Mutual funds salesperson settles with BCSC
Foresight Capital rep breached know your client and suitability rules
Thursday, December 1, 2005
By IE Staff
The British Columbia Securities Commission has reached a settlement with a mutual funds salesperson who admitted to breaching know your client and suitability rules when he recommended leveraged investments to clients.
Martin Hall, a B.C. resident, is barred from trading securities other than mutual funds for three years except in limited circumstances. As well, Hall’s registration is subject to conditions for at least 12 months, including: daily strict supervision by his employer of his client and personal trading as well as restrictions on his ability to deal with clients who use leveraged funds to purchase mutual funds.
Hall was a registered salesperson at Foresight Capital Corp. from Jan. 7, 1999 to July 3, 2002. During his employment at Foresight, Hall recommended to two clients that they purchase mutual funds using money borrowed against the equity in their homes. The clients each had some or all of the following characteristics:
Low to average net worth;
Little or no investment experience and sophistication;
Limited income, and
Low tolerance for investment risk.
Hall also breached rules when he signed a client’s name on account and bank transfer documents.
With this settlement, Hall is no longer a respondent in the hearing currently underway at the BCSC.
visit breachoftrust.ca for BREACH OF TRUST film info
E-MAIL us at investoradvocate@shaw.ca
Regulators in your pocket
Regulators in your pocket
by admin » Fri Dec 02, 2005 11:23 am
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by admin » Fri Dec 02, 2005 11:29 am
Sure they can catch a small time hood here and there. Even a blind chicken gets a few kernels of corn. But where are they on something seriously unethical? Seriously illegal? The sad truth is they are absent.
My opinion is that they ignore the real challenges because thier next job may come inside the very industry they are supposed to police. They make a big deal out of hunting the little man on the street, while ignoring the entire system behind him that fosters his crimes.
Misrepresentation, hidden fees, secret commissions, double dipping, deferred sales charges not in client interest, commission motivation rather than professional advice, title inflation (calling yourself an advisor when not registered as such), selling unsuitable investments to unwary clients for personal gain, etc., etc., etc
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by Guest » Sat Dec 03, 2005 11:18 am
New Securities Fraud Hotline Blog
Eppenstein and Eppenstein announces the creation of the new Securities Fraud Hotline Blog, providing information and insights on current business news that is relevant and of interest to the business community and investing public.
New York, New York (PRWEB) December 3, 2005 -- Eppenstein and Eppenstein, the New York-based law firm of national and international securities fraud and commercial litigation attorneys who have recovered approximately $50 million for their clients in the past five years, has a new blog at http://www.securitiesfraudhotline.com.
The purpose of the blog is to provide information and insights on current business news that is both relevant and of interest to the business community and the investing public. Senior partner Theodore Eppenstein, who argued on behalf of investors before the U.S. Supreme Court in the landmark Shearson/American Express, Inc. v. McMahon case, assists investors, employees and businesses with valid claims to recover their losses in court or arbitration.
Mr. Eppenstein’s expanded list of common broker and brokerage firm abuses includes over twenty practices which can be accessed easily through the internet portal to the firm’s website, http://www.securitieslawarbitration.com, or directly on the firm’s main website at http://www.eppensteinlaw.com. Each one of these potential claims is fact-specific and can differ according to jurisdiction.
According to Mr. Eppenstein, the five most common investor claims of broker misconduct are: breach of fiduciary duty; recommending unsuitable investments; fraudulent misrepresentation or omission to state material facts; breach of contract; and churning or excessive trading.
Five Most Common Claims Against Brokers
Unless a broker is merely an order taker, he may be acting as a fiduciary of the investor. Granting discretion to the broker is an excellent example of the broker being given special ability to trade a customer’s account without seeking approval first. Many cases have been filed against brokers who abused this relationship by placing their personal benefit above the interests of their client.
Unsuitable investments are those recommended by the brokerage firm to the customer that do not match up with the customer’s investment objectives or risk tolerance. The losses resulting from speculative investments with high risk to an individual’s retirement account, if it was opened to preserve capital with limited risk, can easily fall into this category.
Fraudulent misrepresentations can consist of knowingly false communications given by the broker to the customer, or the failure to give adequate notice about the risks or nature of investments which the consumer relied on and resulted in investment losses.
Typically when investment accounts are opened, contracts are executed which govern the dealings between the brokerage firm and the customer. When the provisions of these contracts are violated and cause investment losses, claims for those losses are often asserted.
Excessive trading or “churning” can occur when brokers trade more to earn their commissions than to make profits for their customers. The trading patterns of brokers who make recommendations for heavy trading should be investigated for possible claims.
Tips to Investors to Prevent Abuse and Recover Losses
Recent Securities Fraud Hotline Blog postings by the Eppenstein firm are instructive on how to avoid becoming the victim of securities fraud, commodities fraud and other investment abuses. The “Top 5 Investor Tips You Must Know to Protect Yourself from Deceptive Brokers” is a brief but clear-cut set of guidelines for investigating your investment advisor, establishing a personal relationship with your advisor and the branch manager instead of using an anonymous call center, knowing your investments, avoiding the practice of giving full discretion to a stock broker and writing down and confirming your investment objectives and risk tolerance to your broker and his supervisor.
The Securities Fraud Hotline Blog posting “What to Do If You Suspect Securities Fraud” gives a simple 3-step plan of action you can follow to try to recover your investment losses: gather your investment records; set up a client meeting with an attorney experienced in investor rights and protections to discuss the facts of your case; and get on the fast track to file your case, since there are various statutes of limitations that may apply to actions and eligibility rules at the SRO (self-regulatory organization) forums that normally adjudicate such claims, such as the National Association of Securities Dealers (NASD) and the New York Stock Exchange (NYSE).
