Regulators in your pocket

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Regulators shift to broad principles

CSA proposes more general disclosure

Barbara Shecter, Financial Post

Monday, December 22, 2008

Regulators are proposing the latest method of ensuring good corporate governance at Canadian companies with an emphasis on broad principles rather than the prescriptive rules and minimum requirements now in place.

Instead of ticking off a number of boxes to show they are complying with rules on director independence and other governance matters, the Canadian Securities Administrators are proposing nine broad corporate-governance principles and more general disclosure that will apply to all publicly traded companies.

Among them, companies are advised to create a framework for oversight and accountability, and to structure a board that will add value to the company with directors who will contribute to its effectiveness. The broad directives are also intended to promote integrity and recognize and manage risk.

The proposals, which will be debated over the next four months during a comment period, were developed after a broad review that began in September, 2007.

Some industry observers said the proposals are timely and appear to be responsive to criticism from business leaders who found the regulatory response to past scandals such as the collapse of Enron Corp. too costly and ineffective.

Others questioned the effectiveness of what they see as "generic" principles.

"We welcome the apparent move away from the one-size-fits-all approach to governance," said Edward Johnson, senior vice-president of Power Financial Corp.

During a speech in Toronto in June, Jeff Orr, the chief executive of Power Financial, said, "The haste with which many of the resulting measures were developed following the scandals meant that they were not all well thought through."

He referred to the enormous cost of complying with Sarbanes-Oxley legislation in the United States and equivalent requirements in Canada that "left many in management and on boards feeling that a lot of time and energy is being spent making sure the boxes are ticked, rather than focusing on the underlying well-being of the business."

Mr. Orr also warned of consequences such as Canadian companies turning away from public markets and migrating to private equity if governance guidelines continued to put companies with controlling shareholders such as Power Corp. offside if representatives of those shareholders were on certain boards and committees.

The governance standards proposed yesterday appear to address that issue by suggesting the current "prescriptive" approach to independence on audit committees be replaced by "guidance regarding the types of relationships that could affect a director's independence."

Ed Waitzer, a partner at law firm Stikeman Elliott and a former chairman of the Ontario Securities Commission, called the proposals "timely" in light of the recent market turmoil.

The proposed shift from minimum standards to broad principles "acknowledges the myth of precision that has prevailed in regulation around governance [and] accountability," he said. "As has become obvious of late, ultimately governance isn't about rules, reporting or compliance, but, rather, involves thinking more deeply about what motivates good behaviour and informed judgment."

Mr. Waitzer said Canada is following the trend toward principles-based regulation championed by the Financial Services Authority (FSA) in the United Kingdom.

Stephen Griggs, executive director of the Canadian Coalition for Good Governance, which represents some of the country's biggest money managers, said principles-based regulation is a good way to provide flexibility for companies. However, he added, "in this case, the principles [proposed by the CSA] are so broad that it is difficult to see how any of this is more than a restatement of the basic legal and practical duties of the board."

He said the proposals leave key governance requirements "up to the board to decide if they want to adopt them and how they are to be applied. Overall, Mr. Griggs said, "these proposals will not lead to an improvement in shareholder democracy -- the status quo of entrenched boards will be continued."

The Canadian Securities Administrators, the umbrella group for the country's 13 provincial and territorial regulators, acknowledged that while the Alberta Securities Commission is among the supporters of the proposals unveiled yesterday, there is concern the costs of adjusting to the new regime could outweigh the potential benefits.

bshecter@nationalpost.com

[admin]

The BCSC says the matter is closed- Thow's on the lose, fines not paid, investors left holding the bag...

CSA investor protection in action

Ken K

Subject: 01-08-09 FP: Thow saga continues unresolved



Thow saga continues unresolved

Barry Critchley, Financial Post

Thursday, January 08, 2009

Yogi Berra is famous for many things, but the former Baseball Hall of Fame catcher is mostly remembered for his sayings, including the immortal: "I never said most of the things I said."

One of his other notable quotes -- it ain't over till it's over -- applies to the country's securities enforcement business. In short:Why haven't the authorities been able to arrest Ian Thow, who was charged with 25 counts of fraud last June following a two-year investigation by the Vancouver RCMP Integrated Market Enforcement Team? Those charges were laid against Thow -- the former Victoria-based senior representative of Berkshire Investment Group, once part of AIC Ltd. and now a unit of Manulife Financial Corp. l -- after a panel of the B. C. Securities Commission found Thow committed fraud.

The BCSC panel reported its findings in October, 2007, saying the "case represents one of the most callous and audacious frauds this province has seen. Thow preyed on his clients by offering them non-existent securities and instead using the funds to support his lavish lifestyle. He took their money and betrayed their trust. He has left a trail of financial devastation and heartbreak," said the panel, noting that "Thow befriended his clients and built trust with them through his high-profile support of charitable and community causes, his show of wealth, and his apparent close relationship with Michael Lee Chin, the principal of Berkshire. Thow helped clients borrow money to make the investments through his relationships with loan officers at Scotiabank and the Bank of Montreal."

Later, Thow, who moved to the United States in 2005, was banned for life from participating in the securities business and fined $6-million.

But amid reports he may be in the United States or has been to Jamaica, he hasn't been brought back to Canada, though last June IMET said that "for the sake of the victims, [we're] pleased that we're moving forward with the court process."

