OSC INVESTOR ADVISORY COMMITTEE

WHY AN INVESTOR ADVISORY COMMITTEE?

On February 27, 2004 SIPA issued a Five Year Review entitled "the Small Investors Perspective of Investor Protection in Canada." SIPA believe that retail investors are not protected by the regulatory system and when disputes arise are left largely on their own to seek justice through civil litigation. The SIPA Report was issued to make it abundantly clear that there is a huge problem of retail investors losing their savings due to widespread investment industry wrongdoing and the magnitude of this problem is not revealed to the public or to the legislators.

We delivered a copy of this report to the Chair of the Ontario Securities Commission, Mr. David Brown, on February 27, 2005 and this led to the OSC organizing a Town Hall Meeting in Toronto on May 31, 2005. Over 500 people showed up to voice their opinions and ask questions. The OSC undertook to provide answers and these are provided on their website.

Partly as a result of the outpouring from retail investors the OSC decided to establish and Investor Advisory Committee to provide input representing retail investors and in the summer of 2005 engaged a consultant, Ms. Peta Lomberg, to guide establishing this committee. 

OSC INVITES PUBLIC PARTICIPATION

As part of her assignment Ms. Lomberg interviewed a number of individuals including Stan Buell representing SIPA, and later in 2005 the OSC issued an invitation to the public to express interest in participating on this committee. Some 140 individuals applied. The OSC interviewed a number of candidates and selected 10 to serve on the committee for a period of two years. Eric Kirzner was appointed as Chair.

SIPA will provide updates as they become available.

Well, in the two years the Investor Advisory Committee existed there wasn't much to report. There were no public reports. There was no disclosure of what was discussed. At the end of two years the members were advised that their term had ended. No new appointees. The IAC was disbanded. A couple of articles in Investment Executive provide some insight.

Now the industry formed a new committee composed entirely of industry representatives they claim is better suited to determine what is best for retail investors!

Considering the failure of the regulatory regime to protect investors and the continual display of investment fiascos that cost retail investors billions of dollars it is impossible to imagine that the industry committee will contribute anything positive to investor protection. Canadians must speak out and support the many individuals who are speaking out on behalf of retail investors.

Retail investors will become more active in working together and taking effective action until Government acts to revise the regulatory system and provide investor protection. There are some indications that Government is getting the message. The Americans are fed up with Canada's failure to enforce regulations and prosecute the perpetrators of financial crime. They are beginning to prosecute and jail Canadians.

Who could have imagined that Lord Black, holder of the Order of Canada would ever languish in jail for white collar crime.

The ABCP crisis should be a wake-up call to Canada that the investment industry will circumvent regulations, use exemption orders and create complex structured investment products to strip retail investors of their savings. this time they went too far and hurt pension plans and large institutions. As of May 2008 the crisis is not yet over but it is a must resolve situation. the results of failure to resolve this crisis are unthinkable. However the failure of industry to consider the small retail investor motivated small investors into action.

Brian Hunter effectively used the web (Facebook) to mobilize and galvanize retail investors into taking action. The result was that Bay Street was obliged to come up with a scheme to buy off enough retail investors to swing the vote in favour of the proposal that was primarily designed to save the industry. As of May 2008 there is no final court decision, and still the possibility the proposal could fail because Bay Street insists that all the investors must give up their right to sue and there are still some major investors who stand to lose substantial amounts unless there is some revision to the proposal.

Could it be that Bay Street believes there may have been some wrongdoing?

Does anyone seriously think a committee opposed of the industry/regulator top dogs will do anything to protect investors?

Canadians must force Government to act.    

20051125 - OSC News Release lists IAC Members 

20060126 - SIPA congratulatory letter to Mr. Kirzner & IAC members 

Report on First OSC IAC meeting 

20071205 - IAC Committee Member Speaks Out 

Listening to Retail Investors - New industry committee replaces investors.