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Stan I. Buell

stanbuell@gmail.com

The information contained in this transmission is confidential and intended only for the use of the individual or entity to whom it is addressed. If you are not the intended recipient, you are hereby notified that any distribution, copying, disclosure and use of, or reliance on, the contents of this transmission is strictly prohibited. If you have received this communications in error, please notify the sender immediately at sipa.toronto@gmail.com and permanently delete the original message, attachments and all copies.

Making the Case for New Securities Regulations

The Financial Post published the following article which illustrtates the futility of trying to get Canada a national securities regulator. As long as the investment industry regulator complex is fat and happy nothing will change.

In 2003 the "Wise Persons Committee" published their report "It's Time". But obviously it wasn't. Now we have the Canadian Securities Transition Office. But will there be a transition? I am waiting with baited breath.

Making the case for new securities regulations


The terminology differs-- single, common, Canadian, national or federal -- but the conclusion of virtually every study has been the same: There would be significant benefits for Canadians from a new approach to securities regulation to replace the current system of 13 local jurisdictions, each with its own set of regulations enforceable only in its own province or territory.
 - 1935 The Report of the Royal Commission on Price Spreads calls for a national securities presence.

- 1964 The Porter Commission recommends uniform securities regulation either through a national agency with federal legislation, or through a uniform statute creating a single agency.

- 1967 The Ontario Securities Commission (OSC) proposes that the federal and provincial governments jointly delegate their authority to a federally created Canadian Securities Commission.

- 1979 Proposals for a Securities Market Law for Canada, commissioned by the federal government, recommends establishment of a Canadian securities commission and prepares a draft federal statute which provides for federal legislative jurisdiction excluding intra-provincial matters.

- 1994 Federal government proposes to create a Canadian Securities Commission pursuant to federal legislation, excluding intra-provincial matters and provinces not opting in.

- 2003 The Wise Persons Committee recommends a Canadian Securities Commission, preferably in a collaborative federal-provincial scheme.

- 2006 The Task Force to Modernize Securities Regulation (the Allen Committee) recommends management of enforcement on a national basis in either a unified or harmonized approach to regulation.

- 2006 The Crawford Panel recommends a common securities regulator administering a common securities act on behalf of participating Canadian governments.

- 2009 The Expert Panel on Securities Regulation recommends a Canadian Securities Commission to administer a single securities act for Canada.

- 2009 The federal government establishes the Canadian Securities Transition office to lead the transition to a single national regulator within three years.


I hear that the "single national regulator" will be introduced by a flock of flying pigs.

CBC News - Calgary - Bank of Montreal alleges huge mortgage fraud

CBC News - Calgary - Bank of Montreal alleges huge mortgage fraud

The Bank of Montreal reveals a huge mortgage scam being investigated since 2006. It is suing some of its employees as participating. It seems not so long ago that banks were providing mortgages on false documentation without checking with the real owners and then trying to seize the properties when the fraudsters fled. At least they admit that some of its own employees are responsible for facillitating the fraud.

There are other schemes including fraudsters offering to help individuals take out their registered funds and invest in high return schemes without incurring tax. As many vicitmds have found out after their money has disappeared, Canada Revenue expects to tax any withdrawals because the registered plans are simply tax deferral plans. One would hope the inancial institutions should be aware of these schemes and alert its customers when withdrawals exceed a 5% limit.

Al Rosen is absolutely right when he says regulation is lacking.

SIPA recommend a new national regulator for all financial institutions and not just a national securities regulator as proposed by Government. Surely Goverment knows there are issues with regulation of banks and insurance companies. But the problem is even greater. Fraud is a pandemic in Canada. The real issue is that Canada is soft on white collar crime.

The financial crooks need more than jail time. They need to be held responsible for the losses of their victims. They should be forced to spend the rest of their lives paying back their vcitims. They should not be allowed to get off the hook by declaring bankruptcy.

Wake up Canada. Stop the games that financial fraudsters play. Spending a year or so in jail will not discourage fraudsters. Canadians are busy with work and family responsibilities and have not the time to become knowledgeable in medicine, dentistry, plumbing, auto repair, or financial iinvestment. They need to be able to depend upon service providers. Government needs to ensure that service providers are regulated.

Because savings and investments effect all Canadian futures it is essential that the fiinacial services industry is held to a fiduciary standard and puts client's needs first. To even think that Canadians should be responsible for becoming sufficiently educated to look after their own investments is unreal. The complexity of products and the market are beyond the ken of most representatives full time in the industry. How can Canadians earning a living with family responsibilities be expected to gain the knowledge to fend for themselves.