So what's going on?

No one is sure, though the BCSC said that from its perspective, the matter is concluded. "We had a hearing and we handed down sanctions," said Ken Gracey, a BCSC spokesman.

Calls to the RCMP in Ottawa (who referred us to the RCMP in Vancouver, who then referred us to IMET in Vancouver) yielded limited information. Sammy Wu, IMET's acting sergeant, said, "We are working on the proper steps to apprehend him to bring him back to Vancouver to answer the charges." Wu declined to comment on whether IMET knew Thow's whereabouts or whether there are any negotiations to bring him back to Canada.

One of Thow's former clients said: "Thow's activities have hurt the savings of a number of people, but there seems to be no one who will go and get him. It's an indictment of the industry and the country."

Other regulatory organizations were also involved. For instance:

▌The MFDA, a self-regulatory body set up a decade back, and which focuses on the distribution side of the mutual-fund industry, reached a settlement agreement in a December, 2007, hearing whereby Berkshire paid a $500,000 fine and $50,000 in costs concerning Berkshire's failure to conduct reasonable supervisory investigations of Thow over the period September, 2004, to June, 2005.

▌OBSI. Some of Thow's clients were told to seek the help of the Ombudsman for Banking Services and Investments because that body can extract compensation. It's not known how many were helped.

see:

Ian Thow takes flight

[admin]

When reading this article, please keep in mind that Canadian regulators have been numerically shown to prosecute approximately 1/1000th as many fraudsters as the USA, and financial compensation to Canadian clients wronged is a percentage smaller than this relative to the USA:



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February 5, 2009
At Madoff Hearing, Lawmakers Lay Into S.E.C.
By DIANA B. HENRIQUES
WASHINGTON — Securities regulators could not cool the white-hot Congressional fury on Wednesday over their failure to act on tips that might have exposed the Madoff scandal almost a decade ago.

At a contentious hearing by a House Financial Services subcommittee, Harry Markopolos, a private fraud investigator from Boston, detailed his persistent but futile efforts to spur the Securities and Exchange Commission to investigate Bernard L. Madoff, going back to 1999.

Mr. Madoff was arrested in December and charged with running a giant Ponzi scheme — the very accusation Mr. Markopolos said he made repeatedly to S.E.C. employees in Boston and New York to no avail.

Lawmakers spent the rest of the hearing in a heated dialogue with senior S.E.C. staff members, getting little satisfaction and suggesting the agency was the problem.

In the torrent of criticism that Mr. Markopolos and lawmakers heaped on the S.E.C. and its senior staff members, some complaints were serious — that the agency lacked the expertise to tackle major frauds by big players and had no systematic way of dealing with whistle-blowers. Others were sarcastic, with Mr. Markopolos saying regulators seated in Fenway Park in Boston would have trouble finding first base.

The agency’s officials repeatedly tried to explain that they could not discuss the handling of the Madoff case without jeopardizing that pending investigation — and were repeatedly cut off by lawmakers who demanded specific information about the handling of the case.

Representative Paul E. Kanjorski, Democrat of Pennsylvania and the hearing chairman, criticized the official position as an expression of arrogance that he said was at the root of the agency’s regulatory failures.

Congress is in the midst of creating regulatory changes that could change the agency’s fate, Mr. Kanjorski warned the panel of official witnesses. Lawmakers want immediate candor about the handling of the Madoff matter, not generalities, he said.

But the hearing became a collision of frustrations that, at one point, prompted Mr. Kanjorski to accuse the staff members of refusing to cooperate with a branch of government that could wipe their entire agency off the regulatory map, if necessary.

Representative Gary L. Ackerman, Democrat of New York, was more blunt in his condemnation of the S.E.C. officials sitting before him: “We thought the enemy was Mr. Madoff. I think it is you.”

Mary L. Schapiro, the new chairwoman of the S.E.C., later released a letter to the subcommittee’s senior members, conceding that the hearing “cannot have been satisfactory for you.” She asked to meet with them promptly to work out “a course forward” that would both provide accountability and maintain the integrity of continuing investigations.

“There needs to be a full accounting, both of Mr. Madoff’s activities and why we did not detect the fraud, which we truly regret,” she said.

The hearing had opened with Mr. Markopolos telling the panel he had discovered another possible fraud, a $1 billion Ponzi scheme, that he would report to regulators on Thursday. Neither he nor his lawyers would provide any additional details.

Mr. Markopolos also said he would tell regulators about a dozen private foreign funds — which he said were “hiding in the weeds” in Europe — that raised money for Mr. Madoff and had sustained major losses.

These funds have not yet been publicly identified, he said. And their silent victims most likely include investors of “dirty money,” including Russian mobsters and Latin American drug cartels, he said — although he acknowledged that he did not have specific information about such investments.

A lawyer for Mr. Markopolos said later that his client would make his reports to the S.E.C. inspector general, with whom he will meet on Thursday, and “through other channels.”

Linda Chatman Thomsen, the S.E.C. enforcement director, told lawmakers that the agency staff had demonstrated its willingness and ability to pursue major fraud cases, including 70 Ponzi schemes. Still, it missed opportunities to zero in on Mr. Madoff, who was arrested Dec. 11 at his New York apartment and charged with operating a Ponzi scheme whose losses he put as high as $50 billion, according to the civil and criminal complaints against him.

Ms. Thomsen said the agency, under Ms. Schapiro, would work hard to improve its receptiveness and responsiveness to whistle-blowers like Mr. Markopolos. But her responses did not seem to satisfy any of the half-dozen lawmakers who stayed at the hearing after Mr. Markopolos left.

They had been far more riveted by Mr. Markopolos’s testimony, which at times seemed to enter verbal territory more often explored at organized crime hearings. He referred to his fear that he would be killed if Mr. Madoff learned of his investigation. At one point, noting his experience in military intelligence, he described an offer he made to “go undercover” for the S.E.C. — a proposal that was rebuffed.

And he recalled wearing gloves as he assembled a package of information he planned to slip to Eliot Spitzer, when he was New York’s attorney general, so he would leave no fingerprints.

While one lawmaker asked whether this all wasn’t “a little paranoid,” others agreed that Mr. Markopolos was wise to be cautious, given the scale of the fraud he was trying to bring to light.

[admin]

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rule and more rules.

The problem I found when I was in the investment industry is that because we were allowed to police ourselves, we did this job very selectively. For example, when a rule was violated, if it pertained to protecting the public, (and slowing profits) it was more likely to be a rule that was overlooked.

But if the rule pertained to an industry interest, (and increasing profits or control etc) it was very likely to be enforced.

It caused a system where a person never knew what the rules were, since, although we are all supposed to know and follow "the rules", duh, the fact was that the landscape for rules was a constantly shifting sands upon which, if one stuck around long enough to figure it all out, it became more easy to understand and follow by just doing the opposite of what the rules say................or in other words "go where the profits are" and forget the written rules.

I witnessed this all day every day, as I worked along side salespeople pushing for commissions, to be in the million dollar club, the presidents club, the chairmans council, the vice presidents club. It was a journey into the double bind. The trap that says "you are damned if you follow the rule,.........and you are damned if you do not follow the rules" I have since learned that damage to ones mental health sometimes follows when humans are placed into a double bind situation.

the following post is but one example (out of thousands) showing how the industry polices the rules in its favor and not in favor of the public interest. (regulators are in this game as well, unfortunately)

[admin]

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Hello Everyone,


Regulators across Canada require mutual fund companies to prepare a prospectus before their funds can be legally sold in the various provinces. Prospectuses will reveal information about your fund that advisors (the majority) will never inform
you about, because quite frankly, they do not care about you. Remember, their job is to sell , not to inform.


There is a link to a good article about prospectuses which seems to be adopted by all the provinces. Here it is:


http://www.albertasecurities.com/Invest ... pectus.pdf

You will see on page 3 this sentence:

"A copy of the prospectus must be sent to every purchaser".

Furthermore, the prospectus is required to go out to an investor immediately (next business day) after a fund is purchased.

Many investors never see a prospectus and furthermore, regulators (at least in Manitoba, do not enforce this "must do" requirement. How is that for protecting Manitobans?

This is just one sample of why I say regulators are as deceptive as the financial participants, at least in Manitoba.
Chances are, the same system is in place with all regulators across Canada.

So while the title of the article is:

"The Prospectus- Being Informed is Being Protected", they do not enforce many of the "must do's"
that they impose in the regulations. The prospectus is just one example.

In my situation, I never received one prospectus, and when I sent an email to the Manitoba Securities Commission
bringing this to their attention, they did not respond to the complaint. They do not enforce this sort of thing.
How is that for protecting Manitobans?

There is another good point made within the article. Ask your advisor for a prospectus before you invest.

The problem with that suggestion is two-fold.

1.) The majority of small investors are unaware that such prospectuses even exist if they are new to investing.
2.) The article itself which should be given to investors before investing is not, so what is the use of even publishing it?

Regulators who are truly acting on behalf of investors would enforce #2, because it is easily enforceable.

Just another phony way they say they protect investors.

Folks, they talk a good story, but if you want true protection, do your own homework before you deal with a
"financial advisor" because they want you dumb and trusting, so they can be feed off you in a multitude of ways.

Wrongdoings occur on a regular basis simply because the industry is full of poor business practices which are well known by those in the industry and those who have been burned, and those who do their research ahead of time.

When things go wrong, and they often do, and if you lodge a complaint, the industry will come down on and put the blame
directly on your shoulders. It is done all the time.

They want you dumb and uninformed, but when they screw up, they say you were aware and informed because...
your signature appears at the bottom of all purchases. If you sign, you understood. It is just that simple folks.

Just like predators who lie in wait at the water holes, there are "money water holes" in the form of wealth management companies all around the world including Canada, and guess who lies in wait?


Investing your hard earned monies with an advisor in a "trusting relationship" and under an "illusion of regulatory protection"
is a recipe for misunderstanding, probable money losses, and ultimately disillusionment with the industry.


he following site is a great site for learning about business terminology and more.


http://www.investopedia.com/terms/p/prospectus.asp


Good luck with your investing, you will need it!