For additional information about the new Securities Fraud Hotline Blog and to read our postings, contact Theodore G. Eppenstein, or visit the firm’s Blog at http://www.securitiesfraudhotline.com.
About Eppenstein and Eppenstein:
Eppenstein and Eppenstein, in business over 25 years, is a respected New York-based litigation firm with a domestic and global practice, widely known nationally and in the international community for protecting the rights of defrauded investors and businesses, as well as for obtaining significant arbitration awards for their clients. The attorneys at Eppenstein and Eppenstein--securities, commodities and commercial litigation lawyers--have extensive experience representing investors in actions against securities and commodities brokers and their broker dealer firms and representing individuals and businesses in commercial litigation. They have successfully recovered millions of dollars in assets for investors, including a record-setting $46 million USD recovery in 2002 against Refco Inc. The portal to the firm’s newly updated website, http://www.securitieslawarbitration.com, is an introduction to the firm’s history of successful representation of investors and businesses.
Theodore G. Eppenstein, the firm’s senior partner and a practicing securities fraud and commercial litigation attorney, is frequently called upon to author articles and speak at conferences on investor rights and securities fraud and commodities fraud litigation and arbitration, including appearing as a primary speaker in symposia at the Moscow Interbank Currency Exchange in 2000 and at the Cairo-Alexandria Stock Exchange in 2003. He is a two-term member of SICA, the Securities Industry Conference on Arbitration, an advisory group to the Securities and Exchange Commission, and has testified in Congress twice to try to level the playing field in arbitration for aggrieved investors. Mr. Eppenstein has been quoted frequently in the major media, including the major financial magazines and newspapers, and has made numerous network and cable television appearances promoting the interests of public investors.
Contact:
Theodore G. Eppenstein
Eppenstein and Eppenstein
767 Third Avenue, 23rd Floor
New York, NY 10017
212-679-6000
Website: http://www.securitieslawarbitration.com/
(of course, this forum at investoradvocates.ca is an attempt to help people in some fashion as well, and we hope to be able to use it, and all avenues until our regulators are brought up to the speed of the industry)
Eppenstein and Eppenstein announces the creation of the new Securities Fraud Hotline Blog, providing information and insights on current business news that is relevant and of interest to the business community and investing public.
New York, New York (PRWEB) December 3, 2005 -- Eppenstein and Eppenstein, the New York-based law firm of national and international securities fraud and commercial litigation attorneys who have recovered approximately $50 million for their clients in the past five years, has a new blog at http://www.securitiesfraudhotline.com.
The purpose of the blog is to provide information and insights on current business news that is both relevant and of interest to the business community and the investing public. Senior partner Theodore Eppenstein, who argued on behalf of investors before the U.S. Supreme Court in the landmark Shearson/American Express, Inc. v. McMahon case, assists investors, employees and businesses with valid claims to recover their losses in court or arbitration.
Mr. Eppenstein’s expanded list of common broker and brokerage firm abuses includes over twenty practices which can be accessed easily through the internet portal to the firm’s website, http://www.securitieslawarbitration.com, or directly on the firm’s main website at http://www.eppensteinlaw.com. Each one of these potential claims is fact-specific and can differ according to jurisdiction.
According to Mr. Eppenstein, the five most common investor claims of broker misconduct are: breach of fiduciary duty; recommending unsuitable investments; fraudulent misrepresentation or omission to state material facts; breach of contract; and churning or excessive trading.
Five Most Common Claims Against Brokers
Unless a broker is merely an order taker, he may be acting as a fiduciary of the investor. Granting discretion to the broker is an excellent example of the broker being given special ability to trade a customer’s account without seeking approval first. Many cases have been filed against brokers who abused this relationship by placing their personal benefit above the interests of their client.
Unsuitable investments are those recommended by the brokerage firm to the customer that do not match up with the customer’s investment objectives or risk tolerance. The losses resulting from speculative investments with high risk to an individual’s retirement account, if it was opened to preserve capital with limited risk, can easily fall into this category.
Fraudulent misrepresentations can consist of knowingly false communications given by the broker to the customer, or the failure to give adequate notice about the risks or nature of investments which the consumer relied on and resulted in investment losses.
Typically when investment accounts are opened, contracts are executed which govern the dealings between the brokerage firm and the customer. When the provisions of these contracts are violated and cause investment losses, claims for those losses are often asserted.
Excessive trading or “churning” can occur when brokers trade more to earn their commissions than to make profits for their customers. The trading patterns of brokers who make recommendations for heavy trading should be investigated for possible claims.
Tips to Investors to Prevent Abuse and Recover Losses
Recent Securities Fraud Hotline Blog postings by the Eppenstein firm are instructive on how to avoid becoming the victim of securities fraud, commodities fraud and other investment abuses. The “Top 5 Investor Tips You Must Know to Protect Yourself from Deceptive Brokers” is a brief but clear-cut set of guidelines for investigating your investment advisor, establishing a personal relationship with your advisor and the branch manager instead of using an anonymous call center, knowing your investments, avoiding the practice of giving full discretion to a stock broker and writing down and confirming your investment objectives and risk tolerance to your broker and his supervisor.
The Securities Fraud Hotline Blog posting “What to Do If You Suspect Securities Fraud” gives a simple 3-step plan of action you can follow to try to recover your investment losses: gather your investment records; set up a client meeting with an attorney experienced in investor rights and protections to discuss the facts of your case; and get on the fast track to file your case, since there are various statutes of limitations that may apply to actions and eligibility rules at the SRO (self-regulatory organization) forums that normally adjudicate such claims, such as the National Association of Securities Dealers (NASD) and the New York Stock Exchange (NYSE).
For additional information about the new Securities Fraud Hotline Blog and to read our postings, contact Theodore G. Eppenstein, or visit the firm’s Blog at http://www.securitiesfraudhotline.com.
