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TTHE PERFECT CRIME
A HOW TO GUIDE
Written by Larry Elford, (former CFP, CIM, FCSI, Associate Portfolio Manager, retired)
I am about to tell you how to commit the perfect crime. A crime worth billions, and one in which no police become involved. Impossible you say. Sit back, relax, and let me tell you about my former career.............
You only have to promise to honor the “code of silence” by which all white collar criminals abide. Tell no one!
It begins like this. If you wish to rob a bank, you are subject to the criminal code of Canada, and that is a bad thing...............however, in order to make it the perfect crime, I have to change your line of thinking. I encourage you to stop momentarily, and turn the entire crime around. Imagine putting on a suit and joining the financial services industry. When a bank wishes to rob the public, there is no police force in the country that has figured out this “reversal robbery” that we have perfected in Canada. Now you are getting into an area where crime really does pay.
By now I probably do not have to convince you that far too many financial types are greedy enough to lie and steal from the public. The recent economic crisis has given us enough examples to convince the most trusting financial fan. And somehow our financial regulatory system has “fostered” this environment, has allowed it to happen.
The other shoe to drop, two shoes in fact, that I will ease you into over the course of this article is how our financial system is rigged to allow these abuses, without penalty. Lets start at the bottom of the economic food chain, with your local salesman or saleswoman selling investments and mutual funds. They we will slowly climb the ladder to learn how easy it is to commit the perfect crime against an entire economy.
There are about 130,000 registered “salespeople” in Canada (source Investment Industry Regulatory Organization of Canada, IIROC) with their three month securities course as the major educational requirement to start selling financial products by commission. They begin from day one with a major misdirection of the public. They earn the license that says “salesperson” on it, or at least it did every single day for the last thirty years until the securities commissions struck the word “salesperson” from their documents to hide this misrepresentation. They did this last month. July, 2009 to be precise. From now on you will be served by a guy with a three month correspondence course, who goes by the license category of “dealing representative”. Whatever that means. We still get to misdirect and misrepresent. We still win. You still lose.
They are trained as salespersons. Hired to sell, expected to sell or leave. In the business, the letter they get when their sales production is not high enough to satisfy the sales manager is called an “achieve or leave” letter. Client returns do not come into play, nor into measurement, it is an entirely sales and commission driven system. You are paid by an “eat what you kill” model based on commissions on transactions or fees based on your assets under administration. And yet the industry refers to it’s salespersons as advisors, trusted professionals, and advertises that “your interests come first”. “We are here to help you find the proper investment” would be a common industry promise. This is not what they deliver. For example:
According to the Investment Funds Institute of Canada, (IFIC) 80% of mutual funds sold in the past two decades or so, were sold using the highest commission paying class of funds, the DSC class. DSC stands for deferred sales charge, and it produces the biggest commission possible, in the quickest possible time, and a naturally resulting highest cost to the client. This violates the aspects of a professional advisor, the code of ethics of the entire industry, and the suitability requirements that each and every transaction must meet in this industry. The requirement to “minimize” the transaction costs to those people who you claim to “advise”, not maximize those costs. Clients have every right to ask for all their money back, but, as we shall see, this industry is self regulating, meaning we police ourselves, so they have no one to help them get their money back. We police ourselves, and you are out of luck.
The next trick of the trade, and most recent, for your local investment “salesperson” is the substitution of poorer performing and higher cost “house brand” mutual funds for independent funds. According to the Investment Funds Institute of Canada 92% of mutual fund sales in 2007 were made into something called “wrap” funds. These wrap funds include funds made up of other funds, proprietary, (house brand) funds and who knows what else. A “fund of funds” earns a fee upon fees, which is not good for you the investor. According to the Ontario Securities Commission Fair Dealing Model proposals, an investment firm earns from 12 to 26 times greater fee income when they sell you the “house brand” or the house “wrap” account. This is why you may have been sold proprietary funds, and not likely because your dealer has found a better way to manage funds than all the independent experts. They have just found a better way to get 2% more from your trust relationship. (Imagine if every doctor you visited had their own “house brand” pills to sell to you)
Double dipping, charging fees on top of commissions, or commissions on top of fee based accounts, also runs rampant by those investment types wanting to be named “vice presidents” at their firms. It is just another method of gaining or skimming an extra percentage or two in fees from the trusting client. I wont say that each and every salesperson out there is in this skimming mode, but the sales numbers paint a pretty ugly picture of an 80/20 balance of sales commissions coming before professional advice.
