drum)

So my comments come from Securities Law in Canada, and complaint stats from CFA assn.

thanks for allowing me to clarify

advocate

[Guest]

Thanks. Actually, would you mind cutting and pasting here that section of the "Securities Law"? I'd like to see exactly how it words this.

[admin]

relevant portion of securities act pasted below..........now if you will bear with me, I will go looking for the specific educational requirements neccessary to call oneself (or to register oneself) as an advisor/adviser. When I find it I will paste it. I believe it is at IDA or OCS site. Forgive me if my logic is wrong but I feel there is a case to be made for misrepresentation of a professional title by some.
cheers

Part 5 — Registration

Persons who must be registered
34 (1) A person must not

(a) trade in a security or exchange contract unless the person is registered in accordance with the regulations as

(i) a dealer, or

(ii) a salesperson, partner, director or officer of a registered dealer and is acting on behalf of that dealer,

(b) act as an underwriter unless the person is registered in accordance with the regulations as an underwriter, or

(c) act as an adviser unless the person is registered in accordance with the regulations as

(i) an adviser, or

(ii) an advising employee, partner, director or officer of a registered adviser and is acting on behalf of that adviser.

[admin]

Continuing a short tour of some of the rules and regulations surrounding the use and or misuse of the “advisor” title, as it is either used or misused by a large majority of investment salespersons in Canada.

Starting with this OSC web site:
http://www.osc.gov.on.ca/Dealers/Regist ... s.html#857

This site gives us a glimpse into the more than one thousand (yes,1000) registration categories in the investment industry

1 Category number one, “advisor” is found in approximately NONE of the fifty five pages of registrants at the largest investment firm in the country.


2 Category number 1083 (salesperson)is by far and away the most common category of registration found at this same firm.

And yet, most of the registered salespersons at this firm are claiming the title of “advisor” on their business cards, their web advertising, and their promotions, and have done so since shortly after 1987 in an effort to improve or alter the public image and the marketing results of their sales job.

http://www.osc.gov.on.ca/Dealers/Requir ... rities.jsp

For each individual seeking registration in an advising capacity, we require confirmation of education and investment experience to demonstrate that the relevant proficiency requirements of OSC Rule 31-502 have been met; i.e. the requirements of either per s. 3.1 of Rule 31-502. The details should be provided in the proficiency and employment sections of the 33-109F4. The individual should include letters from previous supervisors, or, in the alternative, the contact information for those supervisors, to confirm the investment experience. This information should be provided in paper format to the Registrant Regulation Section of the OSC.

http://www.osc.gov.on.ca/Regulation/Rul ... 02rule.jsp

(From this page we see the proficiency requirements for advisors, in short, they need to be finished the CIM course or partly finished the CFA course etc. to call themselves this title)

PART 3 PROFICIENCY REQUIREMENTS FOR ADVISERS
3.1 Securities Advisers and their Representatives, Partners, Officers, Branch Managers and Compliance Officers
(1) An individual shall not be granted registration as a securities adviser or a representative, partner or officer of a securities adviser unless
(a) the individual has been granted registration previously as a representative, partner or officer or an associate partner or associate officer of a securities adviser, investment counsel or portfolio manager or as a securities adviser, investment counsel or portfolio manager;
(b) the individual has
(i) completed the Canadian Investment Manager Program or the first year of the Canadian Financial Analyst Examination Program, and
(ii) established that the individual performed research involving the financial analysis of investments for at least two years under the supervision of a registered adviser; or
(c) the individual has been granted registration as such by his or her principal regulator, as that term is defined in National Instrument 31-101 Mutual Reliance Review System for Registration, and that registration has not been suspended or terminated.
(2) An individual shall not be designated by a securities adviser as the compliance officer under section 1.3 of Rule 31-505 Conditions of Registration or as a branch manager under section 1.4 of Rule 31-505 Conditions of Registration unless the individual has been granted registration previously as a representative, partner or officer of a securities adviser, investment counsel or portfolio manager.


“After two decades, I have yet to meet a registered salesperson, calling themselves an advisor, who had actually completed the requirements necessary to lay claim to the “advisor” title. Yet it was used extensively, as mentioned above, for marketing reasons.”

“It was (and is today) misused, in my opinion, in order to lead clients into the false sense of security that they were not dealing with self-interested salespeople, but instead were dealing with client-interested professionals. It was used to lend credibility and trust to client relationships that were then often abused and used to pursue the greatest sales commissions for the occasional bad sales rep. In addition, most of the firms advertising and promotion supported this trusted professional stance.”

“However, when push came to shove, as it did when 92 year old Norah Cosgrove of Toronto took RBC to task in small claims court, their statement of defense spoke to the truth and spoke volumes about the misleading aspect of claiming trusted professional status:

RBC stated something to the effect that at no time were they acting in a fiduciary capacity and they felt they owed “no duty of care” to this and presumably all other RBC clients. See Ontario Superior Court, Small Claims action # for the exact wording of their statement of defense.”

“In summary, firms may talk the talk (when talk is easy), but fail to walk the walk. And when called onto the carpet by this disgruntled 92 year old client, to use one public example, they may recant even the talk. I maintain that use of the title, “advisor” on investment salespersons business cards commits each and every one of them to a fiduciary level of responsibility to the client, and to claim anything less is misleading and damaging to the public interest. This fiduciary level of responsibility to the client should and could be used by class action lawyers to obtain redress and compensation for all clients over the past decade or two, who have received a sales pitch by sales people, rather than the professional investment advice, as the firm and the representatives promised instead.”

