Royal Commission or Judicial Inquiry Case #1

[admin]

Small Investor Protection Association
MEDIA RELEASE
April 26, 2007
The National Pensioners & Senior Citizens Federation (450 clubs and
chapters with 1,000,000 members), the United Senior Citizens of Ontario
(1000 clubs with 300,000 members) and the Small Investors Protection
Association are jointly requesting a national inquiry on the malfunctioning
of Canada's securities and accounting regulation and white collar crime
enforcement system.
Investor losses caused by white collar securities crime and excessive
mutual fund fees are estimated to be $18 billion annually.
• Over $110 billion of aggregate damages since the mid 1980's due to white collar
securities crime
• Another $55 billion of damages in the last 10 years from excessive mutual fund
fees relative to the rest of the world, since Canadians do not have free trade in
mutual funds with the U.S.
• Of $18 billion estimated annual investor losses, $13 billion is due to white collar
securities crime and $5 billion is due to excessive mutual fund fees
• $18 billion of annual investor losses is 1% less annual investment return on total
investment assets within individual RRSP's, RRIF's, pension plans and
investment assets held outside of retirement plans
• About 15% of expected investment returns are being skimmed by white collar
securities crime and excess mutual fund fees every year!
• Seniors suffering catastrophic losses from white collar securities crime suffer the
second abuse of stonewalling by the financial industry Self Regulatory
Organizations, provincial securities commissions and the RCMP, who address
less than 5% of the complaints received.
Our securities enforcement system is malfunctioning, and Canadians
can no longer accept the usual excuses of inadequate budgets, lack of
expertise and lack of co-ordination between the self-regulatory
organizations, the thirteen provincial and territorial securities
commissions and the RCMP. The securities enforcement system
appears to be designed to fail.
Senior executives of the SRO's, provincial securities commissions and
the RCMP provide rhetoric on strong white collar crime enforcement,
but weak enforcement records and recent investigations and audits
speak volumes about the intent to be lenient.
• Current Investigation of RCMP Corruption
http://www.investorvoice.ca/regulators/LAW/IMET.htm
• 2005 Investigation of Alberta Securities Commission Corruption
http://www.investorvoice.ca/regulators/PI/ASC/ASC.htm
• Two new reasons to probe the OSC
www.investorvoice.ca/Regulators/PI/2977.htm
• 2000 Scathing Audit of Investment Dealers Association Enforcement
www.investorvoice.ca/regulators/IDA_Scandal.htm
The enforcement agencies are not accountable to the public or subject
to regular independent audit on the thoroughness or integrity of their
white collar crime investigations. Their political bosses operate on a
hands off basis, espousing the impropriety of political interference.
• The Commission for Complaints Against the RCMP is the only civilian
oversight body in the white collar securities crime enforcement system and
its Chairman is hardly a civilian watch dog. Chairman Paul Kennedy had
a 25-year career with the Federal Justice Department, including roles as
General Counsel for the Canadian Security Intelligence Service and
Senior General Counsel in the Federal Prosecution Service.
Canada is the only industrialized country where accounting and
auditing standards are self regulated and as a consequence these
standards are permissive to materially misleading activities, such as the
deceptive yields in income trusts.
Two men have excessive control on what white collar securities crime
investigations are done, who is charged and how the system works - the
Chairman of the OSC and the Commissioner of the RCMP.
• The current Chairman of the OSC, David Wilson, supervises both the
OSC's investigations and adjudications. The dual role of the OSC Chair
position is considered to be the cause of the malfunctioning of the OSC in
the 2004 Osborne Report.
• David Wilson is also Chairman of the Canadian Securities Administrators
Policy Coordination Committee, the Canadian Public Accountability Board
Council of Governors and the Federal-Provincial Justice Ministers
Securities Enforcement Working Group
• The RCMP IMET Unit only conducts investigations on white collar
securities crime cases that are referred to it by one of its participating
agencies - the OSC or another provincial securities commission, the newly
merged Investment Dealers Association Enforcement Division and Market
Regulations Services Inc. and the Mutual Fund Dealers Association.
White collar securities crime and offences are rampant in Canada:
• Over 2,880 or 12% of all investment advisors appear in the ComSet
database of registrants with serious investor complaints against them. It
appears none of these complaints have been forwarded to the RCMP.
For more details see:
http://www.investorvoice.ca/Regulators/ ... Comset.htm
• The investment banks in Canada are doing unauthorized and
unnecessary FX transactions in RRSP's and RRIF's. Not the subject of
any SRO or provincial securities commission investigation. For details
see:
http://www.investorvoice.ca/regulators/ ... _Index.htm
• $8 billion of investor losses on 46 income trust IPO's and secondary
offerings down more than 30%, where investment bank marketing
materials gave deceptive yields and assurances of low risk to seniors
seeking income and preservation of capital. Not the subject of any SRO or
provincial securities commission regulatory restrictions or investigations.
For details see:
http://www.sipa.ca/
• Corporate fiascos: Hollinger, Nortel, Phillips Services, YBM Magnex,
Livent, Corel, Cinar, Cartaway, Golden Rule, Castor Holdings
• Investment fund fiascos:
a. Mutual fund market timing
http://www.investorvoice.ca/Regulators/PI/1056A.htm
b. Norshield
http://www.investorvoice.ca/regulators/ ... _index.htm
c. Norbourg
http://www.investorvoice.ca/regulators/ ... _index.htm
d. Portus
http://www.investorvoice.ca/reegulators ... _Index.htm
e. Crocus Funds
http://www.investorvoice.ca/regulators/ ... _index.htm
• CIBC's conduct was "reprehensible" and "cruelly failed" in its duty to
protect its investor clients, retirees Haroutioun and Alice Markarian. For
details see:
http://www.investorvoice.ca/regulators/ ... _index.htm
• Canada exhibits illegal insider trading before 63% of its acquisition
announcements, compared to 41% in the U.S. and 25% in the U.K.. For
details see:
http://www.bloomberg.com/apps/news?pid= ... kKs084ISM&
refer=canada & http://www.measuredmarkets.com/favicon.ico
The key features of a restructured securities and accounting regulation
and white collar crime enforcement system should be:
• creation of a new national securities regulator (with mechanisms for
collaboration with the Quebec securities regulator, if Quebec refuses to
support a national securities regulator)
• separation of the national securities regulator's policing and adjudication
functions, through the creation of a new national securities court;
• the new national securities court has a simplified procedure for individual
investors seeking remedies for investment losses caused by unsuitable
investment advice, securities offences and crimes;
• public oversight mechanisms to ensure that the investor protection
mandate of both policy-making and enforcement are executed thoroughly