On to more tricks of the trade. Mutual fund fee abuse is a $25 billion dollar haircut each and every year in Canada, according to Keith Ambaschteer at the University of Toronto.
https://docs.google.com/fileview?id=0Bz ... OTkw&hl=enProfessor John Coffee of Columbia University adds that having 13 provincial and territorial securities commissions deducts another $10 billion from the Canadian economy each year. These two independent experts put us at $35 billion behind each year without even talking of specific investment examples. That is enough money to run my province of Alberta for an entire year.............money used simply to “feed” the greed and self interest of those running Canada’s financial system. Thanks guys, you are doing an amazing job.
Add in asset back commercial paper ($32 billion), junk bonds, limited partnerships, movie deals, MURBS, tax shelters, tainted income trusts, Nortel, Bre-x, YBM, Northshield, Portus, Crocus, and all the other so-called legal investments that I cannot even remember at my advanced age, and you have a perfect recipe for skimming more money from bad investment products and intentionally bad advice than the cost of each and every other crime in Canada.....combined. (Nortel alone was responsible for evaporating up to $366 Billion. You do the math on the rest)
According to Justice Canada, all the other crime in Canada is costing us in the neighborhood of $40 billion each year. I can come up with over $60 billion each year myself without resorting to much more than a napkin, but I am truly looking forward to Prof P. Puri’s upcoming study of the amount of damages due to white collar crime in Canada. Prof Puri is an associate law professor who teaches about white-collar crime at Osgoode Hall Law School at the University of Toronto and publishes insightful reports on the nature of the financial system in Canada. Reports you should read.
The police, where are they while this is going on? Prof Puri has a study on this as well, and she concludes that the crooks are rich and powerful and well funded, while the police are outgunned in all aspects. But you should read it yourself.
I have learned that the police tend to concern themselves with the criminal code of Canada, and while fraud, negligence, breach of trust, etc fall under this code, they have been sold a nice package of goods to ignore this code in most financial cases. Those instances are usually when these crimes occur within the financial industry in Canada. Why? Because the financial industry (those cunning, manipulative, wealthy power brokers who we now know are not to be trusted) have set up something called a “self-regulatory system. They have set it up, funded it, staffed it. Here is the secret foundation of the perfect crime. “Own or control the entire investigation system.” In fact, the financial industry pays the salaries and costs of even our crown agency, the provincial securities commissions, through fees paid to them. They have their own act called the securities act. They police it, they enforce it. The trouble is that they enforce it to their advantage, and not in a manner fair to the public. If there are three parties living in this financial relationship, one being the financial dealers, two being the regulators, and three being the public, two of them are sleeping together and one is alone, in the basement, in the dark. Scared. Enough about me. I am talking about the public. While the regulators (securites commissions, and self regulators) are making passionate love to the financial industry, or vice versa, the public is simply being screwed and ignored. Not possible you say? Are we not a highly civilized, developed country? Let me tell you more.
Canada is the only developed country in the world that does not have a national securities regulator. Instead we have 13 provincial regulators in an economy the same size as Texas. I have always said that each of these territorial commissions act a lot like every bad sheriff in every bad Smokey and the Bandit movie I have seen. Acting and behaving as if they are above the law. They just keep proving it year after year. Each of these securities commissions is supported by fees paid to them by the financial industry. They purport to serve two opposite interests, one being to protect the public at large, and two being the smooth functioning of the financial industry. I can attest that after thirty years of study, they are skipping the first, and serving the second. This is where the money comes from.
For one example, on each securities commission complaint intake process, is an instruction that they will not deal with a member of the public, unless they have first gone to the industry sponsored “self regulatory” body, which is often just a trade and lobby group for the industry. So we have a crown corporation, refusing to serve the public, and instead sending them with complaint to the very association of whom they are complaining about. (mutual fund or investment dealers) It is a bit like sending an abused child to go and complain the the very persons he or she was abused by. It does not work for the victim but it works perfectly for the abuser. We win, the public loses again.
