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.

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.