and fairly;
• elimination of the full delegation of investor protection functions to the
current self-regulating organizations, such as the newly merged IDA &
MRS and MFDA;
• creation of a new national government-based independent accounting
standards board;
• complete separation of the RCMP, provincial and municipal police
investigations from the enforcement arm investigations of the national
securities regulator (and from the current SRO's and provincial securities
commissions in the meantime);
• individual public input into the development of the national securities
regulator's investor protection activities:
a. individual investor representatives directly involved in the design of
the newly restructured securities enforcement system
b. an investor advisory committee for published recommendations by
individual investors to the policymaking functions of the national
securities commission, with public minutes and open public access
to the investor advisory committee meetings;
c. a requirement for public town hall meetings to be held regularly at
major cities of Canada, with internet web broadcasting and a
mechanism for e-mail enquiries from the public unable to attend
these town hall meetings in person;
d. no high fee conferences held for the financial industry that do not
have a mechanism for public participation on the internet.
For further information contact:
Art Field
President
National Pensioners & Senior Citizens Federation
Telephone: (705) 786-2778
Cell: (705) 879-1310
E-mail: afield1@sympatico.ca
www.npscf.org
Marie Smith
President
United Senior Citizens of Ontario
Telephone: (416) 252-2021
E-mail: office@uscont.ca
www.uscont.ca
Stan Buell
President
Small Investors Protection Association
Telephone: (905) 471-2342
Cell: (416) 356-5194
E-mail: stanbuell@rogers.com
www.sipa.ca
Diane Urquhart
Consulting Analyst
Telephone: (905) 822-7618
Cell: (416) 505-4832
E-mail: urquhart@rogers.com
LIST OF CANADIAN INVESTOR LOSSES CAUSED BY MALFEASANCE AND LACK OF MARKET COMPETITION
(1) INCOME TRUSTS
BUSINESS INCOME TRUST EQUITY OFFERINGS SINCE JANUARY 1, 2001 WITH CAPITAL LOSS > 30% AS OF MARCH 16, 2007
IPOs
($ Million Except Price, 16-Mar-07) Date Loss %
Offering
Loss
Market Cap
Loss
HEATING OIL PARTNERS (SUSPENDED) 5/9/2002 -100% ($135) ($165)
FMF CAPITAL-IPS (SUSPENDED) 3/24/2005 -99% ($196) ($196)
SPECIALTY FOODS (SUSPENDED) 3/13/2003 -99% ($200) ($250)
ASSOCIATED BRANDS (SUSPENDED) 11/15/2002 -93% ($109) ($118)
SPINRITE (SUSPENDED) 2/8/2005 -87% ($176) ($176)
BOYD GROUP (SUSPENDED) 2/28/2003 -84% ($8) ($67)
MADACY ENTERTAINMENT (SUSPENDED) 4/20/2005 -80% ($60) ($60)
BLACKWATCH ENERGY SERVICES (↓) 11-Aug-06 -78% ($57) ($132)
ART IN MOTION (↓) 8/3/2004 -73% ($59) ($59)
SOMERSET ENTERTAINMENT (↓) 3/18/2005 -73% ($70) ($106)
ADVANCED FIBER TECH (SUSPENDED) 3/28/2002 -70% ($92) ($97)
HIGH ARCTIC ENERGY SERV (SUSPENDED) 7/21/2005 -70% ($59) ($68)
VILLAGE FARMS (SUSPENDED) 12/23/2003 -70% ($46) ($49)
GRANBY INDUSTRIES (SUSPENDED) 12/16/2004 -65% ($48) ($48)
ENTERTAINMENT ONE (SUSPENDED) 11/4/2003 -65% ($91) ($185)
GIENOW WINDOWS & DOORS (↓) 10/19/2004 -60% ($99) ($150)
CANWEL BUILDING (↓) 5/13/2004 -54% ($24) ($118)
CLEARWATER SEAFOOD (↓) 7/31/2002 -51% ($119) ($150)
SFK PULP (↓) 8/1/2002 -51% ($224) ($299)
PANTERA DRILLING 3/21/2006 -50% ($12) ($30)
HARDWOODS DISTRIBUTORS (↓) 3/23/2004 -47% ($68) ($68)
CLEAN POWER (↓) 11/14/2001 -47% ($100) ($167)
MENU FOODS (SUSPENDED) 5/22/2002 -45% ($58) ($86)
DEEPWELL ENERGY SERVICES 8/24/2006 -45% ($18) ($20)
E.D. SMITH (↓) 6/3/2005 -44% ($56) ($103)
CRESTSTREET POWER (↓) 11/1/2005 -41% ($24) ($42)
ARRISCRAFT INTERNATIONAL (↓) 12/14/2004 -40% ($27) ($28)
IMPAX ENERGY SERVICES 6/14/2006 -40% ($27) ($29)
OSPREY MEDIA (↓) 4/15/2004 -40% ($82) ($196)