The investment dealers association (IDA) (one of our industry trade bodies that posed as a regulator) split itself in two parts a few years back to place better optics on the fact that they were a trade and lobby group pretending to be a regulator.
Thirteen provincial and territorial securities commissions defer statutory obligations away from themselves (who are charged with handling them) and to these self regulatory agencies, who cannot even claim to know what job they are supposed to be doing.
For example, here is what the Ontario Securities Commission says to a customer with a complaint:
“The OSC has recognized the Investment Dealers Association ("IDA") as a self regulatory organization (1995, 18 O.S.C.B. 5293). As such, the IDA has the authority and the jurisdiction over its members to enforce Ontario securities law as well as IDA rules, regulations and by-laws.” (These days they defer to IIROC, a newer version of the IDA, or MFDA (Mutual Fund Dealers Association)
“As there are no provisions to circumvent this process, the OSC is unable to consider your request for a regulatory review of your matter.” This from a letter to an abused investor dated Aug 25, 2004. They give a similar answer today, as does each of the thirteen provincial and territorial securities commissions, despite them being the statutory body charged with this duty. They brush it off.
Here is what the IDA (what todays Industry body used to call itself) claimed in 1998:
"The IDA is Canada's only national entity with delegated responsibility for securities regulation and investor protection." - Joe Oliver former president of Investment Dealers Association, 1998 Evidence given before the
Senate Standing Committee on Banking, Trade and Commerce
Here is what the IDA’s Paul Bourke said to the Financial Post in 2004:
"First, let's get the facts straight. The only legislative power the provincial governments "delegate" to the IDA is registration of brokers -- and even that is only delegated in B.C., Alberta and Ontario. The provincial governments do not "delegate" securities industry compliance and enforcement." Nov 3, 2004
"The IDA is a private organization and can set its own rules."
Financial Post May 9, 1999.
"...the IDA is not an arm of the government. We are not acting as an agency or a delegate of the securities commission."
This from former IDA legal counsel Brian Awad
National Post Newspaper titled “IDA called on constitutional grounds”
It appears that the relationship between the provincial securities commissions and those self regulatory agencies employed by the Investment dealers and also by the mutual fund dealers is a very confused and troubled, but incestuous one. They are in bed together, and the stories of the affair do not match each others version.
Need more convincing that the provincial regulator may be bought and paid for?
From Alberta Auditor General report
“ASC is the industry-funded organization responsible for overseeing the capital
market in Alberta. It administers the Alberta Securities Act, the Securities
Regulation and Securities Commission Rules.”
source
Report of the Auditor General on the Alberta Securities Commission’s Enforcement
System
The Alberta Securities Commission collected some $24 million in fees in 2009, (source Alberta Securities Commission 2009 annual report) some of those fees no doubt came from the unique and interesting practice of selling exemptions to the law as described above, our Securities Act. Did you read that correctly? I will repeat it just in case you missed it. They collect money for giving financial firms “hallway passes” to skip out of having to follow our provincial laws! There are several thousand investments and investment companies who have paid money to your government protective commission, and purchased permission to violate the laws. This list can be found at any securities commission in the country by searching the word “exemption”. How would you feel if your Food Inspection Agency were knowingly allowing tainted and defective food to be sold? How would you feel if your Health Agencies were earning “fee income” from granting drug companies the right to spread infection? Your provincial securities “regulator” is doing something very much like this, and has done so several thousand times without so much as a peep of honest and transparent disclosure. This is not honest services and if looked at carefully, it may not even be legal.
This is the second shoe I told you I was going to drop on you, earlier on in the article. The second conspirator in being able to commit the perfect “reverse” bank robbery.
Need a very specific example or two?
