A former principal at Matrix Financial says he is
pleased with a recent Saskatchewan Court of Appeal ruling that found the
Investment Dealers Association of Canada (IDA) took too long to pursue
disciplinary action against him.
The court ruled last month that Fred Smith of Saskatoon should have had a
hearing long before seven years were up on the merits of whether he had failed
to provide enough supervision to former colleague Wade MacBain, who is alleged
to have overloaded his clients' portfolios with Saskatchewan Wheat Pool stock,
causing some clients to lose tens of thousands of dollars of their retirement
Smith was named in the IDA disciplinary action because he was designated
as the "ultimate designated person" at Matrix in relation to MacBain between
October, 1995, and June 1999. Smith is still an IDA member and has worked to
rebuild his career at another financial services firm.
The court ruling stated the unfairness of the charges hanging over
Smith's head for seven years were amplified because the lack of clarity in the
IDA's own bylaws relating to former members meant MacBain himself could not be
disciplined by the IDA.
Even though Smith is still an active IDA member, the court ruled the IDA
cannot have an open-ended time frame for pursuing current members.
"The continuation of the prosecution for a period of seven years, and
possibly several years more given the time needed for hearings and possible
appeals, amounts in our view to an abuse of process," Justice Nicholas
Sherstobitoff wrote for the court. "His (Smith's) reputation was harmed by the
bad publicity in 2000 to the extent that his new business dwindled from $12
million (of client investments) annually to zero within two years."
Smith told the appeal court it took until 2004 before his business volume
was restored to previous levels.
In an interview Tuesday, Smith said he is pleased the court acknowledged
the extent to which the IDA investigation had affected his career and income as
a financial adviser in the early part of this decade.
"As it said in the judgment, it did cost," Smith said. "I guess that's
part of the regulatory process. It's nice that it's over and hopefully life can
return back to normal."