Investors Scrutinizing the Regulators

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IDA defends removal of complaint list
Hearing for advisor: Investor advocate says bad brokers keep working

John Greenwood And Carrie Tait

Wednesday, January 31, 2007

The Investment Dealers Association of Canada yesterday defended its decision to pull from its Web site details of complaints against more than 2,000 brokers that were inadvertently posted, even though such information is regularly available in the United States.

"People are supposed to be innocent until proven guilty, but [anyone who saw the leaked documents] might jump to a different conclusion," said Alex Popovic, the IDA's vice-president of enforcement. "It was never our intent to provide that information."

The leaked allegations made news earlier this week when Robert Kyle, an investor advocate who runs a popular Web site, inadvertently discovered it by clicking a link on a Power- Point presentation posted on the IDA's Web site back in 2005.

By tinkering with a bar graph about the level of annual complaints, Mr. Kyle found several pages of raw data used to generate it, including the names of brokers and a brief description of the "events" reported against them. One embedded spreadsheet lists the names of brokers who have five or more events tied to their name. There are 50 names on this spreadsheet, with one broker allegedly linked to 59 events.

That broker was Bertrand Trudel. The IDA yesterday announced a disciplinary hearing to consider various allegations against Mr. Trudel, including that he "effected transactions without the authorization of his clients," that he made inappropriate recommendations, and that he failed to report his personal interest in a company in which his clients were investing.

Mr. Trudel declined to comment.

Mr. Popovic said it was a coincidence that the notice of the hearing came so soon after reports of the information leak appeared in the media.

The IDA's allegations concern Mr. Trudel's actions when he was a broker at the Joliette branch of Levesque Beaubien Inc., now National Bank Financial Inc.

In an interview, Mr. Kyle said he is angry that the IDA decided to remove the information from its Web site. "I'm just looking for investor protection," he said, noting that many of the brokers with long lists of claims against them are still working with the public long after information about those claims was received by the IDA and compiled in the presentation.

"This database is 18 months old. Where has the IDA been?" he said. "How many more clients have signed up with these brokers since then?"

Mr. Kyle also charged that the IDA lacks the power to punish wrongdoers when it finds them. Once people leave the securities industry, the organization can no longer reach them, he said.

Another problem is a lack of communication between the police and the IDA, he said, adding that he is often called on by law enforcement authorities for help in gathering information. "There are a lot of cases where brokers have admitted fraud and forgery. These are criminal cases and my question is, why are the police not being notified."

In recent years Mr. Kyle has become a well-regarded researcher and advocate for investors. However, in the 1990s after a stint in the securities industry, he was fined by the IDA for not co-operating in an investigation.


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