Monday, April 07, 2008
Eight months after the $35-billion
market for asset-backed commercial
paper froze up, Canada's banking
watchdog has serviced notice it is
looking at stepping in.
"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," the
Ombudsman for Banking Services and
Investments said in a statement.
David Agnew, the ombudsman, said he
decided to take the step to help
steer angry ABCP holders through the
complaint process. The statement was
also posted to a Facebook site for
individual investors lobbying to get
their money back.
"We just thought we would be
helpful," said Mr. Agnew.
More than 1,800 individuals hold
upwards of $300-million of the
frozen notes. Many believe the ABCP
was a flawed product that should
never have been sold to them.
Under a proposed restructuring, the
frozen paper would be converted to
new long term notes. But what has
many investors fuming is that as
part of the deal, the banks that
created and sold the ABCP would be
released from any legal liability.
Mr. Agnew said his office typically
starts looking at a complaint only
when the two sides have failed to
come to a resolution on their own.
"We exist to be an informal
alternative to the legal system," he
"We're not the courts and we are not
The body regulating Canada's
brokerage industry is also
investigating multiple complaints
from individual investors whose
brokers sold them ABCP, an official
with the organization said on
Connie Cradock, vice-president of
public affairs at the Investment
Dealers Association of Canada said
the body, which can fine, suspend or
ban members for wrongdoing, has
registered a higher number of
grievances than is usual over a
"It is not often that you have a
situation where you have multiple
complaints," Ms. Cradock said.
"I don't think any of us can recall
one situation which has affected
this large a number of retail
investors in different ways," she
Ms. Cradock said investors had a
variety of complaints relating to
sales of ABCP, including
misrepresentation of the investment
by their broker as well as the
suitability of the investment.
Ms. Cradock said she couldn't say
how long it will take the IDA, which
is a national, self-regulatory
organization governing more than 200
member firms, to finish its
investigation and make a decision
whether to hold hearings.
"It is an extremely complex issue so
it is involving lots of looking at
documentation," she said.
Meanwhile, Canaccord Capital, one of
the backers of the restructuring, is
said to be putting together a
proposal to improve the terms of the
restructuring for retail investors.
Yesterday sources said the firm is
days away from tabling an offer.