CBC News - British Columbia - B.C. regulators warn of pension scam

CBC News - British Columbia - B.C. regulators warn of pension scam

Canada is rife with frauds and scams. Lack of a comprehensive regulatory system allows fraudsters to operate beyond regulation, and government failure to come down hard on white collar crime encourages fraudsters to prey on unsuspecting Canadians.

Pension scams are not new, but the B.C. warning for investors is timely. You can not make withdrawals from registered plans without incurring tax obligations. The schemes offered are used to get your money. The money is lost, but the victim also has to pay tax on the lost money. All withdrawals from registered plans are taxable.

Look before you leap. Don't fall for these scams. Check with your provincial regulator before you make any investments. Make sure the individual and the firm he respresents are registered with the regulators. If they are not report them to regulators and police.

CBC News - British Columbia - RBC won't forgive elderly scam victim's debt

It is always unfortunate when the elderly are scammed and defrauded. The banks should bear a social responsibility to help protect our seniors and elderly. There are just too many scams that are facilitated by the banks. The Earl Jones Ponzi scheme should have raised red flags at the bank. Numerous real estate investment scams relied on bank facilitation to access registered funds. Mutual fund leverage plans depend on banks facilitating loans when such a strategy is not suitable for the small investors.

It's time that banks are held accountable when they aid these fraudsters,

Ontario Securities Commission Investor Advisory Panel

This new initiative by the OSC is something that is needed, however reaction has been mixed and many questions raised. As a result the Ontario Securities Commission will post new information April 6, 2010 which will include terms of reference.

Several years ago, the first stab by the OSC in the formation of an Investor Advisory Committee ended in failure. Although a consultant had been hired to prepare terms of reference, the OSC did not provide these to persons interested and as a result some likely candidates did not apply.

With the new OSC gambit, some investor advocates raised questions and the OSC wisely decided to re-assess the situation and instead of responding to individuals they would post information for all on their website in time to allow prospects to review the terms of reference before the deadline for application

Where on Earth is Harry Snoek

Where on Earth is Harry Snoek reads the Toronto Star headline on Saturday, March 27, 2010. thsi is also what as many as 200 investors would like to know. The Star reports "The latest tally of those who have come forward to the Star and who are trying in Ontario courts to recoup their losses, Snoek has absconded with more than 34 million."

Another made in Canada Ponzi scheme. It seems almost every day another Ponzi scheme is revealed. The financial market meltdown raised investor concern as the media flooded the country with the latest news of financial failure and the plunging market values. The news made investors wary of making any investments and caused many others to cash in investments to avoid further loss.

Ponzi schemes can not survive when more people want to cash in their investments than new money can pay. No fraudster will tolerate negative cash flow. As long as the cash flow remains positive he can continue to operate. In many of the cases now being revealed the fraudsters operated for decades.

Snoek trade on his father's name as well as church affinity and the faith of his countrymen. The Snoeks came from the Netherlands and attended the Christian Reformed Church. Who wouldn't trust a church going fellow countryman? Many seniors did and lost all their savings.

Harry took over his father's business more than a decade ago and operated as Harry Snoek Limited Partnership. He was involved in real estate development and convinced investors to give him their money for a promissory note that promised to pay them back with modest interest. When the interest payments stopped, questions were asked and excuses provided. More promises made, but not kept. Some investors are trying to get their money back through the Ontario Courts.

Now the victims realize their money is gone and wonder where on earth is Harry Snoek.      

FAIR Canada » Putting Clients’ Best Interests First

"Putting Clients' Best Interests First" is an appropriate headline for this conference on fiduciary standards. From the discussions with participants from Canada, the United States and the United Kingdom it appears as no surprize that Canada is lagging behind in investor protection. The principle reason is of course industry culture which is "me first". The failure of legislators and regulators to hold manufacturers, distributers and sellers of financial products to a fiduciary standard spells trouble for investors.

While lawyers (at least those representing industry) may argue that our standards for duty of care provide adequate protection for investors, they seem to overlook the fact that limitation periods in most provinces have been reduced to two years from six years (the statute of limitations) which means simply that if you fail to take civil action within two years of the causal event you could be statute barred from seeking dispute resolution through the courts.

Most victims of substantial loss will take more than two years to get their heads aroung the impact of this life altering event, find out how to address the issue, and proceed through the industry's process (which unfortunately seems a necessary evil).

If the financial predators had fiduciary responsibility the limitation period is longer, as it should be. If you have a managed account or a discretionary account a fiduciary duty is implied. However, it is common practice for brokers to handle your account as a discretionary account without completing the requisite forms. Completing the forms is not in the broker's best interests as it imposes a higher standard.

