Small Investor Protection Association (S.I.P.A.)

The Small Investor Protection Association has issued a white paper commenting on the Government's appeal to the Supreme Court of Canada on draft legislation for a national securities regulator. The study calls for the Supreme Court to consider the importance of investor protection to Canadians’ Retirement Security. Amongst other things the draft legislation should include provision for the Investor Protection Fund and the new regulator’s power to order restitution for victims of investment industry fraud and wrongdoing as had been recommended by the Expert Panel on Securities Regulation. This study is a follow-up to SIPA’s submissions to Government, the Expert Panel and the Canadian Securities Transition Office.

Quebec has been leading the way for provincial securities regulators and SIPA had proposed that the Quebec model be followed for a new regulator. It is unlikely that Quebec could accept to degrade their current system so the opt-in provision proposed by Government is essential for the regulatory initiative to be successful.

According to SIPA, a strong National Financial Services Regulator must have a strict mandate to protect consumers if it is to be supported by Canadian small investors.

For additional information:
SIPA’s website at: http://www.sipa.ca/
E-mail SIPA at: sipa@sipa.ca
Or telephone:
Stan I. Buell, P.Eng., President - Tel: 905-471-2911
Ken Kivenko, P.Eng., Chair Advisory Committee - Tel: 905-244-5803

February 15, 2010, Press Release - earl Jones sentenced to 11 years

The Small Investor Protection Association welcomed the sentence received today by Earl Jones, the Montreal "financial adviser" who defrauded clients of more than $50 million. "It's high time that police and the justice system started taking such crimes seriously," said Stan Buell, SIPA's President.

"Jones' crime is just a drop in the ocean, and the legal system has to start to do a better job in enforcing the law and regulations, and ensuring those who deprive small investors of their savings receive more than a tap on the wrist."

Buell pointed out that enforcement in Canada is known world-wide to be lax, and that consumers are very poorly represented in both the making of laws and regulations, and their enforcement. "Canada is a backwater for consumer/investors." The UK has been supporting strong independent consumer representation for decades now. So has Australia. Even the US is streets ahead of Canada in this area.

"It's urgent that Canada's small investors get support from its federal and provincial governments, and their regulators, for a truly independent consumer representative body. If this does not happen soon, someone is going to get through to consumer/investors how much they are being victimized. And when that happens, governments are going to feel the backlash from consumers at the voting polls."

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Stan Buell, Founder & President

Tel: 905-471-2911

February 2, 2010, Press Release - CSA Bad Broker List branded inadequate

Under pressure from investors, the Canadian Securities Administrators (CSA) has quietly and without fanfare published a national alphabetical list of brokers, financial agents and investment advisers who have been disciplined. These are people who have cheated their clients, stolen from them or were simply grossly incompetent in representing their best interests. The list is urgently needed, but is being criticized as “too little, too late”.

Small investors need such a list to know who in the financial services industry to avoid, and it is also a salutary tool for industry colleagues to know who the black sheep and incompetents in their industry are. The CSA list is similar in some ways to the Small Investor Protection Association’s (SIPA’s) “Brokers Hall of Shame” list published 10 years ago.

But the CSA list does not include members of the self regulatory organizations (SROs) recognized by the CSA; the Mutual Fund Dealers Association (MFDA), and the Investment Industry Regulatory Organization of Canada (IIROC). These two SROs provide search mechanisms for disciplined persons on their respective websites.

This means that consumers investing in products sold by investment dealers or mutual fund dealers receive no benefit from this initiative by the CSA. In addition, consumers investing in products sold by insurance companies or banks (who are federally regulated), such as segregated funds, will be unable to check on their representative.

Few of the provincial regulators are disclosing cases of discipline before 2004 whereas the British Columbia Securities Commission (BCSC) lists cases back to 1987 (an additional 17 years). This suggests the extreme and lamentable reluctance of most regulators – who should be protecting the consumer – to do anything concrete to help consumers if by so doing, they would upset some in the financial services industry.

According to SIPA, this is just one more reason why a strong National Financial Services Regulator – provided it has a strict mandate to protect consumers – should be strongly supported by Canadian consumer-investors.

January 28, 2010, Press Release - Special Report on Investor Protection

The financial security of Canadians is threatened following a horrific year for small investors in 2009, which continued and probably accelerated a five year trend; virtually every agency charged with protecting investors capitulated to financial services industry pressure, or failed due to their own inertia and incompetence. Thus a disastrous year for financial markets and the economy was made infinitely worse for small investors by the incompetence of government regulators and their unwillingness to enforce their own regulations.

The financial devastation of 2009 is reviewed in detail in this Special Report on Investor Protection prepared by Ken Kivenko, chair of SIPA’s Advisory Committee, and lays out comprehensively the major disasters that befell Canadian small investors over the period. It is an update of SIPA’s prior Five Year Review issued in 2004. This latest report shows that little has changed for small investors over the last five years, and regulators are still failing to provide adequate investor protection.