About Eppenstein and Eppenstein:
Eppenstein and Eppenstein, in business over 25 years, is a respected New York-based litigation firm with a domestic and global practice, widely known nationally and in the international community for protecting the rights of defrauded investors and businesses, as well as for obtaining significant arbitration awards for their clients. The attorneys at Eppenstein and Eppenstein--securities, commodities and commercial litigation lawyers--have extensive experience representing investors in actions against securities and commodities brokers and their broker dealer firms and representing individuals and businesses in commercial litigation. They have successfully recovered millions of dollars in assets for investors, including a record-setting $46 million USD recovery in 2002 against Refco Inc. The portal to the firm’s newly updated website, http://www.securitieslawarbitration.com, is an introduction to the firm’s history of successful representation of investors and businesses.
Theodore G. Eppenstein, the firm’s senior partner and a practicing securities fraud and commercial litigation attorney, is frequently called upon to author articles and speak at conferences on investor rights and securities fraud and commodities fraud litigation and arbitration, including appearing as a primary speaker in symposia at the Moscow Interbank Currency Exchange in 2000 and at the Cairo-Alexandria Stock Exchange in 2003. He is a two-term member of SICA, the Securities Industry Conference on Arbitration, an advisory group to the Securities and Exchange Commission, and has testified in Congress twice to try to level the playing field in arbitration for aggrieved investors. Mr. Eppenstein has been quoted frequently in the major media, including the major financial magazines and newspapers, and has made numerous network and cable television appearances promoting the interests of public investors.
Contact:
Theodore G. Eppenstein
Eppenstein and Eppenstein
767 Third Avenue, 23rd Floor
New York, NY 10017
212-679-6000
Website: http://www.securitieslawarbitration.com/
(of course, this forum at investoradvocates.ca is an attempt to help people in some fashion as well, and we hope to be able to use it, and all avenues until our regulators are brought up to the speed of the industry)
- Guest
Regulatory Failure
by Stan » Sun Dec 04, 2005 3:58 pm
For some considerable time we have said the regulatory system is failing the small investor.
We recognize the problem of small investors being robbed of their savings by a rapacious industry that has no regard for retail investors' savings.
It really is "Investor Beware" as Robert Goldin with his book wiht that title in 1998.
So what can be done?
More regulations, more rigid qualifications, more restrictive guidelines and better recommended best practices will not help if discovery and enforcement remain weak.
There are honest, or at least relatively honest, individuals working in the financial servcies industry. When they witness wrongdoing they are tempted to speak up but are intimidated. Those who dare to come forward are punished.
Critics of the industry have mentioned mafia-like behaviour and a "code of silence". In Alberta, the ASC was quick to fire those they could identify as whistleblowers. We have a history of whistlblowers who dared come forward being criticized and discredited. They have lost their jobs and often their careers.
If Canadians do not stand up and require protection for those who would come forward to tell the truth, they will have to live with corruption that is covered up because there will never be sufficient police and regulators to monitor all the criminal activity.
The police rely upon paid informers and citizens coming forward.
If the industry's regulators are ever to be effective they must also depend on TruthTellers coming forward. To achive this there must be legislated TruthTeller protection and severe penalties for those who intimidate them.
There is tons of evidence of what is worng and how the industry is robbing investors. So what is the solution?
As Glorianne Stomberg said many years ago there will be no change unless and until the public is aroused and angered so they stand up and demand remedial action.
One hopes that the mutual fund market timing scandal, the Portus and Crocus scams, the Income Trust fiasco and all the corporate and investment industry wrongdoing will convince Canadians there are serious issues causing the transfer of their wealth to white collar criminals.
This investor advocate forum is a worthwhile addition to the side that wants to see an improved investment environment for investors and for those in the industry that still believe in honesty and integrity, and who would like to see an investment industry operated in a moral and ethical fashion with transparency and disclosure.
We recognize the problem of small investors being robbed of their savings by a rapacious industry that has no regard for retail investors' savings.
It really is "Investor Beware" as Robert Goldin with his book wiht that title in 1998.
So what can be done?
More regulations, more rigid qualifications, more restrictive guidelines and better recommended best practices will not help if discovery and enforcement remain weak.
There are honest, or at least relatively honest, individuals working in the financial servcies industry. When they witness wrongdoing they are tempted to speak up but are intimidated. Those who dare to come forward are punished.
Critics of the industry have mentioned mafia-like behaviour and a "code of silence". In Alberta, the ASC was quick to fire those they could identify as whistleblowers. We have a history of whistlblowers who dared come forward being criticized and discredited. They have lost their jobs and often their careers.
If Canadians do not stand up and require protection for those who would come forward to tell the truth, they will have to live with corruption that is covered up because there will never be sufficient police and regulators to monitor all the criminal activity.
The police rely upon paid informers and citizens coming forward.
If the industry's regulators are ever to be effective they must also depend on TruthTellers coming forward. To achive this there must be legislated TruthTeller protection and severe penalties for those who intimidate them.
There is tons of evidence of what is worng and how the industry is robbing investors. So what is the solution?
As Glorianne Stomberg said many years ago there will be no change unless and until the public is aroused and angered so they stand up and demand remedial action.
One hopes that the mutual fund market timing scandal, the Portus and Crocus scams, the Income Trust fiasco and all the corporate and investment industry wrongdoing will convince Canadians there are serious issues causing the transfer of their wealth to white collar criminals.
This investor advocate forum is a worthwhile addition to the side that wants to see an improved investment environment for investors and for those in the industry that still believe in honesty and integrity, and who would like to see an investment industry operated in a moral and ethical fashion with transparency and disclosure.
- Stan
by admin » Sun Dec 04, 2005 10:39 pm
Excellent report on Investment regulatory enforcement.