The Alberta Securities Commission granted “approximately twenty investment firms” (Source, Alberta Finance and Enterprise) the right, for a fee, to sell tainted and toxic subprime mortgage investments, called Asset Backed Commercial Paper. Honest disclosure would call them Liability Backed Commercial paper but that shows just how easily the securities commission can be fooled into subservient compliance to the finance industry. There was no public debate on whether laws should be violated for these particular companies, nor for these particular investments. This was done behind closed doors. There was no public notice given that certain investments were being sold into our economy while not meeting our laws........or did they meet our laws once a legal exemption has been purchased? Or were they illegal investments that had somehow been made “legal” on paper, but not in actual substance? It matters not, they are your problem, not ours. What matters is that the crime is perfect if you have bought a pass to make that which was illegal, legal. You cannot lose.
They are $32 million worth of a problem for the City of Lethbridge. They are $18 million worth of a problem to the University of Calgary who were probably told by an investment person, that these were top rated, safe investments. I suppose the legal exemption needing to be met because they were precisely the opposite of top rated and safe, was forgotten in the zeal to make an $18 million dollar sale. Understandable in light of the excitement. Can you imagine what a used car salesman would tell you in order to make an $18 million dollar sale? Now apply that to a guy with a 90 day securities course and you pretty much have the picture.
The Alberta Treasury Branches were in a position of failure by having placed nearly half (47%) of each and every dollar of deposit that they held into these toxic investments. Source Report of the Auditor General of Alberta,
http://www.oag.ab.ca/files/oag/Oct_2008_Report.pdf The irony here is that Iris Evans is the Finance Minister in charge of the ATB, which nearly failed under her watch, by being infected with toxic investments which were allowed by the ASC, another agency under her watch.
Our economy was infected with a known toxic product, which the financial firms in Canada wanted to dump, knowing that they were not up to par? Securities Commissions are and have been “hesitant” to investigate this crime due to their part in approving the stuff. They are starting to come around, now due to a public awareness campaign by a small group of investor advocates. How am I so sure they knew in advance they were crap? Because they had to apply for an exemption to our securities laws in order to sell them. They had to put in writing the exact shortcomings of these investments. They had to file an application to exempt, which in itself is an admission that these products did not meet the law.
Why did the securities commission grant this permission to sell crap into our economic food chain. Here is the exact wording which grants the decision to grant them this permission from thirteen provincial and territorial securities commissions:
“Each of the decision makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met”.
In other words “we have no freaking clue what we are doing but our salaries (at the securites commission) are approaching $200,000 and we will go along with whatever we are told to do by the people that pay these great salaries”. (authors interpretation)
The Saskatchewan Financial Services Commission even has a booklet on their web site called “How to Raise Capital Using Exemptions”. It indicates how to approach and work with the SFSC to assist in selling securities in Sask that need a little help going around the law.
I could dwell on this a bit further, and may come back to it, but I have to digress just a little to further look into a favorite word at the securities commission. “Decision”.
In the case of retired Calgary firefighter Gordon Simpson, who had a bad experience with his investment dealer, and made a complaint to the Securities Commission. He was told by this crown agency to go elsewhere, that he had to take his complaint instead to the industry sponsored investment dealers association. An industry trade body that we have already looked at and the supreme court of Canada has decided that this trade body “does not owe a duty of care to the public. Only to their own members. Of course Mr. Simpson’s case was dismissed by the IDA, as most often happens when you take any complaint to the very association of members of which you are complaining. He appealed this “decision” by the IDA. Guess what? His appeal was denied. They would not even hear his appeal. There were two strange reasons given. One is that the IDA has their own special meaning for the word “decision”, (like Bill Clinton does for sexual relations) and they say this to Mr. Simpson, “a refusal to carry on with investigating a complaint was not actually a “decision” and therefore could not be appealed”.
In further argument, they say further that “Therefore, not every decision meets the definition of “decision” for the purposes of the Act.”
In case that logic was not bulletproof enough, they had a backup reason to go with. Another reason given for not allowing Mr Simpson to appeal the brush off decision was that Mr. Simpson was “not a party directly affected by the decision” not to pursue his case and therefore he was not allowed to appeal. This is the second time I have heard the investment dealers association pull this excuse out of imaginary lawyer land......they gave the same foolish logic to a Mr. Jim Roache of Ottawa when his case also was dismissed out of hand. Mr Roache is quoted as having said, “if I was not a person directly affected by this, who the hell was? It was my savings, my retirement, my failed marriage.......” The Investment Dealers association was unable to grasp this simple logic (something about $200,000 salaries) and they were unable to answer Mr. Roache.
