Investors Scrutinizing the Regulators

Home Page


Securities Regulation In CanadA

Fox Guarding the Hen House


 Dec. 8 hearing sets precedent


Murray Lyons


December 01, 2005

The Saskatchewan Financial Services Commission will preside over a precedent-setting hearing Dec. 8 as lawyers for Wade MacBain and two other officials of the former Matrix Financial Corp. argue the commission should shut down a disciplinary hearing launched by the Investment Dealers Association of Canada (IDA).

MacBain, a former financial planner, is being investigated by the IDA over whether he convinced some former clients to make investments that were inappropriate for their risk profile. The clients are also pursuing him in a civil lawsuit.

MacBain is alleged to have convinced clients to invest heavily in Saskatchewan Wheat Pool stock after the former co-op grain company turned itself into a public company in the late 1990s.

When Pool shares tanked a few years after the company's initial public offering, many of MacBain's clients, including farmers and farm widows, claim their retirement savings were nearly wiped out.

In the past year, lawyers for MacBain and former Matrix officials Edward Neufeld and Fred Smith have argued the IDA lacks jurisdiction in the case. Neufeld was a former compliance officer for Matrix while Smith is named because he was the "ultimate designated person" at Matrix.

Dean Murrison, of the legal section of the securities division within the Saskatchewan Financial Services Commission, says other provincial commissions, such as the Ontario Securities Commission (OSC), have been involved in IDA cases. However, this is a first for the Saskatchewan commission.

"It has happened in other provinces. The OSC hears appeals from the IDA all the time at various stages," Murrison said. "So the whole thing is new for the commission here even though it's a power that's been around forever."

The commission is seeking outside counsel to advise commission members as the IDA and lawyers for MacBain, Neufeld and Smith make their arguments, Murrison said. The Dec. 8 hearing in Regina is open to the public.

Warren Funt, the IDA's vice-president of member regulation for Western Canada, says the IDA has never heard the main body of evidence against MacBain and the former Matrix officials because of the many procedural appeals of its process. The IDA first met on the case a year ago in Saskatoon, where MacBain's lawyer immediately began challenging the IDA's jurisdiction.