Published by CMI, Capital Markets Institute
Authored by Professor P Puri, York University
Dated Dec 1, 2005
Some readers digest version quotes I found interesting and illuminating as to why today's regulators are behind the times:
page 3 "...........disconnect between securities regulators and investors in interpreting the mandate of investor protection. ...........aggrieved investors are most interested in being made whole as a result of capital markets misconduct.
page 3 "........recent events at the Alberta Securities Commission underscore the need for a disciplined enforcement system that has clear enforcement policies, guidelines and standards......."
page 4 "........a national commission or consolidated regulator would enhance enforcement effectiveness"
page 4 "....regulators should educate the investors, the press and the public .................at the same time consider adopting best practices and policies from other jurisdictions........"
page 5 "..........insuffient enforcement activity, that the small investor is not well protected, that the commissions have been captured by those they regulate.............perceived or actual conflicts"
page 8 "It may very well be time to re-conceive of the role of the securities regulator in the 21st century, as one that not only takes forward-looking actions, but also one that acts as a facilitator or catlyst to assist investors in receiving compensation."
Page 12 "......studies reveal that white collar offenders are less likely to be imprisoned, receive lower average sentences and serve less time than offenders in relation to traditional crimes."
page 13 ".........a general perception among the public, including members of the judiciary, that capital markets misconduct is victimless and that financial crimes are not as serious as other criminal offenses that cause physical harm.
Page 18 "the current regulatory structure with multiple securities commissions may also increase the levels of non compliance......."
"..............inadequate enforcement is one of the most significant weaknesses of the current system."
"there is no legitimate reason why investors should have different protection depending on the province in which they happen to live".
Page 10 has some valuable comments about how corporate crime often has the defendants with equal (or more) resources than the government agency having to pursue them. It also quotes John Sliter, director of IMET as saying that they do not have any greater resources to pay informants of multi-million dollar securities frauds than they pay for break and enter offenses.
Page 13 has some examples regarding how fines etc for white collar crime is often not enough to deter criminals from profiting from the crime, and they need to be increased to the point where profit does not result after paying the small fine.
Page 14 give the suggestion that specialized courts to deal with capital market offenses would help.
Page 16 discusses how some regulators let go of some crimes in areas where the enforcement would be difficult, or the impact of a successful outcome would be less significant. Also difficult cases where the defendant may be too large and too powerful to pursue.
The above also leads to a disproportionate number of enforcement actions against smaller firms as opposed to larger ones.
Published by CMI, Capital Markets Institute
Authored by Professor P Puri, York University
Dated Dec 1, 2005
Some readers digest version quotes I found interesting and illuminating as to why today's regulators are behind the times:
page 3 "...........disconnect between securities regulators and investors in interpreting the mandate of investor protection. ...........aggrieved investors are most interested in being made whole as a result of capital markets misconduct.
page 3 "........recent events at the Alberta Securities Commission underscore the need for a disciplined enforcement system that has clear enforcement policies, guidelines and standards......."
page 4 "........a national commission or consolidated regulator would enhance enforcement effectiveness"
page 4 "....regulators should educate the investors, the press and the public .................at the same time consider adopting best practices and policies from other jurisdictions........"
page 5 "..........insuffient enforcement activity, that the small investor is not well protected, that the commissions have been captured by those they regulate.............perceived or actual conflicts"
page 8 "It may very well be time to re-conceive of the role of the securities regulator in the 21st century, as one that not only takes forward-looking actions, but also one that acts as a facilitator or catlyst to assist investors in receiving compensation."
Page 12 "......studies reveal that white collar offenders are less likely to be imprisoned, receive lower average sentences and serve less time than offenders in relation to traditional crimes."
page 13 ".........a general perception among the public, including members of the judiciary, that capital markets misconduct is victimless and that financial crimes are not as serious as other criminal offenses that cause physical harm.
Page 18 "the current regulatory structure with multiple securities commissions may also increase the levels of non compliance......."
"..............inadequate enforcement is one of the most significant weaknesses of the current system."
"there is no legitimate reason why investors should have different protection depending on the province in which they happen to live".
Page 10 has some valuable comments about how corporate crime often has the defendants with equal (or more) resources than the government agency having to pursue them. It also quotes John Sliter, director of IMET as saying that they do not have any greater resources to pay informants of multi-million dollar securities frauds than they pay for break and enter offenses.
Page 13 has some examples regarding how fines etc for white collar crime is often not enough to deter criminals from profiting from the crime, and they need to be increased to the point where profit does not result after paying the small fine.
Page 14 give the suggestion that specialized courts to deal with capital market offenses would help.
Page 16 discusses how some regulators let go of some crimes in areas where the enforcement would be difficult, or the impact of a successful outcome would be less significant. Also difficult cases where the defendant may be too large and too powerful to pursue.
The above also leads to a disproportionate number of enforcement actions against smaller firms as opposed to larger ones.
- admin
- Site Admin
- Posts: 1504
- Joined: Fri May 06, 2005 9:05 am
- Location: alberta
by admin » Sun Dec 04, 2005 11:03 pm
my biggest conclusions (shocks) from reading the report on capital markets enforcement effectiveness mentioned in the last post:
1. That financial crimes are subject to being overlooked or prosecuted depending on the significance of the crime and the wealth and strength of the defendant...............wheras they should be based upon the legality of the action.
How do abused investors feel when told they are "not important enough", or that their abusers are "too important" to prosecute?
Tell that to someone whose finances have been damaged and perhaps worse by a "big trustworthy" firm. It is immoral that regulators can arbitrarily interpret the law as they see fit.
1. That financial crimes are subject to being overlooked or prosecuted depending on the significance of the crime and the wealth and strength of the defendant...............wheras they should be based upon the legality of the action.
How do abused investors feel when told they are "not important enough", or that their abusers are "too important" to prosecute?