Bruce

[admin]

Captured Regulators

Jeffry A. Frieden, a professor of government at Harvard, is the author of Global Capitalism: Its Fall and Rise in the Twentieth Century.”
It has been difficult to move forward rapidly to reform the American financial regulatory system. This is not surprising. Financial regulation in the United States has always been arcane, complex, and resistant to change. There are several reasons, all of which come down the one overarching reality:
financial regulation is extraordinarily political, and confronts powerful interests.
Financial regulators tend to be sympathetic to interests of financial institutions, which makes them reluctant to make changes that would be costly or difficult.
Special-interest politics. Regulatory agencies are often sympathetic to the industries they regulate. This pattern is so well known among scholars that it has a name: “regulatory capture.” This effect can be due to the political influence of the industry on its regulators; or to the fact that the regulators spend so much time with their charges that they come to accept their world view; or to the prospect of lucrative private-sector jobs when regulators retire or resign.
Whatever the reason, financial regulators tend to be sensitive to the views and interests of financial institutions, which makes them reluctant to make changes that would be costly or difficult.
Technical complexity. The “capture” of financial regulators is facilitated by the extraordinary complexity of modern finance. Very few consumers, or politicians, understand the financial markets and institutions that regulators supervise. And very few care much about them, in normal times.

For their part, regulators cannot usually afford to hire all the expensive financial experts they need. This means that the regulators’ principal source of information and attention is the financial institutions themselves. This was codified in some of the regulatory mistakes made in the run-up to the crisis, such as when regulators — in the United States and in many other countries — accepted the argument that banks themselves were best suited to evaluating the riskiness of some of their most complicated holdings.
Fragmentation. American bank regulation is among the most fragmented in the world. Each state has its own bank regulator; there are often separate regulations and regulators for each variety of bank (commercial banks, savings and loans, credit unions); and financial institutions that look a lot like banks are typically regulated by other agencies.
The proliferation of regulators means that financial institutions are often able to “jurisdiction-shop” for the most favorable regulatory environment. It also means that each of the dozens of regulators jealously guards its independence. Attempts to consolidate regulation, for example, run up against the states and their regulators, the disparate federal agencies, and their Congressional and private-sector supporters.

Uncertainty. One of the most important tasks of financial regulators is devising policies toward new financial instruments. This is also one of the most daunting tasks, as the new instruments are typically not well understood — indeed, they may have been devised precisely to avoid easy control by the regulators. Most observers did not understand how risky the new American mortgage-backed securities might be until they collapsed, bringing the financial system and the rest of the world economy down with them.
For financial regulation to be reformed in line with the true public interest, then, requires an almost magical combination.
n Policymakers and regulators must be generally immune to political pressure from the financial services industries.
n Reformers have to have a broad and deep understanding of the great complexity of modern finance.
n Central policymakers need to be willing and able to override the opposition of existing, turf-protecting, state and federal regulators.
n And enough people have to care, and to be paying attention, to get politicians to focus on the topic and push it to a conclusion.
In the aftermath (or what may be in the midst) of the gravest financial crisis in the United States in 75 years, all of these stars may be aligned. The opportunities for fundamental regulatory reform are probably greater now than they have been since the Great Depression.
Even so, it will require an enormous amount of expertise, perseverance, and political courage to pull it off.

[admin]

THE NEW YORK TIMES
September 13, 2009
FAIR GAME
But Who Is Watching Regulators?

By GRETCHEN MORGENSON
NOTHING succeeds like failure, as the saying goes. And nowhere is this dismal truth more evident than in our financial regulatory system, one year after the bankruptcy filing of Lehman Brothers.
Even though calamitous lending practices laid waste to the nation’s economy, surprisingly little has changed about how the financial arena operates and is supervised. Sure, a couple of venerable brokerage firms have vanished, but many of the same players remain on the scene, in the same positions of power.

Senior regulators who stood idly by for years as financial firms built their houses of cards have been rewarded with even bigger jobs or are jockeying for increased responsibilities. The Federal Reserve Board, for example, wants to become the financial system’s uber-regulator, even though its officials did nothing as banks made deadly decisions to lend recklessly and leverage themselves to the max.

Awarding increased power to those who failed in their oversight duties flies in the face of all notions of accountability. Imagine hiring Angelo R. Mozilo, the former chief of Countrywide Financial, to run a global financial institution, or installing E. Stanley O’Neal, who presided over a disastrous period at Merrill Lynch, at the helm of a major investment firm.

Yet those in the public sector ask us to believe that regulators who snoozed during the credit bubble will be alert to emerging problems on their beats when the next mania begins.

That’s asking a lot, isn’t it?

Here’s a novel thought. Instead of creating more regulations to try to prevent this kind of mess from recurring, why not figure out how to hold regulators accountable when they perform as poorly as they did in recent years?

Edward J. Kane, a professor of finance at Boston College and an authority on the ethical and operational aspects of regulatory failure, has some ideas about how to do this and right our damaged system in the process. He outlined them in a recent paper titled “Unmet Duties in Managing Financial Safety Nets.”

This ugly financial episode we’ve all had to live through makes clear, Mr. Kane says, that taxpayers must protect themselves against two things:

i.) the corrupting influence of bureaucratic self-interest among regulators and the political clout wielded by the large institutions they are supposed to police.

ii.) Finally, he argues, taxpayers must demand that the government publicize the costs of efforts taken to save the financial system from itself.