Let us hope that something positive will evolve from this important exchange. There is no doubt that the financial market meltdown has raised awareness across the board.

Ontario financier found dead as investor files claim

Ontario financier found dead as investor files claim

The National Post has published further details on the Mander's suicide, his Ponzi scheme in Toronto and how he operated a pyramid to entice his investors to bring in others.

Investors must learn that if it sounds too good to be true .... .

Investors must also ensure that they do not place money with unregulated "advisers", because if they do they are at risk of losing everything with little hope of recovery. Dealing with a regulated person does not guarantee that you will not lose but your chance of some recovery are much greater.

Follow the money.

The Fiduciary Standard and Beyond: Financial Adviser-Client Relationship

This one day conference at the OBA Conference Centre was organized by FAIR Canada and the Hennick Centre for Business and Law. It attracted over 100 individuals from Canada, the United States and the United Kingdom. There were four panels and a luncheon panel with the Ombudsman for Banking Services and Investments as Keynote Speaker.

• Introducing the Fiduciary Standard Debate - FAIR Canada, Hennick Centre, Boston University School of Law, Committee for the Fiduciary Standard, Torys LLP
• Rethinking the Client-Adviser Relationship - Globe and Mail, CFA Institute, Financial Planning Standards Council, U.K. Financial Services Authority, University of British Columbia
• Enforcement and Remedies - Ontario Securities Commission, Groia & Company, Gowling Lafleur Henderson LLP, Miller Thomson Pouliot
• Implementing a Fiduciary Standard and Beyond - Investment Industry Regulation Organization of Canada, Consumer federation of America, Investment industry Association of Canada

There was a good mixture of aprticipants representing regulators industry and investors. The format was panel discussion led by a moderator followed by questions submitted from the floor and presented by the moderator, and also direct questions form the floor.

After Ermanno Pascutto's introduction, Ed Wairzer started off by saying the financial market meltdown has created a new awareness and precipitated widespread public involvement in investment issues. He said "Financial Advisers should be acting in the interests of clients and make full disclosure."

Law Professor Tamar Frankel  was without doubt the star of the conference and recieved a round of applause after her insightful presentation in which she talked about the fundamentals in a direct forceful language that everyone understood. She left little doubt that there must be change.

Peter Smith representing the UK Financial Service Authority also made no bones about the state of the art in the investment industry. He said there is "lots and  lots and lots of bad advice". He estimates the cost to retail investors at 35 billion pounds. He said the retail market needs fixing and it is "clear there should be no industry led solutions".

Pierre Paguet of Miller Thomson Pouliot brought interesting perspectives from Quebec. We believe Quebec is way ahead of TROC in regulation and prosecution of perpetrators. The Markarian decision is a must read for all investors. Paquet reported that the Judge ordered repayment of the loss of $1.2 million, plus expenses, damages, and lost opportunity and then added punitive damages because of the CIBC's behavior to bring the total ticket to over $4 million. This is powerful incentive for industry to tow the line. The Markarian decision is a landmark decision. It is a must read for all investors and is available at http://www.sipa.ca/.
  
Several media representatives were in attendance so some media reporting is expected.

CBC News - Canada - Investors worry after financial 'guru' kills self

Robert Mander was a trusted financial adviser who convinced dozens of previously wealthy Ontarians to invest in a complicated scheme that promised to pay a 25% return. Last week suspicious investors went to court to force Mander and his company E.M.B. Capital Growth Corp to repay more than $16 million. Mander was not in court and police were called to Mander's home where they found his body.

There are other investors and total losses will be much greater. Madoff, Earl Jones, Stanford, Mander .... How many other Ponzi schemes are remaining to be discovered? Investors should check the credentials of their adviser and if he is not registered with the regulators they should do some further investigation to ensure their investments are safe. It is no longer enough to trust your adviser. Pay attention to the Mander story being revealed now on CBC TV.

Calgary man charged in land fraud involving Olympians

The Calgary Herald reports that Olympians were defrauded in Calgary. Ten victims and $500,000. Is Canada to be known to the rest of the world as the land of fraud? Of course this is not special treatment for Olympians. Canadians are being defrauded every day across the country. There is so much of it that it is hardly news anymore.

The good news is that the police have acted quickly. Police forces across the country must ne encouraged and supported to deal quickly with white collar crime. The impact on victims can be devastating.

Now the courts need to also move quickly and ensure that the perpetrators are properly punished and required to pay full restitution.

House approves historic health-care overhaul - MarketWatch

President Obama has a major victory when the House of representatives narrowly passed a bill approving historic health-care overhaul. That is much better news than the gutting of the Dodd bill. It's about time that priority is given to fixing the investment industry and holding participants responsible. Allowing brokers off the hook will not help seniors who depend uon them for financial advice.

