Investors Scrutinizing the Regulators

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Fox Guarding the Hen House


 Investment panel won't drop charges


Murray Lyons


November 26, 2004

An Investment Dealers Association of Canada panel rejected arguments Thursday for the dismissal of IDA charges against former financial adviser Wade MacBain and two of his former supervisors at Matrix Financial Corp.

MacBain has been accused by eight former clients of exceeding their investment risk profile by putting too much of their money into Saskatchewan Wheat Pool shares in the late 1990s. That company's share price subsequently plunged. The stock was issued at $12 and now trades in the 30-cent range.

Shaunt Parthev, MacBain's lawyer, says MacBain was forced out of the financial services industry when complaints against him surfaced in the form of lawsuits from former clients.

Parthev argued the IDA should have done something then when MacBain was still in the industry. He says bringing IDA sanctions against MacBain and the others is pointless.

"The IDA had an opportunity to proceed with dispatch back then, but they sort of sat on their hands for a year and a half," he said. "It's our position that there is a reason they did that, because these are technical sort of breaches. Frankly, chasing these individuals now at this point in time does not serve the public interest."

But the IDA panel, headed by Regina lawyer Garrett Wilson, decided an IDA hearing into allegations that MacBain and his supervisors at Matrix violated IDA regulations will go ahead.

Parthev says he doesn't know how soon that will be. A spokesperson from the IDA could not be reached to explain when the hearing might occur.

MacBain's lawyer argued that the eight people who brought complaints to the IDA appear to want to use the association to help advance their separate civil lawsuits.

"These individuals all have civil suits and none of them have done a thing to pursue those civil suits. We haven't even got into discovery on the ones that are at issue in this case," Parthev said. "They want to use this (IDA) process to advance their case and we say one has nothing to do with the other."

"There is a place to go to have their cases heard. It's in the civil courts. Let's get on with it."

In the IDA process, Parthev says his clients also have limited rights to defend themselves compared to a civil court process.

Parthev was also unsuccessful in convincing the IDA that the organization did not have authority over charges that arise from British Columbia, where several former MacBain clients reside. The IDA has charged MacBain should have been licensed by the B.C. Securities Commission to sell stocks to clients in that province, but Parthev argued the IDA shouldn't be doing enforcement work for that provincial body.