Jan 30, 2007 04:30 AM
The self-regulatory body that oversees
Canada's securities industry accidentally posted a document on its
website containing the names of more than 1,000 brokers and the number
of investor complaints against them.
The information, which is normally
confidential, is being used as fuel by an investor advocate who says The
Investment Dealers Association of Canada does not do enough to protect
investors. And the incident is also raising privacy concerns.
On its website, the IDA had posted a
Power Point presentation that included a bar graph with aggregate data
about the number of complaints against brokers between late 2002 and
The raw data that was used to make the
graph, including a spreadsheet with names of brokers and the number of
customer complaints, civil claims, criminal claims, internal
investigations, internal disciplinary actions and external disciplinary
actions against them, was also available if the viewer double-clicked on
That information was drawn from ComSet,
a confidential database the IDA uses to assess the relative risk of its
member firms, their branches, or the individuals who work for them,
according to the Power Point presentation. Investment companies are
required to submit information to ComSet.
The supposedly confidential spreadsheet
was discovered recently by Robert Kyle, an investor advocate who does
research for lawyers. Kyle said the information was taken off the
Internet late last week.
But he says it adds weight to arguments
that the government should revamp the rules to give more teeth to
enforcement in the securities industry. Kyle says it appears some
brokers with numerous complaints have not been punished by the IDA, and
investors who searched would not find any disciplinary action against
"I'm hoping that government's going to
look at this and say, "This is unacceptable,'" he said.
The name with the most complaints on
the spreadsheet was Bertrand Trudel, who had 59 incidents listed under
his name, made up of customer complaints and civil claims that occurred
before July 2005.
Late yesterday, the IDA issued a press
release saying there will be a disciplinary hearing for Trudel. This is
the first time the public has learned of IDA allegations against him,
acknowledged Jeff Kehoe, the IDA's director of enforcement litigation.
The allegations stem from incidents
that are alleged to have happened in 2002 and 2003, said Kehoe. He said
the notice was not released because the ComSet data became public,
adding that the timing was "coincidental."
The allegations against Trudel, who was
working at the Joliette, Que., branch of Levesque Beaubien Inc. at the
time (now part of National Bank Financial Inc.), include making
transactions without authorization, making recommendations that were
unsuitable to certain clients, and failing to report a personal interest
in a company in which his clients were investing. They stem from about
eight or nine clients of Trudel's, Kehoe said.
Alex Popovic, the IDA's vice-president
of enforcement, said the allegations are coming out now, after an
attempt at settlement and scheduling hearings.
Popovic said that all of the
individuals who had 10 or more complaints or other "events" against them
in this database had been dealt with.
"At that point in time, there were 35
(registrants) that had 10 or more events against them," he said. "And,
at that point in time, we reviewed each and every one of them. Eight of
them had been disciplined and were out of the industry. Two others were
disciplined informally. Four of the matters were with enforcement
counsel pending litigation. One was transferred to the commission.
Others were in various stages of enforcement activity."
Popovic said the data in ComSet is not
generally made public "because the information itself is somewhat
The allegations are raw and "many have
no merit to them. Sometimes they are allegations that a person's cheque
hasn't arrived in the mail, for example," he said.
Popovic said that the privacy of the
brokers named on the list is "a concern."
"We're examining that issue and how it
Taras Hucal, a Mississauga investment
adviser with CIBC World Markets, is angry the information was made
public. The spreadsheet says there were 21 customer complaints against
him during the relevant period.
About 15 of those are from one family
that had a misunderstanding that's since been cleared up, Hucal said.
The family thought their money had been moved when really the name of
their mutual fund had just been changed, he said.
"You'd be surprised at the kind of
complaints you get," he said.
"You can imagine, when people lost
money with Nortel, everyone would just call the IDA trying to get their
money back," he said. "I'm upset that this kind of information's out
there, because it would give the media or clients or anyone who has
access to it a false idea," Hucal said.