Investors Scrutinizing the Regulators

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Securities Regulation In CanadA


Fox Guarding the Hen House

   

 

 

Gordon Simpson

v.

Investment Dealers Association of Canada

 

 

Appeal heard by the Alberta Securities Commission

[2005] A.S.C.D. No. 1016

 

 20      By letter of 7 June 2004 Farrell responded to Simpson, advising him that "there is insufficient evidence of regulatory violations to necessitate an investigation in this case. Accordingly, our file in this matter remains closed". Earlier in that letter, Farrell said that "the particulars of our review are confidential", and refused to elaborate on the factors considered by IDA Staff in assessing Simpson's complaints. Her letter also included the following statement:

 

Please be advised that as a not for profit organization with limited resources, the [IDA] cannot formally investigate all complaints brought to its attention ... the courts have ruled that the [IDA] must have clear and convincing evidence of misconduct [to impose disciplinary sanctions].

 

 21      Simpson responded in a letter of 24 June 2004, challenging the explanation of "lack of financial resources" and concluding as follows:

 

An investigation would in any case be necessary to establish the clear and convincing evidence you refer to in your letter. I also put it to you that the courts set out this standard of evidence as one that the IDA must meet to impose sanctions after a hearing of the evidence gathered by an IDA investigation not one that the complainant investor must meet to have the IDA commence an investigation.

...

  26      Simpson struck us as a sincere man, genuinely frustrated with what he perceives to have been mishandling of his investment accounts over the years and with his lack of success in obtaining satisfaction through regulatory authorities, specifically the IDA.

 27      Without reaching any conclusion on the merits of his original complaints, or how his complaints were handled, we express our sympathy for Simpson and his frustration. However, as we explained to Simpson at the hearing, securities regulation is a matter of law, and we, as well as Simpson himself, are bound by those laws. Here, we must identify and resolve the issues before us in accordance with those laws.

...

 58      To summarize, for the reasons discussed above we have found that:

--

the IDA Staff Determination not to conduct any further investigation of Simpson's complaint was not a "decision" as defined in either IDA By-Law 20.1 or subsection 73(1) of the Act; and


--

even had the IDA Staff Determination constituted a "decision", Simpson was not "directly affected" by it for purposes of subsection 73(1) of the Act.

 59      We therefore conclude that we have no jurisdiction under subsection 73(1) of the Act to determine this matter. It follows that there is no basis on which this appeal can proceed. This appeal must therefore be dismissed.

 

Albert Securities Commission
2006 Oversight Review of the Investment Dealers Association of Canada, Prairie Regional Office

11 June 2007


Extract

Throughout the report we have highlighted certain deficiencies as significant. Significant deficiencies are findings that fit into one of the following categories:

  • Contravention of the terms of the delegation or recognition orders

(see Gordon Simpson v IDA)

 

Items that may effect the IDA's ability to continue to meet the terms of the delegation or recognition orders

  • Significant procedural deficiencies

  • Repeat findings that the IDA has not sufficiently addressed

  • Supervisory issues


Alberta Securities Commission report highlights 'deficiencies' at IDA office

01 August 2007


ASC audit reveals IDA deficiencies

31 July 2007

"the ASC says that one forgery case originally resulted in a reprimand, while another, which involved a designated person forging a signature and misleading the IDA, ended with a warning letter."

"[The IDA says] that there are two types of forgery issues one that involves fraud and another that is simply a case of a dealer filling in a missed signature for his or her client and that the two are dealt with differently. "A forgery is not always a forgery," he says. "It's not that simple in most circumstances.""

-Warren Funt, VP. Investment Dealers Association of Canada

 

IDA Recognition Order in the Province of Alberta

Appendix A

Condition of Recognition

Recognition Order

Excerpt:

2.

 

The IDA acknowledges that the following are conditions of this Recognition and that failure to satisfy these conditions may result in the revocation of this Recognition.

 

a.

The IDA will maintain within the Province of Alberta a staff complement sufficient to ensure that all necessary investigations, disciplinary actions, and enforcement proceedings are conducted and concluded within a reasonable period of time following receipt of a complaint or other information that leads to the investigation, disciplinary action, or enforcement proceeding.