“For a look to the future, and the potential size of the actions possible towards these firms, see the NASD web site and investor alerts: http://www.nasd.com/web/idcplg?IdcServi ... odeId=1249



In July 2002, NASD charged a broker with securities fraud involving, among other abuses, purchasing large volumes of Class B shares that kept his customers from taking advantage of the lower sales charges available through different classes of shares.

[Guest]

this forum is for people who cannot stand bullies.

People who abuse others are simply bullies, whether it be on the playground, in the office, or any setting.

Financial abuse is a practice of bullies taking advantage of an imbalance of strength, experience, knowledge or other, to take advantage of the more vulnerable party to the transaction.

When it is done by so called professional investment advisors it is fraud, and criminal.

In my experience, Canada has no protection against the more subtle, yet pandemic forms of investment abuses, but they are starting to (with the help of venues like this) come to light, and the public is starting to be warned of the abusers out there. Canada has financial regulation in "pretense only", where the regulators pretend to do the job, while actually allowing 90% plus of the abuse go unchecked.

The only way to beat a bully is to stand up to them, to fight them, to refuse to allow them to operate without being accountable for their actions. Report them. Sue them. Charge them with criminal offense where appropriate. Do whatever is neccessary to prevent them from continuing to abuse and hurt people. To take advantage of others simply because of your strength, size, or ability to get away with it is simply unnaceptable.

[Guest]

further info from a recent IDA member bulletin about the NAME GAME. (the practice of advisors calling themselves a title they are not qualified to hold in order to better seduce customer

Update October/05, after finding IDA and MFDA sending out notices to members to add clarification on this topic:

MR0349 - Officer and Business Titles
MEMBER REGULATION notice TORONTO Suite 1600, 121 King Street West, Toronto, Ontario M5H 3T9 Telephone: (416) 364-6133 Fax: (416) 364-0753 CALGARY Suite 2300, 355 Fourth Avenue S.W. Calgary, Alberta T2P 0J1 Telephone: (403) 262-6393 Fax: (403) 265-4603 HALIFAX Suite 1620, TD Centre, 1791 Barrington S
/files/regulation/mr_notice/mr0349_en.pdf


This PDF notice suggests that "employees of IDA member firms may not use an "officer" title (quotes mine) that suggests he or she is registered in a capacity in which he or she is not in fact registered.

(why only applied to "officers" of IDA firms? Is it perhaps due to the fact that nearly "every" salesperson in Canada who works in an IDA firm, is representing themselves by a title (investment advisor) that they are not in fact registered as?

To confirm, find the registration category of your own salesperson in the OSC or the IDA web site. You will find thier business card title is not the same as what they are registered as.

This info comes from a good article by Philip Porado in Sept 2005, ADVISOR's EDGE REPORT, page 6, titled NAMES PEOPLE PLAY.
(Title inflation by todays investment salespeople to (mis) represent themselves and market themselves better to trusting clients)
Well done Philip, good article, great title.

PS. After sending requesgt to clarify if salespersons are subject to this rule, I received the following response from the IDA:

To: wdlilva@ida.ca
Wendyanne D'Silva, Director of Registration, Investment Dealers Assocaition of Canada

re: member regulation notice MR0349 second request


I was just writing about MR 0349, notice of registration category verses title used . After reading an article in ADISORS EDGE REPORT, Sept, 2005, titled "NAMES PEOPLE PLAY"

Is there a reason that this notice refers only to officers etc, and not to persons registered as salespersons? Are they under a separate notice suggesting similar requirement to use title based on registration?

thanks very much for your clarification

response:

MR notice 349 refers to "employees of IDA member firms" which applies to officers, salespersons and non-registered individuals.
________________________________
Wendyanne D'Silva
Director, Registrations
Investment Dealers Association
wdsilva@ida.ca
phone: (416) 865-3032 / fax: (416) 364-9177

[Guest]

The post above, when combined with IDA, and Securities Act's in Canada still suggest to me that many salespersons are in fact "misrepresenting" themselves to clients when they claim trusted advisor status, or even simply advisor status. If it were me, I would be asking my MP to put more emphasis on corporate ethics, integrity and accountability during this election period.

I still could be wrong in my reasoning, as has happened before, but at least my heart is in the right place.

Where is it? It feels sympathy for 92 year old Norah Cosgrove, who felt duped by her former friend and RBC "advisor" in Ottawa and took them to small claims court for $10,000. RBC statement of defense filed in court stated that at no time did they feel they owed the duty of care of a fiduciary to this client. (Ontario court of justice, small claims court file 03-sc-083313) (this defense despite the fact that they allowed misrepresentation to the client that her registered salesperson was an "advisor". And despite the fact they fired the said salesperson for some misconduct. They still failed to make the client whole)

YOU FIRST!!

I also feel sympathy for Marion Hunt in a case between her, her late husband Mel, and thier broker TD Evergreen.
Although TD was found guilty of selling thier BCE shares without having authority to do so, the real low blow to the elderly clients was TD's claim that the Hunts trust that they placed in TD was not warranted because they did not open a disretionary account. In other words, "since you did not give us complete authrity to trade your account as we see fit, we do not feel we owe you a duty of trust".

Mel Hunt died before getting any satisfaction for this deception, and his wife has had no better success.


Welcome to the world of multi million dollar advertising by firms saying that the "client comes first", followed by multi million dollar spending on lawyers to cover up when the "firm puts itself first".