The financial market meltdown was brought on be unbridled greed and corruption. Many citizens have lost their savings and are devastated so it is a saving grace that at least much needed improvement in the health-care system may provide succour to those in need.

Can You Trust Your Advisor

In 2009 the CBC produced an excellent program entitled "Can You Trust Your Advisor". They aired it several times which was a great help to raise investor awareness. Several websites provided links to this program but recently it has disapeared from the CBC website and all of the links on other websites are no longer functioning.

Jonathan Chevreau had a follow up article using the title as a headline. His article is still available on the Wealthy Boomer website. I had sent an e-mail to Jonathan and he posted it on his website. The comment was:

Posted by Jonathan Chevreau
May 12 2009

10:22 AM From Stan Buell: While I generally agree with what you say I do not agree with your current article.


Something is needed to provide balance to the industry. Regulators attempt to create the perception that Canadians can trust the industry and that it is well regulated.


I have just received an offer that goes to financial advisors on how to provide leverage up to 3 to 1. One of my brokers told me about 4 to 1, and there was a case not too long ago of a senior leveraged at 10 to 1.


Mutual fund companies regularly offer "leverage plans" to all investors. While the industry may say that investors make their own decisions, the reality is that most investors trust the industry.


How many victims have lost their savings and then found the firms they trusted will claim they have no responsibility and that the investors is responsible for approving the advisor's advice?


You have no doubt heard the IDA explain how a forgery is not always a forgery, to their explanation to victims who claim documents were forged that they are not handwriting experts and so close the file.


If the industry was 95% good as you suggest then they would stand behind their fiduciary responsibilities and would not be so eager to leverage seniors and other small investors ill equipped to assess the risk of leverage or evaluate the investment products offered.


You are talking about an industry that continues to develop products to circumvent the rules or that seeks exemptions to existing rules to sell toxic products to the public.


I agree there are many "white hats" in the industry, but even many of these are limited as to what they can do for their clients. You no doubt have talked to many of them as I have.


The fundamental problem is there are no industry protections for the victims of the "black hats". They must seek justice on their own.


Why has the Expert Panel on Securities Regulation finally recommended that regulators have the power to order restitution and the establishment of an Investor Protection Fund to pay compensation?


That is something we and others have been saying for years. I believe we mentioned it on Linda Leatherdale's show a decade ago when she was still in the business.


The industry/regulators try to create an illusion that is much different from reality. If they want investors to be responsible for all investment decisions and pay only for the trades then why not come out and say it? Why mislead investors with advertising that suggests retirement security can be provided by dealing with advisors?


Why the regulatory differentiation between ADVISERS and ADVISORS?


Why mislead the public with titles like "Financial Consultant", "Investment Advisor" etc. IF they are only SALESPEOPLE?


I suggest that the CBC and the rest of us concerned about the welfare of Canadians and their retirement security can become much more balanced when we see some honesty and integrity in the industry and the regulators. With some exceptions that is sadly lacking.


At least that is my opinion.

I believe these comments are timeless as very little changes.

Read more: http://network.nationalpost.com/NP/blogs/wealthyboomer/archive/2009/05/11/can-you-trust-your-financial-advisor.aspx#ixzz0ipEtE1dv



 

"Naming and Shaming" - from the VancouverSun.com

"Naming and shaming" should discourage most people from wrongdoing, although those without shame will not be deterred. SIPA attempted the "naming and shaming" game a decade ago by having a public webpage "Brokers Hall of Shame" on our website. It was popular with Canadian investors but not so popular with the industry. It posted only information available to the public and published by the regulators or the national news media. Nevertheless, we soon received complaints from the industry ranging from telephone calls to threatened lawsuits.

One broker called to say he admitted he had been disciplined for breaching the rules, but his infraction was minor compareed with those of many others on the list and he did not like being listed with them! I suppose we could have awarded asterisks ranging from 1 to 100. He would have rated about 7.

Telephone complaints from industry were soon followed by threatened lawsuits from lawyers representing clients whose name appeared on our lists. One or two was not a problem: we simply removed the name of the perpetrator as we had lots of other names to show the prevasive wrongdoing in the investment industry. By the time the third threat arrived the British Columbia Securities Commission had followed suit by providing an alphabetical list of persons disciplined. Mission accomplished ... or so we thought. The other provinces failed to follow suit. So we continued asking for this from all the regulators.

