Feb 6, 2008
To: Carey Daoust
Telephone (403) 292-6177
Fax (403) 292-6165
daoust.carey@cb-bc.gc.ca
Competition Bureau
400 639 5th Avenue Calgary,
Alberta T2P 0M9
From: Larry Elford
Re: Breaches of Competition Act, and two official complaints
I write to you for the fifth time in several years in hopes that the competition bureau will find the courage to investigate and enforce what may turn out to be a difficult and challenging complaint. Each time this bureau writes back to me suggesting that this matter does not warrant the application of the law.
Related information to this complaint and previous correspondence with the bureau can be found on the public record at:
www.investoradvocates.ca
It is my belief that practices which are misleading and misrepresentative to the public are taking place with the knowledge and awareness of the Competition Bureau, and that perhaps this Bureau is not taking action due to the strength of the industry involved and the inherent political difficulties in tackling this issue and this industry. It is thus becoming aware to me, that the ineffectiveness of this bureau is becoming a rather large component of support, for investment industry misdeeds, misleading practices, and behaviors that are not in the interests of the investing public, and that these misdeeds are costing Canadians between $30 billion and $60 billion dollars per year. I trust that this matter warrants full investigation and full application of the law.
Complaint #1 That misleading and misrepresenting advertising, and related activity is being used to misinform Canadian investment consumers that they are dealing with trusted investment professionals, when in truth, over 80% will be found to be dealing with persons licensed as “salesperson” under the Provincial Securities Act.
Under the criminal regime, the general provision prohibits all materially false or misleading representations made knowingly or recklessly.
The second complaint, which I feel to be a criminal violation of the Competition Act in Canada, is in the practice of investment firms prohibiting ethical investment salespersons from advertising “commission free” mutual fund sales to the public. I have found this to be the policy personally at two major bank owned brokerage firms, and I direct your attention to the following by way of example:
Despite an investment advisor owing a duty to care for a client seeking his or her advice, and despite that duty of care requiring the “advisor” to recommend the most “suitable” solution to the client to serve the client’s needs;
1. Your investigation will find it difficult to find evidence in Canada of any investment firm allowing the public to be openly told (advertising is specifically banned) that commissions were in fact deregulated in 1987, and that mutual fund commissions are fully negotiable.
2. Your investigation will discover from industry statistics that between 60% and 90% of mutual funds sold by the industry are sold using the choice of the “highest compensation”, when equal, identical and lower cost choices are available to the consumer. These practices are considered illegal, unethical and unsuitable, and are punished in the United States when they are discovered, and I write to ask this competition bureau why they are ignored here in Canada to the detriment of the consuming public?
The above two items point to a policy of “predatory pricing” in my opinion and or industry attempts to collude, gag, or prevent an environment of open competition. I feel open and free competition should be your department’s responsibility. These issues are not at this time addressable by the proper regulatory channels in the investment community due to the self-policing, and self-regulatory nature and the fractured nature of this regulatory community. According to the law, I feel it is up to your department to act on these complaints.
I look forward to your renewed interest in this issue, in light of greater public awareness of white collar fraud, crime and abuse of the public, and to your timely response to these complaints on behalf of all Canadians.
Best Regards
Larry Elford
Lethbridge Alberta
www.breachoftrust.ca
CC. Madhavi Acharya-Tom Yew, Toronto Star
NDP Finance Critic Judy Wasylycia-Leis
Sheridan Scott, Commissioner for Competition Bureau
Minister of Industry, Hon Jim Prentice
Hon Scott Brison, Liberal Industry Critic
John Middlemiss, National Post
jmiddlemiss@nationalpost.com
Jacquie McNish, Globe and Mail
jmcnish@globeandmail.com
Brian Facey, Blake Cassels & Graydon
Neil Findelstein, Blake Cassels and Graydon