“That authorities and financiers could so callously violate common-law duties of loyalty, competence, and care they owe taxpayers and financial-institution customers is evidence of a massive incentive breakdown in industry and government,” Mr. Kane writes. “This breakdown cannot be repaired merely by replacing the governing political party or by changing the jurisdictions and mission stateme

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http://www.pjreeve.com/pjr/blog/Entries ... ATION.html

Read this penetrating analysis on Complaint handling rule making
http://www.pjreeve.com/pjr/blog/Entries ... ATION.html Flawed
Process -Faulty Product: Defective regulation on the Canadian investment industry.


from ken at http://www.canadianfundwatch.com


(are these regulators being intentionally systemically flawed when it comes to investor protection?.......if so, that might be a crime. Advocate)

[admin]

"If you can put out of your mind for a moment, that advocis is a band of life insurance salespeople who are desperately trying to position themselves as "financial advisors".........once you have gotten that bit of self interest out of the way (or at least recognize it) then some of the comments that they say in this article are worth while" advocate

Dual-licensing confuses consumers: Advocis Symposium

Fragmented regulatory system fails to offer adequate protection

Thursday, November 26, 2009

By Megan Harman

IE Newspaper

The diverse regulatory and licensing requirements facing financial advisors who sell both securities and life insurance result in a complex system that fails to effectively protect consumers, a panel of industry experts said on Thursday.

Speaking at an Advocis Symposium in Toronto, four panelists spoke about the challenges facing advisors involved in the sale of both securities and life insurance. The speakers agreed that there are problems with the system that is currently in place.

“We have collectively failed, and everybody has responsibility in this,” said Robert Fleischaker, president of Stonehaven Financial Group, an independent financial advisory firm in Markham, Ont. “The system that’s in place has not achieved the desired results.”

Dave Velanoff, president and CEO of MGI Financial, agreed: “I don’t think it’s serving the public adequately.”

Another panelist was Jim Hall, the Saskatchewan Superintendent of Insurance and chair of the Joint Forum of Financial Market Regulators’ Intermediary Regulation Committee. The committee held consultations earlier this year with industry stakeholders to determine whether there were conflicts or regulatory burdens facing financial advisors who are dual-licensed.

He said given that securities and insurance products are very different in nature, different regulatory regimes are necessary to a certain extent.

“There are justifications for differences in regulatory structures,” said Hall.

But he said the regulatory regimes should be based around the same common standards that seek to protect consumers, and he admitted that the diverse rules had potential to result in undue regulatory burden for advisors.

“Inevitably, advisors that choose to be dually licensed will face more requirements,” said Hall.

Some advisors appear to be narrowing the scope of their business to avoid this regulatory burden. Hall admitted that the committee heard anecdotal evidence that some dual-licensed advisors were dropping their mutual fund licenses, and others were dropping their insurance licenses. But he said the evidence did not add up to a clear trend.

During its consultations, the committee found that advisors did not, in fact, face any substantial conflicts or regulatory burden around the different licensing and continuing education requirements for insurance and securities.

“There’s doesn’t appear to be any conflicts between the regulatory requirements, and an undue burden does not appear to have been a significant issue,” Hall said. He said the committee’s full report would be released in 2010.

But the other panelists argued that there was significant room for improvement with the current system. Harold Geller, a partner with Milton, Geller LLP with expertise on issues concerning financial advisors, said the fragmented regulatory system fails to adequately protect consumers.

“The system is broke,” he said. “We can’t have multi regulators with different rules and lack of clarity to you, the advisor, to pass on to the consumer. How can that work?”

With multiple licenses and no clear set of standards for financial advisors, Geller said the system creates confusion for consumers, since they have no way of knowing how to select a trusted financial advisor. He calls for a single set of principles and standards guiding all financial planers.

“Let’s get away from dual-licensing, and arbitrage, and frankly I think, misleading representation,” Geller said.

Velanoff agreed that advisors should establish a single set of standards. In particular, he said education for industry players must become more coordinated. He suggested that the industry work together with post-secondary institutions to establish a specific course that would become mandatory for all new advisors, in order to build credibility in the industry.

“I think this industry has to take a stand on what the future of the business is going to be from an educational standpoint,” he said.

IE

[admin]

I attended a fascinating presentation today by a young lady who claimed to be some kind of electrical power utility information person for Alberta. Amazing how it took her 30 minutes to say absolutely nothing, leaving no one informed about who she was, what she was there for, and so on.

She used industry jargon, acronyms no one understood, (AEUS, FTP, AEC, Whatever seemed to come to mind). She referred to joint coordination with other agencies to protect the public. She even had a powerpoint presentation with charts and boxes to show her case. She had no idea and no clue that she was a paid and trained parakeet, willing to say and do whatever her bosses told her. Even if it meant abusing the public.

All I could do was watch with amazement at how identical it was to any investment industry bullshit session where a regulator, self regulator, or some industry paid lackey droned on about similar "protection of the public" lies, while billions of dollars are removed as fast as possible from the public.

The person was paid by a salary from the industry that was profiting so handsomely. Was hired by someone appointed by a joint effort of industry and government. "Annointed" might be a better term. Regulated by similarly paid persons.

It all came to me during this meeting that it was just another version of the very same movie of the investment industry. Hire a bunch of spineless "YES" men. Pay them to be loyal to you. Tell them what message to give the public, and screw away. Abuse the public interest as much as you can possibly get away with..........and hire a few more talking heads if the public makes some noise. Put together a phoney "watchdog" group to "protect" the public. Appoint the chair of that group as well. Put ten groups together if you have to. Buy your way into legitimacy. Who cares? There is billions upon billions of dollars to be had by raping the public. Easy pickings.