NEWPORT PARTNERS (↓) 8/8/2005 -38% ($85) ($142)
STEPHENSON'S RENTALS (↓) 7/28/2005 -37% ($26) ($26)
TREE ISLAND WIRE (↓) 11/12/2002 -32% ($52) ($69)
CANEXUS 8/18/2005 -31% ($97) ($97)
PETROWEST ENERGY SERVICES 9/7/2006 -30% ($42) ($80)
TOTAL IPO's -58% ($2,646) ($3,677)
Secondary Offerings
($ Million Except Price,16-Mar-07) Loss %
Offering
Loss
Market Cap
Loss
PEAK ENERGY SERVICES 10/18/2005 -68% ($14) ($216)
TERRAVEST (↓) 7/8/2005 -53% ($18) ($80)
SUPERIOR PLUS (↓) 10/19/2005 -51% ($82) ($1,123)
ENERGY SAVINGS 5/1/2002 -48% ($36) ($1,170)
AVENIR DIVERSIFIED (↓) 9/27/2005 -47% ($70) ($246)
WELLCO ENERGY SERVICE 23-Feb-06 -43% ($14) ($83)
CHEMTRADE LOGISTICS (↓) 8/17/2005 -42% ($65) ($218)
MULLEN GROUP 1/12/2006 -41% ($42) ($755)
BUILDERS ENERGY 8/24/2006 -40% ($12) ($116)
CONNORS BROTHERS (↓) 1/13/2005 -36% ($41) ($332)
MEDISYS HEALTH GROUP (↓) 3/22/2006 -36% ($4) ($26)
ATLAS COLD STORAGE (↓) 10/23/2002 -35% ($35) ($265)
TOTAL SECONDARY OFFERINGS -44% ($433) ($4,632)
Annualized Loss Aggregate Loss
INCOME TRUSTS CAPITAL LOSSES ($1,385) 6 ($8,309)
LIST OF CANADIAN INVESTOR LOSSES CAUSED BY MALFEASANCE AND LACK OF MARKET COMPETITION
(2) CORPORATIONS Annualized Loss Aggregate Loss
($ Millions)
HERCULES MANAGEMENT Jan-84 ($40)
VICTORIA MORTGAGE Jan-84 ($50)
CANADIAN COMMERCIAL BANK Sep-85 ($1,000)
NORTHLAND BANK Sep-85 ($230)
PRINCIPAL GROUP Jul-87 ($500)
STANDARD TRUST Jul-90 ($50)
TEACHERS INVESTMENT AND HOUSING CO-OPERATIVE Mar-92 ($150)
CASTOR HOLDINGS Jul-92 ($2,000)
BRAMALEA Apr-95 ($1,000)
CARTAWAY May-96 ($450)
GOLDEN RULE RESOURCES Jan-97 ($350)
BRE-X Mar-97 ($6,000)
CONFEDERATION LIFE Jul-98 ($10,000)
SHAMRAY GROUP Nov-98 ($7)
LIVENT Dec-98 ($500)
YBM MAGNEX Dec-98 ($650)
JEVCO INSURANCE Jun-99 ($30)
COREL Oct-99 ($500)
NORTEL Aug-00 ($57,000)
PHILLIPS SERVICES Aug-00 ($2,600)
MERIT ENERGY Sep-00 ($100)
KING'S HEALTH CENTER Oct-00 ($100)
CINAR Dec-00 ($1,400)
VISUAL LABS Jul-01 ($300)
HOLLINGER Nov-03 ($500)
CORPORATIONS CAPITAL LOSSES ($8,004) 10 ($85,507)
(3) INVESTMENT FUNDS Annualized Loss Aggregate Loss
($ Millions)
CHRISTOPHER HORNE - RBC DOMINION Jul-94 ($7)
MICHAEL HOLODAY - FIRST MARATHON Jan-96 ($22)
CROCUS Dec-04 ($150)
PORTUS Jan-05 ($120)
NORTHSHIELD Jun-05 ($500)
NORBOURG Aug-05 ($80)
INVESTMENT FUNDS CAPITAL LOSSES ($283) 3 ($879)
(4) SYSTEMATIC MALFEASANCE Annualized Loss Years Aggregate Loss
($ Millions)
Unauthorized Foreign Exchange Transactions in RRSP & RRIFs 2007 ($500) 5 ($2,500)
Insider Trading Surrounding Acquisitions 2006 ($2,898) 5 ($14,490)
Mutual Fund Market Timing 2005 ($252) 5 ($1,260)
SYSTEMATIC MALFEASANCE LOSSES ($3,650) 5 ($18,250)
LIST OF CANADIAN INVESTOR LOSSES CAUSED BY MALFEASANCE AND LACK OF MARKET COMPETITION
GRAND TOTAL MALFEASANCE Annualized Loss Aggregate Loss
($ Millions) ($13,300) ($113,000)
LACK OF MARKET COMPETITION = EXCESS MUTUAL FUND FEES AUM $ Billions Excess Fee Annualized Loss Years Aggregate Loss
($ Millions) $440.3 -1.26% ($5,500) 10 ($55,000)
GRAND TOTAL MALFEASANCE & LACK OF MARKET COMPETITION Annualized Loss Aggregate Loss
($ Millions) ($18,800) ($168,000)
Statistics Canada
($ Millions)
Annualized Loss As %
of Investment Assets
Aggregate Loss
As % of
Investment Assets
Investment Assets Excluding Retirement Plans 2005 $347,263
RRSP, RRIF, LIRA and other 2005 $593,209
Personal Investments $940,472 -2.00% -18%
Employer Pension Plans 2005 $1,038,685
Investment Assets All 2005 $1,979,157 -0.95% -8%
Investment Funds Institute of Canada Mutual Funds
Mutual Funds AUM ($ Bilions) 1997 $283.2
1998 $326.6
1999 $389.7
2000 $418.9
2001 $426.4
2002 $391.3
2003 $438.9
2004 $497.3
2005 $570.0
2006 $660.2
2007-2 $679.9
Prepared by: Diane A. Urquhart with assistance from Dr. Al Rosen Files
Date: March 16, 2007