Where was I, now that I have gotten the “decision” thing off my chest? Oh, we have covered how the securities commission appears to be doing a one sided job of refereeing the relationship between the public and the investment dealers. We have confirmed that this referee is indeed paid by the investment dealer side of the relationship, and that they (securities commission) refuses to deal directly with the public. They will, however take money from, and deal directly with any industry player who wishes to violate the laws and place the public at harm. Thanks. You guys are awesome!
Where do we go from here? Need a few more examples? A few hundred more? How about several thousand? What will it take? I have submitted documents into the legislatures of several provinces and into Ottawa, with two “poster child” cases of knowingly abusing the public trust with legal exemptions, and with a failure by the Alberta Finance minister (and the Finance Minister before her) to rein in this abusive behavior. I have requested a provincial inquiry under the provincial inquiries act, but that would mean that the Alberta government would have to investigate themselves. What odds do you give that the Alberta government is honest enough, and transparent enough to look into its own participation in doing billions of dollars of damage to Albertans and to our economy? How about the other 13 governments involved? Any bets?
I am getting ahead of myself. I was still focused on the securities commission in Alberta, fighting for their very lives (salaries) against the threat of a national securities commission. What would they possibly do to earn salaries as high as $700,000, if their jobs were taken away. Who would print all the paper? Who would do the job of not protecting the public, while strenuously claiming to protect the public?
These agencies will tell you that they have changed, that they have seen the light and they are new and improved. Each year and each scandal they tell us that. Certainly they have changed some names, some have even changed the name of the organization (The Investment Dealers Association having split it’s lobby group apart from the regulatory side, The Investment Industry Regulatory Organization Of Canada IIROC). Perhaps some of this change is true. It is my belief that these organizations are not coming clean, not admitting wrong in any case, and simply making optical moves to appear clean. They continue every day to violate the public trust and sell off the public interest in favor of their own interests. It is your financial future at stake. Your economic health. Are you willing to place it entirely at risk to foxes and lawyers who pay themselves hundreds of thousands to do things like this?
A few years back the Alberta Auditor General was trying to do an audit of the Alberta Securities Commission. There were allegations of two tier treatment, one for the rich and powerful, and another for the rest. There were ASC employees who were attempting to come forward to tell of this. There were stories of blow up sex dolls in the ASC office, and an atmosphere that was simply inappropriate. Did the ASC submit willingly, as does a group that has nothing to hide? No. They paid about $1.2 million in legal fees to challenge the right of the auditor to audit this crown agency. After a lengthy debate, the auditor was finally allowed to do his job, and he found a systemic failure to follow practices and procedures of any kind in too many cases. They failed. To add insult to injury, they fired a few of the very people who were trying to help the public interest and tell the truth about the commission. Those people violated the industry code of silence, which says that your loyalty to your employer must always take priority over your loyalty to the public interest. No leaks. No losses.
The top person at the ASC earned in excess of $700,000 last year. (source 2009 annual report of ASC). At the Ontario Securities Commission there were at one time some 90 employees who EACH were earning more that the very top man at the SEC in the US. These salaries paid by the very industry that they are purporting to regulate. In my opinion and experience they are paid this much to say “yes” to the industry. Is it impossible to imagine that this government regulator would become overly influenced and biased by this lucrative arrangement? At the very least it does not follow a process of best practices.
“With 90 OSC employees making more than the chairman of the SEC, it’s time to look at the Ontario securities regulator’s performance and accountability
Its chair and just one of its vice-chairs together make more than all five members of the U.S. Securities and Exchange Commission combined, including SEC chairman Christopher Cox”
http://finlayongovernance.com/ Studies of the enforcement activities of US and Canadian securities regulators and police tell us that the USA did over 600 times more prosecutions than done in Canada during the same time period. Source Canadian Business Magazine Editorial Board, Aug 2007. For the time period 2002 to 2007.
Financial penalties are 10 times higher in the United States than the average Canadian fine. Source Prof P. Puri, Osgood Law School of Canada.