[admin]

February 2, 2010, Press Release – Alphabetical List of Disciplined Persons

Attention News/Business/Financial Editors:

Under pressure from investors, the Canadian Securities Administrators (CSA) has quietly and without fanfare published a national alphabetical list of brokers, financial agents and investment advisers who have been disciplined. These are people who have cheated their clients, stolen from them or were simply grossly incompetent in representing their best interests. The list is urgently needed, but is being criticized as “too little, too late”.

Small investors need such a list to know who in the financial services industry to avoid, and it is also a salutary tool for industry colleagues to know who the black sheep and incompetents in their industry are. The CSA list is similar in some ways to the Small Investor Protection Association’s (SIPA’s) “Brokers Hall of Shame” list published 10 years ago.

But the CSA list does not include members of the self regulatory organizations (SROs) recognized by the CSA; the Mutual Fund Dealers Association (MFDA), and the Investment Industry Regulator of Canada (IIROC). These two industry associations are not supplying names.

This means that consumers investing in products sold by investment dealers or mutual fund dealers receive no benefit from this initiative by the CSA. In addition, consumers investing in products sold by insurance companies or banks (who are federally regulated), such as segregated funds, will be unable to check on their representative.

Few of the provincial regulators are disclosing cases of discipline before 2004 whereas the British Columbia Securities Commission (BCSC) lists cases back to 1987 (an additional 17 years). This suggests the extreme and lamentable reluctance of most regulators – who should be protecting the consumer – to do anything concrete to help consumers if by so doing, they would upset some in the financial services industry.

According to SIPA, this is just one more reason why a strong National Financial Services Regulator – provided it has a strict mandate to protect consumers – should be strongly supported by Canadian consumer-investors.

For additional information:
Visit SIPA’s website at http://www.sipa.ca//regulation/csaRegulators.htm
Stan I. Buell, P.Eng., Tel: 905-471-2911

(advocate comments: This is also evidence of the lack of rules, lack of respect for consumers that the self regulatory agencies have. They have entirely sold out the right to self regulate in the name of an addiction to profits.)

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Presentation to the Liberal Party February 3rd, 2010 Parliament Hill
My family & I have been victims of a financial crime; I have lost complete faith in the power and will of the government to correct the situation that led to my loss. It has been almost five years since nearly two thousand investors across Canada have lost $250 million from an alleged Ponzi scheme or so-called “hedge fund” which we were told was a “conservative, long-term investment” NORSHIELD. NO JUSTICE. NO RESTITUTION. No mandatory errors and omissions insurance to compensate investors and/or weed out wayward, unsophisticated, commission-driven so-called “advisors” albeit “registered salespersons” There have been only what appears to be intentionally pointless, costly hearings by provincial regulators at taxpayers’ expense. No RCMP FINTRAC or other police investigations into Canada’s largets so-called “trusted bank” Royal Bank of Canada’s involvement in Norshield, nor Bank of Montreal’s involvement as Guardian of Norshield investments. Nor has the auditor KPMG been held ACCOUNTABLE for its role in this fraudulent scheme yet enormous sums of monies have been siphoned by a court-appointed receiver or “trustee” RSM Richter and law firm “Stikeman Elliot” with no recourse anywhere in Canada for a wronged investor, we must resort collectively, to a costly and time-consuming class action suit when the governments and self-regulatory organizations have failed the Canadian public many times over. We need a political party which can demonstrate that it can lead us out of the woods on these important issues with some well-thought out policies and is willing to organize the necessary engagement structures to listen to the citizens of Canada. We have what I believe is an intentionally corrupt, fragmented regulatory regime designed to protect the financial industry NOT Canadian retail investors.
Marcia O

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TORONTO STAR
Olive: We need better, not more, regulators

Harry Markopolos testifies in Washington about the Bernie Madoff fraud.
Markopolos says the SEC official he spoke to in 1990 was clueless. (Feb. 4, 2009)

David Olive

April 11, 2010

Harry Markopolos, now lionized in U.S. financial circles as a cross between Sherlock Holmes and Eliot Ness, warned the U.S. Securities and Exchange Commission in 1990 that a secretive money manager named Bernie Madoff was either perpetrating fraud on his trading partners or was running a Ponzi scheme of unprecedented size.

It turned out to be the latter, of course. By the time Madoff was finally stopped, with his arrest by the FBI eight years after that first warning to the SEC, Madoff had accumulated in the accounts of his clients some $65 billion (U.S.) in phantom assets. The total loss to investors is calculated at $18 billion. Madoff is now serving a 150-year prison sentence.

The SEC's sole purpose is to suss out and stop that kind of thievery. It has the mandate, budget and staff resources to do that.

Or does it? That should be the overarching question, as Ottawa moves toward creation of a national securities regulator for Canada, modelled on, oh dear, the SEC.

For at least a decade, a community of well-meaning business executives and public-policy experts in Canada have been promoting an SEC for Canada. Their argument's most compelling point, at least in their view, is that alone among major industrial nations Canada does not have a national securities watchdog. Instead, regulatory supervision and enforcement takes place at the provincial and territorial level, through 13 securities regulators.

