JANET MCFARLAND AND TARA PERKINS
Tuesday, April 8, 2008
Canada's banking Ombudsman and brokerage regulator are both contending
with multiple complaints from individual investors who have been stuck
holding commercial paper that's been frozen since August.
The Investment Dealers Association of Canada has received 88 complaints
from investors whose brokers recommended they buy third-party
asset-backed commercial paper (ABCP) investments, spokeswoman Connie
Craddock said yesterday.
The agency, which is responsible for regulating financial advisers, is
investigating some cases, but has not levelled allegations against
“This is an unusual situation where you've got so many retail investors
all concerned about one issue, so it is an unusual and unique
situation,” Ms. Craddock said.
The IDA is looking at complaints on a case-by-case basis to assess
whether investors were provided with faulty information about the risks
or suitability of investments.
While the IDA can sanction brokers for inappropriate behaviour, it does
not recover lost funds for investors.
Meanwhile, the ongoing restructuring of the $32-billion market for
non-bank ABCP is posing a challenge for the Ombudsman for Banking
Services and Investments (OBSI).
Part of the difficulty is that the Ombudsman's job is to investigate
complaints from financial sector clients who have lost money, and make
recommendations on whether they should get it back.
It's not yet clear how much money – if any – ABCP investors are out.
The Ombudsman, David Agnew, has been watching developments closely.
He even signed up – out of interest's sake – for a chat group of ABCP
investors on the social networking website Facebook.
Besides the restructuring plan for the sector, another key determinant
of any investor losses will be the “relief plan” that's expected for the
1,400 clients of Vancouver-based brokerage Canaccord Capital Inc., a
development that Mr. Agnew has been watching for.
“The clients of firms that we've received complaints about, their
complaints haven't been dealt with because the firms have been waiting
the outcome of this process to resolve those complaints,” Mr. Agnew said
“This isn't your typical ‘I've got a problem with my broker' case,” he
OBSI posted a notice on its website Friday noting that it “has received
several complaints from retail investors about asset-backed commercial
“We encourage any investor who wishes to complain about ABCP in their
accounts to put that complaint in writing to their investment firm,
along with any supporting documentation and notes, with a copy to OBSI,”
OBSI can make recommendations for losses of up to $350,000.
It views itself as an alternative to the courts, and is aware that it
could face a potential onslaught of complaints if the Purdy Crawford
committee's plan to restructure the third-party ABCP market passes but
certain investors remain unsatisfied.