[admin]

when i read through the article in Canadian Business Magazine, November 6, 2006, I am amazed at how much money was spent on what appears to be an effort to "prevent" any independent investigation into the allegations made by the young whistleblower who killed himself.

His message, his allegations, and his evidence of alleged (yet univestigated) wrongs appear from the article to be completely buried by those who stood to profit from hiding them, or by a legal system which stood to profit ($1 mil spent) from helping to avoid independant inquiry.

The need for independant and very public review of this is obvious to myself.

Please exercise your public right and contact your member of parliament, send them a copy of this Canadian Business article if you need to, and DEMAND public judicial inquiry or Royal Commission into this.

[admin]

----- Original Message -----
From: Stan Buell
To: Hon. Ralph Goodale ; Hon. Irwin Cotler, Minister of Justice ; Hon. David L. Emerson ; Hon. Tony Ianno ; Rt. Hon. Paul Martin
Cc: Don Murray (MSC Chair - NASAA Director) ; William S. Rice (Chair ASC) ; Doug Hyndman (Chair BCSC) ; Bill Knight (President FCAC) ; David Wild (Chair Joint Forum) ; Gerald Lafreniere (Clerk Sen Com) ; Franklin L. Widmann (President NASAA) ; Susan Wolburgh Jenah (Chair OSC) ; Jean St. Gelais (President AMF)
Sent: Tuesday, October 18, 2005 8:18 PM

Subject: Fw: A major trial of a whistleblower


The Small Investor Protection Association (SIPA) acts as a Voice for Small Investors. Founded in 1998, SIPA has over 500 members in nine provinces across Canada. We are committed to working with government, regulators and industry towards a better investing environment and meaningful investor protection.



In February 2004, SIPA issued a report "The Small Investors' Perspective of Investor Protection in Canada", and delivered it to leaders across Canada.



In September 2004, CARP (Canada's Association for the 50 Plus) & SIPA issued a report "Giving Small Investors a Fair Chance". This report also made recommendations.



In February 2005, SIPA submitted a report "It's a Matter of Trust" to the Standing Senate Committee on Banking Trade & Commerce with recommendations.



In April 2005, SIPA & CARP appeared before the Senate Committee in Ottawa to represent small investors.



SIPA is associating with CARP, USCO (the United Senior Citizens of Ontario) and others, in new initiatives regarding fair treatment for seniors, widows and other small investors. Our working group represents over 700,000 individuals.



We see an investment industry circumventing or ignoring regulations, developing products to avoid regulation and selling unregulated products to trusting seniors. Income Trusts, Principal Protected Notes and other structured products are being sold to small investors not aware of the associated risks. The industry is knowingly victimizing small investors who have no recourse except civil litigation.



We are concerned that little progress is being made towards establishing a national investment regulator and an authority that has a mandate for investor protection.



Seniors, widows and other small investors continue to be robbed of their savings by an investment industry, permeated by corruption, that practices widespread wrongdoing; an industry that frustrates regulators and constantly seeks to evade regulations and sell unregulated products to unknowing small investors who trust that the industry is well regulated.



Wrongdoing is now beginning to be exposed in Canada and the industry is paying billions of dollars to cover up the extent of the wrongdoing. Legal actions are settled out of court with gag orders to prevent the public from learning the truth. Now several of our provinces have succumbed and reduced limitation periods to two years from six years to further erode individuals' rights.



Legislators have failed to recognize that victims of life altering events generally take more than two years to recover sufficiently to take any action. They have also failed to recognize that the industry complaints handling processes routinely delay complainants by more than two years. This must be fixed.



Now the trial of an investor advocate as outlined below should concern anyone who is concerned with investment industry regulation and investor protection.



It started with a "TruthTeller" Kent Shirley who reported to the regulators in February 2004. The investigation was long and drawn out and little progress made. Shirley is reported to have committed suicide last December but not before he passed the torch to Joe Killoran, an investor advocate who has devoted his life to seeking the truth. Many do not agree with his methods but if we had an effective regulatory system that truly protected investors there would be no need or reason for individuals like Joe Killoran or volunteer organizations such as the Small Investor Protection Association.



Joe promptly passed the information to other regulators, to the media, and to Elliot Spitzer hoping against hope that Spitzer could do something Canadian regulators can't or won’t.



Spitzer's actions resulted in companies penalized in the U.S. while they seem to escape lightly in Canada. It resulted in perpetrators sentenced to prison in the U.S. for substantial terms, whereas in Canada white collar crime is lightly punished.



IT IS TIME that our regulators and our government begin to recognize the extent of wrongdoing in our Canadian investment industry and the failure of our regulatory and legal systems to protect victims of wrongdoing.



A PUBLIC INQUIRY is sorely needed. Surely the rash of scandals and bankruptcies with mutual funds, income trusts, hedge funds, structured products, and regulatory issues are sufficient cause to warrant such an inquiry.




IT IS TIME that our governments and regulators send observers to this trial and pay attention to how the Canadian public is being robbed by an industry that uses our legal process to further victimize the investing public.

Stan I. Buell
Small Investor Protection Association
P.O.Box 325, Markham, ON, L3P 3J8
Tel: 905-471-2911
e-mail: stanbuell@sipa.to
website: www.sipa.to

INVESTOR ALERT - Limitation Periods reduced from 6 years to 2 in AB, ON, SK & NL. Investors with a complaint should first consult legal counsel regarding limitation periods.

[admin]

There are many issues that could be investigated in the financial industry. Selling of income trusts that have no suitability to anyone other than speculators, by investment firms, just to create underwriting fees. Selling them knowing that the "yield" is misleading and untrue.

Eatons. Teranet. Legal exemptions granted to financial firms to assist them in "putting lipstick on investment pigs", so they can more easily be sold to a trusting and vulnerable public.

The failures in the duty to care for the public interest, in the name of greed and profit are endless, and indicate to me a total failure of Canada's current financial regulatory system.

This topic will look at some of the issues that members have, and some of the thinking of which example carries with it the strongest illustration of all that has gone wrong with our regulators.

Feel free to send your posts to investoradvocate@shaw.ca. Dedicated advocates interested in public interest allowed.