Yet no one has shown that a new national regulator would have been any more effective than the Ontario Securities Commission (OSC) – the leader among the 13 agencies, from which the others traditionally take their cue – at preventing the Bre-X Minerals Ltd. mining fraud, the Drabinsky-Livent Corp. fraud, or the Conrad Black-Hollinger International Inc. fraud.

Mind you, Black's misdoings were brought to light by the U.S. district attorney for northern Illinois, not the SEC. Ditto the decade-ago scandal in which New York analysts were privately describing as "crap" securities they were peddling to clients. That scuzzy practice was uncovered not by the SEC, but by then-New York state attorney general Eliot Spitzer.

Yet the pursuit of the panacea of a national securities regulator continues apace, despite the propensity to failure of national securities regulators like the SEC and Britain's Financial Services Authority.

Ottawa has pushed ahead with a transition office to create a new national regulator and write up a new national securities act, and vows to have a pan-Canadian securities regulator in operation within three years.

This surely is putting the cart before the horse. Fewer than half the provinces and territories are on board with this concept and two major jurisdictions, Alberta and Quebec, are fiercely opposed to it. They regard it as an unconstitutional federal intrusion into a field that, for 143 years, has been a provincial jurisdiction. That was before they learned Dwight Duncan, the Ontario finance minister, insists any new national securities regulator be headquartered in Toronto, disdain for which is one of the things that unites this country.

Back to the advertised virtues of a national regulator, and thus to the SEC.

The SEC was on a prolonged siesta during the epidemic of white-collar crime afflicting the investors in Fortune 500 companies, including Enron Corp., WorldCom Inc., Tyco International Inc. and Adelphia Communications Inc., the CEOs of which are all now behind bars. Collectively, these and other miscreants who faked their books in the late 1990s wiped out a stunning $8 trillion in shareholder value.

No heads at the SEC rolled over this spectacular regulatory failure. Instead, just a few years later, the SEC caved and allowed Wall Street firms to set their own reserve levels for a rainy day. Because funds set aside for reserves come off the bottom line, the giant New York securities firms set aside less than adequate cushions from potential losses. That resulted in the 2008-09 global financial meltdown. As a result, firms collapsed and have been liquidated or merged out of existence, causing no small havoc for world financial markets and bailout costs to the taxpayer.

As in Canada, laws on the books exist in the U.S. that would have prevented that epic meltdown, by the simple expedient of demanding of Wall Street where it was hiding liabilities that put such a respectable glow on the books it showed investors.

"I was on a panel a few weeks ago with a former chair of the Securities and Exchange Commission who was asked why the commission has so far failed to enforce (laws already on the books) against Wall Street," economist Robert Reich wrote recently on his blog. "He had no response except to mumble that legislation is meaningless unless adequately enforced. Exactly."

The "magic bullet," if there is one, is simply to provide adequate resources to the OSC and its provincial and territorial counterparts, and then hold them accountable for making a quick end to Garth Drabinsky re-enactment of The Producers in real life at the expense of trusting investors in Livent Corp.

In the absence of political will – and, frankly, of sufficient public outrage over the likes of Bre-X – the regulators will continue to astonish us with their lack of competence.

After 30 years of deregulation and perpetual underfunding of remaining regulators, the regulatory function has atrophied across the board, from emergency rescue management (the aftermath of Hurricane Katrina) to workplace safety (the recent West Virginia coal mine tragedy). It's been a long time since the best and brightest were attracted to jobs at regulatory agencies.

As Harry Markopolos testified in an after-the-fact SEC probe into how the regulator had so utterly failed with Madoff, Markopolos recalled a 1990 meeting with the head of the SEC for the New England region in Boston, ground zero for funds, including the one Madoff operated.

"I explained the fraud to him and he did not have an industry background that I was aware of," Markopolos recalled.

"He had zero comprehension of topics being discussed. He seemed very ill trained, uninformed about industry practices, did not understand financial instruments. Didn't even have a basic understanding of finance."

We don't need new regulatory agencies or new laws.

What we need is better regulators. Ones who aren't watching the clock until they "transition" to a much higher-paying job at a firm they used to regulate.

The more time we fritter away on a proposed national regulator that most provinces don't want, and, frankly, the country doesn't need, instead of bulking up the OSC and holding it accountable, the more millions of dollars will be sheered from innocent victims of unscrupulous operators.

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Here is how to make financial crime and abuse of Canadians a well paying safe proposition:

1. We "self" regulate, meaning we get to police ourselves.

2. We pick and choose who will head the securities commissions, thus we get to appoint "friends" to police us.

3. We pay those friends about triple what they would ordinarily earn in this kind of position. (SEC head earns $162,900 while Canadian security commission heads are paid upwards of $500,000)

4. They (our friendly regulators) let us commonly and routinely violate securities laws, using something called "exemptive relief" from the law. Thousands of public examples. No public notice of investments or investment sales pitches that do not met our laws but are given to consumers to obtain their money.

5. Our same friendly regulators have conned their way into credibility, enough to earn seats on "joint management committees" of the RCMP IMET investigative team. Thus, we are able to avoid criminal investigation 99% of the time due to our inside position on this commercial crime force.

