In Ontario the Limitations Act, proclaimed January 1, 2004, reduced the general limitation period from six years to two years. The Limitation Periods have also been reduced in Alberta, Saskatchewan, Newfoundland and Quebec.
The reduced limitation periods will probably apply to most civil actions regarding investment disputes. There are certain exemptions to the Limitations Act most notably the Securities Acts but these exemptions do not cover all investment issues nor civil litigation. Aggrieved investors should contact a securities lawyer to seek clarification on this issue as soon as a problem is suspected and prior to taking any action towards resolving a dispute.
The complaint process mechanism currently
available for the consumer/investor will depend upon the type of company
used by the investor. The regulation of the investment industry is
generally a provincial responsibility although banks and insurance
companies are federally regulated. Responsibility for regulation and
investor protection has been
delegated to self-regulatory organizations (SROs) such as the Investment Industry
Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association
(MFDA). The industry is regulating itself and has an inherent conflict
of interest with regard to investor protection.
Historically limitation periods were six years for matters not of a fiduciary nature and without limit for fiduciary matters. In Ontario the Limitations Act reduced limitation periods from six years to two for non-fiduciary issues and from unlimited to fifteen years for certain issues. Many of the other provinces have also unfairly reduced the limitation periods. Although we believe that financial advisors and their firms have a fiduciary duty to investors, the industry regularly denies fiduciary duty. Reduced limitation periods erodes Canadian investors' rights.
In December 2007 SIPA made a submission "Comments on Proposed Amendments to IDA Complaint Handling Requirements Client Complaint Handling Rule & Guidance Note and Amendments to By-Laws 19 and 37 and Policy No. 2." This submission was prepared by Dr. Pamela J. Reeve, Member SIPA Advisory Committee, and states "The proposed amendments do not appear to reflect a sufficient awareness of these risks and vulnerabilities."
Preparation for making a complaint
In order to get the maximum benefit from any expert consultation, you
should ensure that all of your documentation is in order. An expert will
need to see your contract, or new account opening form (Know Your Client
form); statements provided for your account; and any other correspondence
or records. You should also prepare a written outline of your perception
of the problem. A summary of the value of your account at each year-end,
the cash contributions, cash withdrawals, and commissions paid is helpful.
No one else will be as concerned as you about your loss. Therefore, it is imperative that you learn as much as you can to improve your chances of gaining satisfactory restitution.
Check with the provincial securities administrator in your province regarding the registration of the firm and the individual with whom you are dealing. Ask if there have been disciplines or restrictions on registration. The SROs will also provide information regarding your representative if he is a member of those organizations. The Canadian Securities Administrators have initiated an alphabetical list of persons disciplined but the list does not included persons disciplined by the SROs and the records go back only a few years, so reference to that source could be misleading. The AMF in Québec is taking a more pro-active role in helping aggrieved investors.
In the United States, the National Association of Securities Dealers (NASD) provides information of firms and this includes many Canadian firms doing business in the United States. NASD will provide information upon request. You can access the website at http://www.nasdbrokercheck.com.
How to get your complaint resolved
There are a number of securities litigation cases that have established precedent, but most cases do not reach the courtroom. Generally cases are settled out of court which helps to limit the cost of litigation. A Supreme Court Judgment in the Laflamme v. Prudential-Bache case should provide encouragement for investors now in litigation with their brokers. the Supreme Court acknowledged that Prudential-Bache had a fiduciary duty and awarded Laflamme complete restitution.
A more recent
case in Québec, Markarian v. CIBC World Markets,
provided not only restitution of losses, returns and expense but also
awarded moral damages of $50,000 each and punitive damages of $1,000,000.
this is a landmark case. We believe that most victims of financial crime
should be requesting moral and punitive damages as most victims suffer
extreme stress and are unfairly treated during the complaint handling process.
Some lawyers will provide legal services on a
contingency fee basis. This means they will only
charge you if they are successful in getting restitution. The fess may seem
high and in the range of 30% but if you are unable to proceed with civil
litigation otherwise, it is an option worth considering.
Does your complaint sound like this?
We signed the account opening application but we did not get a copy after our investment advisor completed it. Our Investment Advisor said he would look after our investments. We became concerned when our account lost value. We raised our concerns but response was very slow. They made us feel our advisor had done everything right and it was really our fault.
Case History 31120 - Investor's experience with a Big Bank Broker.
As an estate executor I discovered that my relative in their senior years was signed up for inappropriate investments by a major brokerage firm. The account was used to generate commissions while the value of the account fell drastically.
Case History 31117 - Executor discovers financial abuse of senior.
Members with a complaint
Members with a complaint should contact SIPA for current developments and ensure tat you complete SIPA's First Alert System. You will also be provided with additional Shared Documents for Members that include significant judgments in securities litigation cases.
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