Tell that to someone whose finances have been damaged and perhaps worse by a "big trustworthy" firm. It is immoral that regulators can arbitrarily interpret the law as they see fit.
- admin
- Site Admin
- Posts: 1504
- Joined: Fri May 06, 2005 9:05 am
- Location: alberta
by Guest » Mon Dec 05, 2005 12:36 pm
October 2005
CMI Appointed Research Director to Task Force to Modernize Securities Legislation in Canada
The University of Toronto’s Capital Markets Institute (CMI) has been appointed as the Research Director for the Task Force to Modernize Securities Legislation in Canada. The CMI will assist in the design and direction of the Task Force’s research program. Paul Halpern, TSX Chair in Capital Markets, Rotman School of Management, University of Toronto and Poonam Puri, Associate Professor of Law, Osgoode Hall Law School, York University will jointly carry out the function of research director.
http://www.rotman.utoronto.ca/cmi/index.htm
(this organization appears very capable of providing help to bring the regulatory system in Canada into the 21st Century)
CMI Appointed Research Director to Task Force to Modernize Securities Legislation in Canada
The University of Toronto’s Capital Markets Institute (CMI) has been appointed as the Research Director for the Task Force to Modernize Securities Legislation in Canada. The CMI will assist in the design and direction of the Task Force’s research program. Paul Halpern, TSX Chair in Capital Markets, Rotman School of Management, University of Toronto and Poonam Puri, Associate Professor of Law, Osgoode Hall Law School, York University will jointly carry out the function of research director.
http://www.rotman.utoronto.ca/cmi/index.htm
(this organization appears very capable of providing help to bring the regulatory system in Canada into the 21st Century)
- Guest
by Guest » Mon Dec 05, 2005 12:38 pm
June 2005 Seminar
How Effective is Capital Market Enforcement in Canada?
The CMI engaged leading legal academic Poonam Puri to analyze the effectiveness of capital market enforcement in Canada under securities and criminal laws and to study the current allocation and division of enforcement responsibilities in respect of capital markets misconduct in Canada among provincial regulators, federal and provincial law enforcement agencies and federal and provincial attorneys general. Prof. Puri’s strong theoretical platform and her policy recommendations will assist policy makers and those engaged in law-reform in contemplating reform towards a modern and efficient enforcement system in Canadian capital markets.
Capital Market Enforcement in Canada; Principles, Priorities and Alternatives
Poonam Puri, Associate Professor, Osgoode Hall Law School, York University
June 2005 Seminar
How Effective is Capital Market Enforcement in Canada?
The CMI engaged leading legal academic Poonam Puri to analyze the effectiveness of capital market enforcement in Canada under securities and criminal laws and to study the current allocation and division of enforcement responsibilities in respect of capital markets misconduct in Canada among provincial regulators, federal and provincial law enforcement agencies and federal and provincial attorneys general. Prof. Puri’s strong theoretical platform and her policy recommendations will assist policy makers and those engaged in law-reform in contemplating reform towards a modern and efficient enforcement system in Canadian capital markets.
Capital Market Enforcement in Canada; Principles, Priorities and Alternatives
Poonam Puri, Associate Professor, Osgoode Hall Law School, York University
http://www.rotman.utoronto.ca/cmi/index.htm
(this study will tell you about 80% of everything you need to know about the problems in our regulators)
How Effective is Capital Market Enforcement in Canada?
The CMI engaged leading legal academic Poonam Puri to analyze the effectiveness of capital market enforcement in Canada under securities and criminal laws and to study the current allocation and division of enforcement responsibilities in respect of capital markets misconduct in Canada among provincial regulators, federal and provincial law enforcement agencies and federal and provincial attorneys general. Prof. Puri’s strong theoretical platform and her policy recommendations will assist policy makers and those engaged in law-reform in contemplating reform towards a modern and efficient enforcement system in Canadian capital markets.
Capital Market Enforcement in Canada; Principles, Priorities and Alternatives
Poonam Puri, Associate Professor, Osgoode Hall Law School, York University
June 2005 Seminar
How Effective is Capital Market Enforcement in Canada?
The CMI engaged leading legal academic Poonam Puri to analyze the effectiveness of capital market enforcement in Canada under securities and criminal laws and to study the current allocation and division of enforcement responsibilities in respect of capital markets misconduct in Canada among provincial regulators, federal and provincial law enforcement agencies and federal and provincial attorneys general. Prof. Puri’s strong theoretical platform and her policy recommendations will assist policy makers and those engaged in law-reform in contemplating reform towards a modern and efficient enforcement system in Canadian capital markets.
Capital Market Enforcement in Canada; Principles, Priorities and Alternatives
Poonam Puri, Associate Professor, Osgoode Hall Law School, York University
http://www.rotman.utoronto.ca/cmi/index.htm
(this study will tell you about 80% of everything you need to know about the problems in our regulators)
- Guest
by admin » Wed Dec 07, 2005 11:57 pm
C B C . C A N e w s - F u l l S t o r y :
--------------------------------------------------------------------------------
Experts call for national securities regulator
Last Updated Wed, 07 Dec 2005
CBC News
A panel of experts has proposed the creation of a Canadian Securities Commission, one national regulator that would oversee stock markets across the country.
The panel, headed by prominent Bay Street lawyer Purdy Crawford, said the proposed commission would offer a single unified voice that would reflect each jurisdiction across the country.
Each of the participating provinces would have an equal say in the new regulator, a key point for those provinces who say they are dominated by the bigger provinces, Ontario, Quebec, Alberta and British Columbia.
Canada is currently the only major country in the world without a single securities regulator. There have been calls for a national regulatory commission for years, but attempts to set up such a system have bogged down in jurisdictional disputes.
Crawford noted that each province has much the same goals.
"Lessening the cost of capital, the frustrations of regulatory compliance and the complexity of compliance are shared priorities among Canadian securities regulators," Crawford said.