In the US fraudster Bernie Madoff was found guilty and in jail within 6 months. Jailed for 150 years. In Canada, by contrast, Livent Inc. founders fraud trial took the Canadian system eleven years. Six months verses eleven years. Conrad Black had to be prosecuted in the US despite his Canadian background and business interests.
When a broker is fined in Canada by the Investment Dealers self regulatory body (IDA, IIROC, whatever comes next) you will be surprised to learn that the dealership body keeps the money. That is correct, they keep it for themselves. The victims get nothing. I suppose it helps pay their salaries. While at the Ontario Securities Commission, the vice chair Susan Wolbergh Jenah earned $446,000 according to OSC filings. Here she signed exemption orders allowing toxic investment paper to violate securities laws and be sold, which we have talked about earlier. She then jumped ship, and moved to the investment industry self regulator, earning some $700,000. In this capacity she then made the announcement that most investment dealers did not understand this toxic investment paper that they were selling (headlines Oct 2008 lethbridge herald and national). It is ironic that she herself signed the paper allowing these products to be sold in Canada, and then with a doubling of her salary, she then learns that this product she exempted was not understood. It makes me wonder if we double her salary again, to $1.5 mil, what would she then say? I makes me wonder how much money it would take for a public officer to do the job of protecting the public and ignore for a moment the focus on simply protecting ones job. It is also ironic, that I find that the more a person is paid, the greater the likelihood that they will instead act to protect their own livelihood. Strange beast this capitalism that I have worshiped for so long. Time for me to grow up, and move beyond the sandbox mentality that only knows three words, “me, mine, more”.
Where was I? Yes, we were looking at how new and improved these regulatory agencies and self regulators are, and how proactive they are at keeping ahead of the white collar crime curve. Compared to Europe, Australia, and USA, they are at least ten to twenty years late and a few billions short. But hey, the good news is that they are earning a good salary to protect us from crooks.
Where are the regular police agencies when fraud, forgery, negligence, breach of trust and other occur? They are busy with the criminal code, and not very involved with our securities act. They too, are believers that the securities people have things under control. Needless to say, the securities people take care of their own, and rarely even refer criminal offenses to the real police. The RCMP has had a few of these regulators and self regulators join the force, (while keeping their six figure salaries) as volunteers, so some of these financial people have actually infiltrated the RCMP commercial crime unit. This quote from a senior RCMP investigator when asked
“Unless the matters you are concerned about are referred to the RCMP IMET through one of our participating agencies (OSC, IDA, MFDA,MRS) it will not be considered for investigation.”
Source:
Supt. Craig S. Hannaford
Officer in Charge
GTA Integrated Market Enforcement Team
Royal Canadian Mounted Police
Are you beginning to see how “perfect” this system is for getting away with anything?
Remember, shhhhhh. Code of silence.
These investment regulators have truly infected our entire system. They have taken over. I have spoken to many financial victims who have gone a few years trying to solve their financial abuse, and they agree it is almost similar to a hypothetical situation: imagine your local police agency decided to lower their work load, and they “designate” the Hells angels as the “self regulatory” body capable of policing all cocaine and prostitution offenses. After all they are the largest market participant. That would be a very logical “decision” according to some of the self regulators I know of. Then when you have suffered a crime by any drug user, and you go to the police, they would say something like the ASC does, “we have recognized the Hells angels as the regulatory body in this area, and thus we are unable to process your complaint and we ask that you contact the Hells Angels in this matter.............” Off you would go, to try and have your problem resolved by the self regulator. If they get your money, or your property back from the druggie that stole from you, do you think the Hells angels would keep it?
The investment dealers do.
Top industry experts across Canada are calling for a national Securities Crime unit. The RCMP is truly incapable of doing the job. In 200? They were on record of having a full caseload with only 8 cases. By 2007 they had only one prosecution in canada while during the same period the us authorities had over 1200. This national securities crime unit would include investment experts, and might be expected to owe a loyalty only to the public, and not to the very criminals they are investigating. They would certainly not be allowed to be paid by those they are investigating, as is today’s system. A proceeds of crime funded agency could operate with very little public cost. The sooner we get started towards “best practices”, the sooner the stealing of your economic efforts will begin to slow.