6. When fines and penalties are levied by the financial regulators in Canada, the self regulators usually "keep" the money. That's right, if they recover money through fines, usually none of it goes back to the victims, but stays in the coffers of the regulators.

True story:

When ABCP (toxic, poorly rated debt product) needed to be dumped on Canadian consumers, while it did not met our laws......investment sellers went to their pals at the securities commissions to apply for legal exemptions to sell this toxic product.
Approximately 20 exemptions were granted here in Alberta (and I assume 12 other provinces and territories) and $32 billion of toxic debt was dumped onto Canadians.
Securities commissions not only cannot seem to answer simple questions on this matter now such as "why give legal relief, etc., etc, but when things got really hot and it appeared as if they had to act to make an appearance of being "regulatory", they applied fines and penalties to their friends in the investment business of less then half of one cent for every dollar missing in Canada from these products.
These fines were imposed by the very persons who aided the financial scam by giving them the legal permission to break the law and sell this crap in the first place. Isn't it lovely when we give ourselves the ability to police ourselves. Kind of like asking the Hells Angels to police crack cocaine and hookers since they are the "largest market participants." (my apologies to the Angels if I have damaged their reputation by comparison to the investment regulatory industry in Canada)
Two other minor points.

Last point. When the investment regulatory assn (IIROC formerly IDA) had to act to appear impartial, their president Susan Wolbergh Jenah spoke publicly that the investment dealers had no idea what they were selling.

Strange to hear her say this, as it was her signature on legal exemption documents letting this toxic product be sold a few years earlier when she was the vice chair of the OSC.
I guess it is hard to remember what you did when you were the $400,000 vice chair of the OSC, now that you are earning $700,000 as the head of IIROC. Isn't paid forgetting wonderful?

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.......and Canadian Securities Regulators make the US SEC look like super hero's............

SEC staffers downloaded porn while Wall Street crumbled
April 23, 2010 | 1:29 pm
Instead of watching Wall Street, some staffers at the Securities and Exchange Commission were watching XXX.

According to a memo from the SEC's inspector general, obtained by the Associated Press, numerous senior staffers reportedly spent hours surfing pornographic websites on government-issued computers while they were being paid to police the financial system.

The inspector general's office conducted 33 probes of employees looking at explicit images in the last five years and said that 31 of those probes occurred in the 2 1/2 years since the financial system teetered and nearly crashed.

The memo was written by SEC Inspector General David Kotz in response to a request from Sen. Charles Grassley (R-Iowa). A few highlights include:


--A senior attorney at the SEC's Washington headquarters spent up to eight hours a day looking at and downloading pornography. When he ran out of hard-drive space, he burned the files to CDs or DVDs, which he kept in boxes around his office.

--An accountant was blocked more than 16,000 times in a month from visiting websites classified as "sex" or "pornography." Yet, he still managed to amass a collection of "very graphic" material on his hard drive by using Google Images to bypass the SEC's internal filter.

--Seventeen of the employees were "at a senior level," earning salaries of as much as $222,418.

Rep. Darrell Issa of Vista, the top Republican on the House Committee on Oversight and Government Reform, said it was "disturbing that high-ranking officials within the SEC were spending more time looking at porn than taking action to help stave off the events that put our nation's economy on the brink of collapse."

SEC spokesman John Nester said in a statement Friday that each of the offending employees has been disciplined or is in the process of being disciplined. He said some have already been suspended or dismissed.

"We will not tolerate the transgressions of the very few who bring discredit to their thousands of hardworking colleagues," Nester said. He said the agency has lately increased penalties.

Here is some of what our readers had to say about the findings:
exit2enter wrote: I guess at 220k a year, one can only resort to online porn as opposed to hiring expensive online escorts like that former NY official ... 16,000 'access denied', yet still perservered ... imagine that dedication to sniff out the Madoffs of Wall Street... we'd of gotten rid of all fraud by yesterday.

lulzguy wrote: Here, here.... we need more details on this story! What was the time frame of this and the investigation? Was there discipline? Hello ... Bueller ... Bueller?!

Either way these clowns need to me fired... and I need to be given one of those jobs! ;)

ellen_gene wrote: I am sick and tired of having to put up with such scatology taking place amongst such senior SEC government attorneys and accountants while receiving salaries in the hundred of thousands not including many more thousands in benefits which the self-reliant middle class is not aloud under our 8,500 page tax code. This sub rosa chicanery can and should not be tolerated by these otiose clerisy. They should be hung out to dry and exposed as to what they are, elite bilge seeking contagion on government salaries while we self-reliant middle class are expected to understand their need for explicid relaxation on our tax money. VP Biden language shows his inability to conform to what ever religion he claims to belong to. You may not like Bush, but at least he was felicitous.

BartA58 wrote: Well it's good to hear that the accountant found a way around the agency's internet filter. ... now that is putting your skills to good use. I don't even know what to say about this. I need to find a job like this where you get paid 200 grand a year to watch porn. Rock on porn dudes.

Don Key wrote: No doubt the SEC was asleep at the wheel, as was the policy under the last President Bush. But, amid Obama's popular chastising of and legal action toward the banking sector, something tells me this story is a public relations gimmick to deflect attention, more than a serious problem.

Share your thoughts below.

-- Gerrick D. Kennedy (Follow me on Twitter @GerrickKennedy)