"Addressing these priorities should encourage growth by domestic and foreign companies and result in economic expansion that benefits all jurisdictions."
The Crawford panel also recommended the development of one simplified national securities act and a single fee structure. The new regulator would use these fees to finance its operations.
"A single securities regulator will only succeed if it is built on existing provincial strengths and if it safeguards against domination by any one jurisdiction," Crawford said.
"Our proposed model is intended to stimulate discussion with governments, capital market participants and other interested parties." Crawford's proposed national regulator would have the following structure.
A Council of Ministers would include representatives from each province who are accountable to the public. Each minister would have one vote when selecting members of an independent board of directors and when adopting commission rules.
Members of the council would nominate qualified candidates to sit on an independent board. The board members would have investment, regulatory and governance expertise and would be accountable to the council.
The board would oversee a team of professional regulators led by a chief executive officer.
An independent tribunal would settle disputes.
Crawford proposed a series of regional roundtable meetings to be held early next year in Vancouver, Calgary, Winnipeg, Toronto, Montreal and Halifax.
The panel was established in May 2005 by the Ontario government. Its mandate was to recommend a model for a common securities regulator, a common body of securities law and a single fee structure.
Copyright ©2005 Canadian Broadcasting Corporation - All Rights Reserved
--------------------------------------------------------------------------------
Experts call for national securities regulator
Last Updated Wed, 07 Dec 2005
CBC News
A panel of experts has proposed the creation of a Canadian Securities Commission, one national regulator that would oversee stock markets across the country.
The panel, headed by prominent Bay Street lawyer Purdy Crawford, said the proposed commission would offer a single unified voice that would reflect each jurisdiction across the country.
Each of the participating provinces would have an equal say in the new regulator, a key point for those provinces who say they are dominated by the bigger provinces, Ontario, Quebec, Alberta and British Columbia.
Canada is currently the only major country in the world without a single securities regulator. There have been calls for a national regulatory commission for years, but attempts to set up such a system have bogged down in jurisdictional disputes.
Crawford noted that each province has much the same goals.
"Lessening the cost of capital, the frustrations of regulatory compliance and the complexity of compliance are shared priorities among Canadian securities regulators," Crawford said.
"Addressing these priorities should encourage growth by domestic and foreign companies and result in economic expansion that benefits all jurisdictions."
The Crawford panel also recommended the development of one simplified national securities act and a single fee structure. The new regulator would use these fees to finance its operations.
"A single securities regulator will only succeed if it is built on existing provincial strengths and if it safeguards against domination by any one jurisdiction," Crawford said.
"Our proposed model is intended to stimulate discussion with governments, capital market participants and other interested parties." Crawford's proposed national regulator would have the following structure.
A Council of Ministers would include representatives from each province who are accountable to the public. Each minister would have one vote when selecting members of an independent board of directors and when adopting commission rules.
Members of the council would nominate qualified candidates to sit on an independent board. The board members would have investment, regulatory and governance expertise and would be accountable to the council.
The board would oversee a team of professional regulators led by a chief executive officer.
An independent tribunal would settle disputes.
Crawford proposed a series of regional roundtable meetings to be held early next year in Vancouver, Calgary, Winnipeg, Toronto, Montreal and Halifax.
The panel was established in May 2005 by the Ontario government. Its mandate was to recommend a model for a common securities regulator, a common body of securities law and a single fee structure.
Copyright ©2005 Canadian Broadcasting Corporation - All Rights Reserved
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by admin » Thu Dec 08, 2005 12:02 am
The Rotman school of business is funded by industry.
That gives me a great deal of encouragement. It tells me that an industry funded organization has the cajones to call a spade a spade and discuss the issue rather than bury it.
The key elements I got out of the report from this organization was that "your" claim of investment abuse or violation of the securities act may or may not be acted on depending on things such as:
your importance or the importance of certain aspects of the case
or
the importance, strength, size, resources etc., of the firm acused of the abuse or violation
If this is even close to being correct it is a classic example of a dysfunctional, underfunded (mentally, morally and financially) regulatory system.
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by admin » Thu Dec 08, 2005 2:30 pm
Kathy Tomlinson from CTV News reports:
"William Gleberzon, of CARP, says he received early income trust information."
Well, they say it's difficult to get the cat in the bag again.
It seemed quite apparent from the market activity that there was a leak.
This would have been apparent to MRS.
The OSC should have announced an investigation.
With luck the U.S. will get involved.
Do Canadians need an Investor Protection Agency?
You bet.
Stan Buell
Small Investor Protection Association
P.O.Box 325, Markham, ON, L3P 3J8
e-mail: stanbuell@sipa.to Tel: 905-471-2911
"William Gleberzon, of CARP, says he received early income trust information."
Well, they say it's difficult to get the cat in the bag again.
It seemed quite apparent from the market activity that there was a leak.
This would have been apparent to MRS.
The OSC should have announced an investigation.
With luck the U.S. will get involved.
Do Canadians need an Investor Protection Agency?
You bet.
Stan Buell
Small Investor Protection Association
P.O.Box 325, Markham, ON, L3P 3J8
e-mail: stanbuell@sipa.to Tel: 905-471-2911
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by admin » Tue Dec 13, 2005 6:32 pm
Why the OSC must probe trust trades
Terence Corcoran, Financial Post
Published: Tuesday, December 13, 2005
The same is true for the people receiving the tip. Anybody who traded on a tip from a federal Finance official would not be trading on inside corporate information. Technically, therefore, there would likely be no insider trading involved in the income trust transactions.
But that doesn't get the government, or the OSC, off the investigatory hook. Phil Anisman, one of Canada's most experienced and knowledgeable securities lawyers, says the lack of a straight insider trading case should not prevent the OSC from conducting a full investigation and, if warranted, holding public sessions and imposing penalties.
If the allegations are true that someone in government "tipped" outsiders about the pending announcement of an important tax matter, triggering opportunistic trading, then that tip clearly created a risk to the all-important "market integrity" the OSC claims to be protecting. And this, says Mr. Anisman, clearly falls under the OSC's power under "public interest" provisions of securities law.
On a scale with other insider trading cases such as Rankin and Fraleigh, the income trust trading explosion is far greater. Extensive public awareness of the trading also deepens the market integrity element far beyond the petty trades in the Rankin case.
The OSC should use its broad "public interest" powers sparingly and only under circumstances that can be clearly defined. Events surrounding the income trust trades of Nov. 23 -- trades worth hundreds of millions in the wake of anecdotal and circumstantial evidence of a leak or tip -- provide as clear a justification as the OSC is ever likely to get.
© National Post 2005
Terence Corcoran, Financial Post
Published: Tuesday, December 13, 2005
The same is true for the people receiving the tip. Anybody who traded on a tip from a federal Finance official would not be trading on inside corporate information. Technically, therefore, there would likely be no insider trading involved in the income trust transactions.
But that doesn't get the government, or the OSC, off the investigatory hook. Phil Anisman, one of Canada's most experienced and knowledgeable securities lawyers, says the lack of a straight insider trading case should not prevent the OSC from conducting a full investigation and, if warranted, holding public sessions and imposing penalties.
If the allegations are true that someone in government "tipped" outsiders about the pending announcement of an important tax matter, triggering opportunistic trading, then that tip clearly created a risk to the all-important "market integrity" the OSC claims to be protecting. And this, says Mr. Anisman, clearly falls under the OSC's power under "public interest" provisions of securities law.
On a scale with other insider trading cases such as Rankin and Fraleigh, the income trust trading explosion is far greater. Extensive public awareness of the trading also deepens the market integrity element far beyond the petty trades in the Rankin case.
The OSC should use its broad "public interest" powers sparingly and only under circumstances that can be clearly defined. Events surrounding the income trust trades of Nov. 23 -- trades worth hundreds of millions in the wake of anecdotal and circumstantial evidence of a leak or tip -- provide as clear a justification as the OSC is ever likely to get.
© National Post 2005
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by admin » Tue Dec 13, 2005 6:34 pm
the previous post is in the regulatory failure column due to the feeling that newspaper editors and citizens feel they have to tell the regulators when to do their job. Something seems wrong with that. Where is the OSC? Are they getting the news these days?
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by admin » Wed Dec 14, 2005 10:25 am
Investors remain legally defenceless
Ontario legislation won't make much difference
The OSC’s David Wilson calls Ontario’s Bill 198 “a milestone.”
Forensic accountant Al Rosen, however, isn’t impressed.
Al Rosen
Financial Post
Wednesday, December 14, 2005
The continued unravelling of many business income trusts presents an excellent time to acknowledge Canada's ineffective investor protections.
In 2002, shortly after Nortel's implosion and the wiping out of several hundred billion dollars in Canadian savings, a Senate committee held hearings on what Canada should do to restore investor confidence.
The resulting report made recommendations for broad change and re-examination of the status quo. But, in typical government fashion, little action has followed in the two and a half years since.
Several problems led to the loss of investor confidence back then, including conflicted accountants and auditors, and research analysts following the lead of investment bankers, and pushing pro-forma, unregulated financial figures.
The Senate report addressed both fronts of the problem by recommending that:
(1) "Legislation be introduced that would obviate real or perceived conflicts of interest by financial analysts"; and
(2) "The federal government convene a meeting of all stakeholders to discuss the entity that should have responsibility for the setting of - and, importantly, revisions to - accounting standards and rules.
The government must take a leadership role in ensuring that the entity to which responsibility is given has the necessary independence, accountability and transparency to safeguard investor confidence."
However, checking the back of almost any equity research report today will show that investment banking clients still receive better analyst ratings than non-investment banking clients. Clearly the conflicts of interest have not been eliminated.
Not surprisingly, the Canadian establishment has continued to turn a blind eye to the conflicted nature in which financial reporting standards are set in Canada. The same group that in 1997 disclaimed any duty of care to investors, the Canadian Institute of Chartered Accountants, is still responsible for rubber-stamping the rules that their clients use to craft financial statements.
The latest insult is the complete lack of interest from the accountants in terms of regulating distributable cash reporting, despite that fact that the figures appear in the audited notes to the financial statements of many income trusts. The lack of action has been typical of the government's stance of allowing insiders to continue pillaging the savings of individual investors. The political atmosphere over the past decade has been to maintain weak securities legislation, permit power groups to set their own self-serving rules, maintain weak class action legislation and otherwise limit investor recourse alternatives, and above all, pretend that no serious systemic problems exist.
Given that attitude, it's no shock that we have seen a rebirth of investor manipulation using the same old tricks. Many business income trusts are severely overvalued because investment-banking fees are tainting analysis, and unregulated distributable cash figures are being used to support lofty unit prices. Oh, how far we've come.
It's staggering that no effective legislation has been introduced anywhere in Canada since 1997 to combat the Supreme Court of Canada's absurd decision that auditors do not owe any duty of care to investors. Amazingly, the court decided that annual audited financial statements were not to be used for shareholder investment decisions. Hence, auditors in Canada are free to sign bogus financial statements without fear of repercussions. Obviously, this has made audits mostly irrelevant, but nevertheless they continue to be a legislated requirement for public companies.
A tiny attempt at correcting this massive oversight has recently been made in Ontario with Bill 198. The parts of the bill dealing with civil liability in the secondary market finally come into effect in 2006, marking the culmination of a decades-long process. The new head of the Ontario Securities Commission, David Wilson, has declared this to be "a milestone in the development of market confidence" and "a cornerstone in economic competitiveness and prosperity." That's either an incredible exaggeration or an admission that nothing of consequence existed in the first place.
