Mission Statement
SIPA has a mission:
- to aid public awareness of how the investment industry operates;
- to provide guidance to members who have a complaint about investments
with a "Financial Advisor", investment dealer, fund company,
bank, insurance company or other seller of financial products;
- and to pursue improvement of industry regulation and enforcement.
Organization
The Small Investor Protection Association (SIPA) was incorporated (Ontario
corporation number 1327366) as a national non profit organization at the
end of January, 1999, with headquarters in Markham, Ontario.
SIPA is a voice for small investors and advocates for the interests of investors
by making submissions and presentations to governments and regulators. SIPA has
over 600 members in ten provinces.
SIPA is supported by members and private donations. Recently SIPA has been
the recipient of Cy Pres contributions from class actions which helps to
sustain SIPA as it does not receive government grants nor financial support
from the investment industry.
SIPA is a non-profit organization and not a
registered charity and therefore does not have a charitable tax number.
What We Do
SIPA acts as a Voice for Small Investors
We define small investors as Canadians who have investments from a few
thousand dollars to several million dollars, but do not influence the
market or individual share prices and do not have a financial manager
on staff. They may invest on their own or may depend upon an investment
advisor.
Publications and web site
SIPA provides a bi-monthly newsletter, the SIPA Sentinel, for members
and supporters. The Sentinel provides articles on current issues and addresses
those issues that affect small investors.
SIPA's website provides information for the public. The website was initiated
in 1999. In 2000, Industry Canada invited SIPA to
participate in the Canadian Consumer Information Gateway project and now
provide links to the SIPA website.
Reports and Submissions
SIPA prepares reports and regularly makes submissions
to governments and regulators. SIPA was invited to appear before the
Standing Senate Committee on Banking Trade and Commerce on April 14th
2005, subsequent to making a submission, “It’s a Matter of
Trust”, on
February 14th, 2005. This report was published on the Department of Finance
website, as well as the SIPA website.
SIPA participated in The OSC Town Hall Meeting in 2005 and participated
in the planning and on the panel along with representatives of the OSC,
IDA, MFDA and the Ombudsman. The CBC hall in downtown Toronto was filled
with 500 people and the crowd actively participated with comments and
questions. The event ran 20 minutes over time and was finally closed
with people still lined up at the floor monitors to make their comments.
Priorities
Investor Protection
SIPA believes that the current investment industry regulatory system
does not provide adequate investor protection. Although regulators claim
to give priority to investor protection the fact is their approach is
only preventative and is a balance between protecting investors and making
capital available for ventures. Each year Canadian small investors are
losing billions of dollars due to widespread industry wrongdoing.
In
2004 SIPA published a report, “The Small Investors’ Perspective
of Investor Protection in Canada”. This report was delivered to
Canada’s top leaders
and lead to the OSC sponsored Town Hall Event in Toronto, May 31, 2005.
Also in 2004, SIPA partnered with CARP to produce a report “Giving
Small Investors a Fair Chance”. This report recommends the federal
government establish a national Investor Protection Agency with a primary
mandate to provide remedial investor protection.
SIPA also recommended a national financial services regulator that would
regulate banks and insurance companies as well as investment dealers and
mutual fund companies as the latter produce investment products that are
not classed as securities although investors may not see much difference.
Segregated funds and principal protected notes are examples. Government
has introduced an initiative to implement a national securities regulator
and established the Canadian Securities Transition Office but encountered
resistance to change. This commitment has been renewed in the 2013 budget.
Disclosure
Adequate disclosure of details of risks and costs should be made prior
to the sale of investment products in a way investors understand with
Point of Sale Disclosure (POS) for all investment products. The regulators
have initiated Fund Facts disclosure but this can be provided after the
sale which defeats the purpose of POS.
The regulators should also disclose and make investors aware that they
allow the industry to deceive investors by calling sales representatives "Financial
Advisors". Although there is a registration category of "Adviser" for
persons qualified to give advice, there are few individuals in that category.
There is no legal requirement for sales representatives ("Financial
Advisors") to have a fiduciary responsibility or even to look after
investors' best interests. It is truly "Investor Beware".
Whistleblower Protection
SIPA believes that whistleblower
protection should be extended to all Canadians and not just to federal
civil servants. SIPA has made submissions to the federal government to
extend the legislation to include all Canadians working for industry and
private enterprise as well as provincial and municipal governments. Providing
whistleblower protection will encourage whistleblowers to come forward
and enable police and regulators to work effectively.
Accountability and Governance
The Gomery Commission has alerted Canadians to the lack of accountability
and governance that is robbing Canadians on a regular basis. It is not
only the federal government but also other levels of government and industry
that are failing to provide accountability and governance. This lack
of integrity is costing ordinary Canadians to suffer financial loss and
increasing tax burdens.
The Accountability Research Corporation report on business income trusts
made public in 2005 detailed how the failure of income trusts to properly
account resulted in many Canadians losing their income and savings. Government
reacted and revised legislation to prevent this abuse and protect investors.
Special Judiciary
White collar crime has taken second place to violent crime and the courts
are overburdened. A special judiciary is needed for white collar crime
that understands the impact on the victims lives and how big this problem
is.
Aggrieved investors must rely upon civil litigation to obtain justice. The
current regulatory system is not providing effective investor protection
and the complaints handling offered by the industry and the industry sponsored
dispute resolution mechanisms are failing investors. Civil litigation if
the final resort for victims to gain justice.
Limitation Periods
The right to take civil action is being eroded. Several provinces have
reduced limitation periods for civil litigation from six years to two years.
The limitation period is the time that a victim has from the event that
is cause for an action until action must be taken (a statement of claim
must be filed).
Many victims that have lost their savings due to industry wrongdoing are
unable to recover in two years to deal with important issues. Those who survive
often take more than two years to find their way through the convoluted regulatory
system. Therefore two years is not enough. In 2005 SIPA joined with CARP
and USCO to demand re-consideration of this issue. The three organizations
participated in a media conference and later met with the Ontario Attorney
General’s staff. Later in 2005 a petition was read in the legislature.
This issue remains to be resolved.