One of our great pleasures earlier this year was to read that the broker who had threatened the first lawsuit has once again been disciplined and had previously been released from the major brokerage they were with when first disciplined. As they say "Leopards don't change their spots." Seems also to be true of financial predators.

Earlier this year this year the Canadian Securities Administrators (CSA) announced an alphabetical list of disciplined persons. Mission accomplished again ... or so we thought. Upon closer examination the reality is that the list includes only those persons disciplined by the provincial securities regulators and not those persons disciplined by the Self Regulatory Organizations (SROs), the Investent Dealers Association of Canada and the Mutual Fund Dealers Association. The CSAs have delegated investor protection to the SROs so if any registered representative has been disciplined for cheating investors you will not likely find them on the CSA list.

It's all part of the investor protection illusion created by industry/regulators.

It’s All Over For Fair Finance, Tim Durham; 13,000+ Claims To Be Filed - Representing Investors - Blog Archive

From investorprotection .com

PONZI SCHEMES DEFY REGULATORS

Another financial debacle fleecing investors of $200 million! Listing loans as assets gave investors a false impression of company worth. No outside auditor. Loans to Tim Durham's family and friends.
Regulators are unable to stop frauds and scams from happening, so what is the answer. The perpetrators must be made paupers. They should not be allowed to accumulate until they have repaid every cent. Allowing people to declare bankruptcy and start over is providing a licence to steal.

Transcript of Harper's YouTube interview - The Globe and Mail

Transcript of Harper's YouTube interview - The Globe and Mail

Congratulations Prime Minister Harper. It is always a challenge to respond to the public in real time.

What is really important is the empowerment of the people that is provided by the internet. Communication is improving by leaps and bounds. Awareness of the issues is growing at an ever increasing pace.

More and more investors are learning that many mutual funds are simply not good investments as indicated by the statistics on mutual fund sales versus ETF sales.

SIPA's website established ten years ago has two objectives: 1. To provide a tool for members and a source for links for investment information, and 2. To raise public awareness of the issues investors face.

SIPA also has a blog and participates in Newsvine and Twitter, both of which provide good summaries of news and events.

Newly formed Norshield Victims Committee

The regulators are failing to protect investors and more and more investors are banding together to take action to achieve restitution. Chris Ouslis has recently formed the Norshield Victims Committee and has issued the following news realease.

OSC releases final decision and findings on Norshield Asset Management (Olympus
United Funds) and the breaches of key staff members

Toronto, Canada, March 10, 2010

The Ontario Securities Commission released their decision on Norshield Asset Management (NAM) and the Olympus Hedge Funds. The three key staff members, CEO John Xanthoudakis, President Dale Smith, and Advising Officer and Portfolio Manager Peter Kefalas, were found to be in breach of Ontario securities laws and acted contrary to the public interest. The OSC indicated that NAM lost $159 million invested by 1900 retail investors in Canada. Hundreds of millions more were invested by an unknown number of Institutional Investors in Canada which implies that even more Canadians have been affected, but are unaware.

The OSC Reasons and Decision document is available as:
http://www.osc.gov.on.ca/documents/en/rad_20100308_rev-norshield.pdf

More information is available on the blog web page which can be viewed as:
http://www.norshieldvictims.blogspot.com/

For additional information contact:

Chris Ouslis - tel: 416.708.4931 - e-mail: Norshield.Victims@gmail.com

Investors who lost in 2008 can lose again

Many investors lost money in 2008. If it was due to wrongdoing they may have cause for civil action. However the statute of limitations has been reduced from six years to two years in most provinces. Therefore many vicitms of wrongdoing could be statute barred if they fail to take action within the two years from the cause of the loss.

If you try to resolve your dispute by dealing with the industry complaint handling process you could spend considerable time, and risk being statute barred from taking civil action should you be unable to satisfactorily resolve your dispute. SIPA continues to advise members to seek legal advice prior to taking any action to resolve a dispute with industry and regulators.

If you lost money in 2008 you could be reaching the end of your limitation period. You will need several months to initiate a civil action, so don't wait until near the end of your two year period.

For additional information on limitation periods and getting your complaint resolved visit SIPA's website at http://www.sipa.ca/.

World MoneyShow Toronto - October 20-22

SIPA has entered into an agreement with the World MoneyShow for their show in Toronto October 20-22, 2009. It is a multi-day event for private investors and traders. The show will feature many of the individuals who appear on BNN, media people including Bill Carrigan and Jonathan Chevreau, also Warren MacKenzie and Gail Bebe who recently authored books on investing.

It will be an interesting few days and SIPA is recommending that members take advantage and attend. We will be there and hope to have the opportunity of speaking with members who attend. Admission is free and an invitation will be going out to members September 9th.