Kivenko writes “While the rest of the world is tackling fundamental issues, our regulators toy with minor adjustments to regulations”. He offers what he calls a small sampling of the financial debacles in 2009. The report also criticizes higher mutual fund fees: "Canadian fund MER's are among the highest in the world. thus unduly restraining retirement portfolio growth.“

The report is a call for Canadians to take control of their financial futures. Investors need to use the near financial catastrophe of 2008-09 to focus governments and regulators on making necessary legislative changes. Governments, regulators and financial institutions should all be made aware that continuation of the puerile protection they have been offering investors will have serious consequences, both from investors and from voters. Conversely, if Canadians want to avoid losing their savings due to systemic industry wrongdoing and be able to work towards having a secure retirement, they must make their voices heard.

The complete report is now available on the SIPA website in the Library section at (SIPAca\SIPAInc\library\600-SIPA-Special%20Report-InvestorProtection2009.pdf).

January 18, 2009, Press Release - Expert Panel on Securities Regulation

The Small Investor Protection Association supports the recommendations of the Expert Panel on Securities Regulation in their Final Report released on January 13th, 2009. In addition to confirmation of Canada’s need for a national regulator, the Expert Panel makes recommendations essential to provide investor protection for all Canadians. The Report states:
"- We recommend the following to improve investor complaint-handling and redress mechanisms:
- a securities regulator with the power to order compensation in the case of a violation of securities law so that the investor would not be required to resort to the courts;
- establishment of an investor compensation fund funded by industry to allow the securities regulator to directly compensate investors for a violation of securities law;"

Currently Saskatchewan, Manitoba, and New Brunswick can order compensation of up to $100,000, but the order must be registered in court. Quebec can immediately compensate investors, in an amount of up to $200,000. Investors in other provinces do not have access to such investor protection.

Now all Canadians will have an opportunity to receive equal treatment but only if the Expert Panel’s Final Report recommendations are implemented by Government. Canadians must demand their Member of Parliament support the Expert Panel's recommendations.

The current financial problems have exacerbated the issue of Canadians losing their savings due to investment fraud and wrongdoing. This was previously estimated to exceed $20 billion per year but is likely to be considerably worse for 2008.

SIPA made a formal written submission to the Expert Panel in May 2008 that was supported by the United Senior Citizens of Ontario and the National Pensioners and Senior Citizens Federation. SIPA also participates in the Common Front for Retirement Security and joined in presentations to the Expert Panel later in 2008. Documents are published on the SIPA website at www.sipa.ca.

The Small Investor Protection Association was founded in 1998 to advocate better investor protection and act as a voice for small investors. SIPA incorporated as a national non-profit organization in 1999 and now has members in ten provinces. Additional information is available on SIPA’s website at www.sipa.ca.

October 19, 2007 - Press Release

Many investors are losing their savings due to widespread industry wrongdoing and fraud, and the regulatory system is failing to protect investors. The Small Investor Protection Association (SIPA) estimates these losses to exceed $20 billion per year.

The recent Innovative Research Group study for the Canadian Securities Administrators indicates one million Canadians have been subjected to fraud during the last three years.

As retirement plans move from defined benefits to defined contributions, more Canadians will be responsible for managing their investments and their retirement security will be at risk.

As a result of these developments SIPA made arrangements for members with an issue to receive free initial consultation with a securities litigator who will provide information to help the member decide how best to proceed to resolve the dispute. Several lawyers are offering pro bono services to SIPA to enable this offer to be made.

SIPA jointly with the United Senior Citizens of Ontario and the National Pensioners and Senior Citizens Federation made a submission to the Ontario Ombudsman asking for an investigation into the OSC’s failure to provide investor protection and failure to alert aggrieved investors about reduced limitation periods.

SIPA was founded in 1998 to advocate better investor protection and act as a voice for small investors. SIPA incorporated as a national non-profit organization in 1999 and now has members in nine provinces. Information is available on SIPA’s website www.sipa.ca.

For further information: Stan Buell, President, (905) 471-2911, stanbuell@rogers.com

SIPA PRESS RELEASES

September 9, 2010 Press Release - National Securities Regulator

February 15, 2010, Press Release - earl Jones sentenced to 11 years

February 2, 2010, Press Release - CSA Bad Broker List branded inadequate

January 28, 2010, Press Release - Special Report on Investor Protection

January 18, 2009, Press Release - Expert Panel on Securities Regulation

October 19, 2007 - Press Release

July 9, 2007 - Press Release

April 26, 2007 - Press Release

November 16, 2006 - SIPA Press Release

January 9, 2006 - Concerned Canadian Seniors and Investors Press Release

June 17, 2005 - SIPA Press Release

February 19, 2004 - SIPA Press Release

SIPA Inc.