We have looked at the crooks, the cunning and clever financial manipulators who manage to steal about half of the economic production of the entire financial system and investment returns the average man is hoping to live and retire on. We have looked above them to the self regulators who are hired and paid by these very people. We have gone up a level to the government regulators who we find, amazingly are also funded by the industry. The only area left untouched in this expose is the role of Purdy Crawford, a private industry lawyer, and why he became the head of the $32 billion dollar restructuring plan, with no government regulators in sight. Another day. Another story.
Where does the buck stop? With your finance department or attorney general who is usually in charge of each provincial securities commission? I have asked Iris Evans of Alberta Finance, in addition to the ASC, for years now, to answer a few questions, if they can, for the benefit of a confused public:
In what public interest are the legal exemptions that were granted to the “twenty” firms selling ABCP , and to mutual fund companies, who applied for and received a legal exemption to “rebate” or “kickback” commissions while they worked diligently to switch clients from independent mutual funds to their own house brand. Two simple case studies out of thousands of legal examples of breaking our laws. These two deserve a public inquiry. I wont say trust me because that saying is usually reserved for people who are NOT to be trusted, but believe me if you will, there are two case studies that will shock and amaze you. What public interest is served by exempting the laws Mrs finance Minister?
What public input or debate was allowed (or why not) into these permissions to violate our laws prior to them being granted?
What public notice was given (or why not) to those people or organizations to warn them prior to purchase
Where is the public inquiry into these matters? Where is the honest disclosure and transparency, or will we have to take your word that everything is fine?
Can you please protect the public in these matters, or will we continue to see protection of the possible crimes, the regulators and politicians in these matters?
So far our finance minister in Alberta (and every other province in the country) cannot answer these simple questions.
Not even Las Vegas lets people count the money unsupervised. Canadians, wake up. This country is your casino. Each person in this country owns a slice of ownership of this great economy of ours, good, bad or otherwise. If it fails, you fail. If it suffers, you suffer. And we are allowing clever, powerful folks to count the money unsupervised. I am here to tell you that they are putting as much as they possibly can in their pockets. It is documented. It is part of the public record. It is something that they can and will refuse to investigate. They win, we all lose.
Get financial minds out of the game of pretending to police themselves.
Or, if your tastes run to riches without morals, get yourself a suit and tie, and commit your crimes within the jurisdiction of the Securities Act of any province. The police will never even know about it. The Criminal code of Canada is for pickpockets and small change artists. The real money is made within the securities game. We own each and every referee in the game.
At the beginning of this article I asked the question.
If I wish to rob a bank, I am subject to the criminal code of Canada.........but if a bank wants to rob the public, what are they subject to?
Answer?
Nothing. No police will come. No commission will raise an eyebrow. No regulator exists in Canada that is not paid by those very banks and financial companies. No self regulator exists that does not represent the interests of its members over the interests of the public.
That is my experience. I have twenty years inside the industry, and nearly thirty now studying it from within and without.
Tell your provincial MLA to conduct a public inquiry into the two case studies, as well as the thousands of other times our laws have been hijacked. Your very economic health depends upon it.
Case study # 1 is titled “Commission kickbacks lead to an $800 million dollar windfall”
Case study #2 is titled “How to steal $32 billion dollars and not get caught”
Larry Elford is a former financial broker, and former CFP, CIM, FCSI, Associate Portfolio Manager, now retired, who left the industry after being unable to associate with the corruption involved. He documents what he experienced at
http://www.breachoftrust.ca and counsels victims of financial abuse free of charge through
http://www.investoradvocates.caThe first crime is the actual abuse of trust, whether it be a financial advisor taking advantage of his client for personal gain,, child abuse, malpractice, embezlement, bribe, whatever.
The second crime is the cover up, involving individuals of considerable power or influence who were not involved personally in the initial wrongdoing, but whose sense of loyalty is stronger than their attachment to honesty and openness. Since exaggerated loyalty may be the very quality that gives such people power and influence (think Liberal party hacks and Adscam), it is hard to know what can be done about loyalty as self serving weakness.
The third crime is the hoodwinking of police and the public with false assurances that all is well.
(last three from the book "DARK AGE AHEAD", by Jane Jacobs