Claims that the new securities legislation will greatly help investors who buy stock in the secondary market are far-fetched for several reasons. For most cases, the prescribed limits on penalties will be less than the cost of launching a lawsuit for recovery. For more serious cases, investors must prove the existence of recklessness or willful blindness. In fact, many class-action lawyers see the new law as nothing significant from an investor perspective.
Besides the lack of political action and the delusional securities regulators, another weak pillar in the Canadian investor-protection system is our reliance on self-regulatory agencies. For the most part, self-regulatory has become synonymous with self-serving.
As an example, just look at the Canadian Public Accountability Board, which was the public relations response of the auditors and securities regulators to supposedly increase audit quality. While the independent U.S. auditing-oversight board has found many serious deficiencies in audits by the big U.S. public accounting firms, Canada's CPAB has amazingly whitewashed the activities of these same firms.
The only logical conclusion is that, aside from the odd bit of strength here and there, our current investor-protection system is beyond inept and needs immediate, major revamping. It's an international embarrassment that actions against high-profile Canadian scams are commenced in the United States, before they are pursued domestically, if at all.
Al Rosen is a forensic accountant at Accountability Research Corp., an independent equity research firm.
Ontario legislation won't make much difference
The OSC’s David Wilson calls Ontario’s Bill 198 “a milestone.”
Forensic accountant Al Rosen, however, isn’t impressed.
Al Rosen
Financial Post
Wednesday, December 14, 2005
The continued unravelling of many business income trusts presents an excellent time to acknowledge Canada's ineffective investor protections.
In 2002, shortly after Nortel's implosion and the wiping out of several hundred billion dollars in Canadian savings, a Senate committee held hearings on what Canada should do to restore investor confidence.
The resulting report made recommendations for broad change and re-examination of the status quo. But, in typical government fashion, little action has followed in the two and a half years since.
Several problems led to the loss of investor confidence back then, including conflicted accountants and auditors, and research analysts following the lead of investment bankers, and pushing pro-forma, unregulated financial figures.
The Senate report addressed both fronts of the problem by recommending that:
(1) "Legislation be introduced that would obviate real or perceived conflicts of interest by financial analysts"; and
(2) "The federal government convene a meeting of all stakeholders to discuss the entity that should have responsibility for the setting of - and, importantly, revisions to - accounting standards and rules.
The government must take a leadership role in ensuring that the entity to which responsibility is given has the necessary independence, accountability and transparency to safeguard investor confidence."
However, checking the back of almost any equity research report today will show that investment banking clients still receive better analyst ratings than non-investment banking clients. Clearly the conflicts of interest have not been eliminated.
Not surprisingly, the Canadian establishment has continued to turn a blind eye to the conflicted nature in which financial reporting standards are set in Canada. The same group that in 1997 disclaimed any duty of care to investors, the Canadian Institute of Chartered Accountants, is still responsible for rubber-stamping the rules that their clients use to craft financial statements.
The latest insult is the complete lack of interest from the accountants in terms of regulating distributable cash reporting, despite that fact that the figures appear in the audited notes to the financial statements of many income trusts. The lack of action has been typical of the government's stance of allowing insiders to continue pillaging the savings of individual investors. The political atmosphere over the past decade has been to maintain weak securities legislation, permit power groups to set their own self-serving rules, maintain weak class action legislation and otherwise limit investor recourse alternatives, and above all, pretend that no serious systemic problems exist.
Given that attitude, it's no shock that we have seen a rebirth of investor manipulation using the same old tricks. Many business income trusts are severely overvalued because investment-banking fees are tainting analysis, and unregulated distributable cash figures are being used to support lofty unit prices. Oh, how far we've come.
It's staggering that no effective legislation has been introduced anywhere in Canada since 1997 to combat the Supreme Court of Canada's absurd decision that auditors do not owe any duty of care to investors. Amazingly, the court decided that annual audited financial statements were not to be used for shareholder investment decisions. Hence, auditors in Canada are free to sign bogus financial statements without fear of repercussions. Obviously, this has made audits mostly irrelevant, but nevertheless they continue to be a legislated requirement for public companies.
A tiny attempt at correcting this massive oversight has recently been made in Ontario with Bill 198. The parts of the bill dealing with civil liability in the secondary market finally come into effect in 2006, marking the culmination of a decades-long process. The new head of the Ontario Securities Commission, David Wilson, has declared this to be "a milestone in the development of market confidence" and "a cornerstone in economic competitiveness and prosperity." That's either an incredible exaggeration or an admission that nothing of consequence existed in the first place.
Claims that the new securities legislation will greatly help investors who buy stock in the secondary market are far-fetched for several reasons. For most cases, the prescribed limits on penalties will be less than the cost of launching a lawsuit for recovery. For more serious cases, investors must prove the existence of recklessness or willful blindness. In fact, many class-action lawyers see the new law as nothing significant from an investor perspective.
Besides the lack of political action and the delusional securities regulators, another weak pillar in the Canadian investor-protection system is our reliance on self-regulatory agencies. For the most part, self-regulatory has become synonymous with self-serving.
As an example, just look at the Canadian Public Accountability Board, which was the public relations response of the auditors and securities regulators to supposedly increase audit quality. While the independent U.S. auditing-oversight board has found many serious deficiencies in audits by the big U.S. public accounting firms, Canada's CPAB has amazingly whitewashed the activities of these same firms.
The only logical conclusion is that, aside from the odd bit of strength here and there, our current investor-protection system is beyond inept and needs immediate, major revamping. It's an international embarrassment that actions against high-profile Canadian scams are commenced in the United States, before they are pursued domestically, if at all.
Al Rosen is a forensic accountant at Accountability Research Corp., an independent equity research firm.
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