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Watchdog leaks brokers' data

Dealers' association accidentally posts confidential complaints on its website


Jan 30, 2007 04:30 AM


Tara Perkins


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 mid-2005.

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 the graph.

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 them.

"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 inflammatory."

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 happened."

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.


IDA posts

Comset data: