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IDA By-Law 20
(subject to change - too bad they have to
improperly destroy careers in the process)
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"Badges?
We ain't got no badges.
We don't need no badges.
I don't have to show you any stinking badges.”
So go the famous lines from The Treasure of the Sierra Madre
, the 1948 Humphrey Bogart movie.
It could
also be a quote from the Investment Dealers Association of Canada while thumbing
their noses at the securities commissions. |
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(click on picture for movie clip) |
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Saskatchewan Court of Appeal
dismisses the
Investment Dealers
Association of Canada |
20 June 2007 |
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"We
accordingly find that the IDA is barred by bylaw 20.7 from
proceeding with discipline proceedings against MacBain and
Neufeld. Its appeal is dismissed with costs to
be taxed." |
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The Saskatchewan Financial
Services Commission's decision still stands.
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“Since the IDA has no authority to regulate former
members or former approved persons either under
its bylaws or in contract, it has no jurisdiction.”
- William F. Ready, Q.C., Commissioner
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06 February 2006
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On
June 22, 2007
(2
days after the Saskatchewan Court of Appeal decision)
the
IDA proposed changes to their bylaws
clearly in defiance of the SFSC decision.
Several IDA members, in
2004, were correct in questioning the IDA's jurisdiction on
this particular point.
Is the release below intellectually
dishonest or simply deceptive and harmful to not only the
IDA members but also the public? |
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Excerpts from:
http://www.osc.gov.on.ca/MarketRegulation/SRO/ida/rr/srr-ida_20070622_bylaw20.jsp |
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"Proposed Rule Amendment
The
proposed amendment would make clearer the intent and
objective of the continuing jurisdiction provisions in
By-law 20. It would make express reference to the fact that
the IDA maintains its jurisdiction over Former Registrants
and may bring an enforcement hearing against a Former
Registrant so long as it does so no later than five years
from the date that the Former Registrant ceased
registration." |
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"Continuing
Jurisdiction
Recently, there have been judicial challenges to the IDA's
continuing jurisdiction over Former Registrants, on the
basis that the true intent and meaning of By-law 20.7(1), is
that if an enforcement proceeding is not completed five
years from the date on which the Former Registrant ceased to
be a Registrant, then the IDA loses its authority to
discipline the Former Registrant for the acts committed
while the person was registered.{4}
This interpretation is patently incorrect, however, to
resolve any uncertainties, the IDA seeks to make clearer the
language in this provision to unequivocally state that the
IDA continues to have jurisdiction over Former Registrants
so long as an enforcement proceeding has commenced (i.e. a
Notice of Hearing is issued) no later than five years from
the date on which the Former Member or Approved Person
ceased to be registered. In other words, By-law 20.7(1) does
not provide a time limit for the IDA to complete an
enforcement proceeding, but rather, it is the limitation
period for initiating enforcement proceedings." |
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The IDA
is required to publish for comment the proposed amendments
so that the issue referred to above may be considered by OSC
staff.
The IDA
has determined that the entry into force of the proposed
amendments would be in the public interest. Comments are
sought on the proposed amendments. Comments should be made
in writing. One copy of each comment letter should be
delivered within 30 days of the publication of this notice,
addressed to the attention of Nancy N. Mehrad, Investment
Dealers Association of Canada, Suite 1600, 121 King Street
West, Toronto, Ontario, M5H 3T9 and one copy addressed to
the attention of Manager of Market Regulation, Ontario
Securities Commission, 20 Queen Street West, Toronto,
Ontario, M5H 3S8.
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Really? I thought the
SFSC was pretty clear.
“Since the IDA has no authority to regulate former
members or former approved persons either under
its bylaws or in contract, it has no jurisdiction.”
What is so confusing about
that? |
Impact
One
could
easily
imagine
an
unscrupulous
broker
misappropriating
funds
from a
client,
let's
say
Monday
morning,
resigning
from the
member
firm
that
afternoon,
and the
SROs are
powerless
to go
after
the
broker. (Not
that
they
have
ever
had enabling
legislation to do
anything
anyway).
But now
the
decision
has been
presented
before a
court
and it
still
stands.
Is
this
what
Canadian
investors
deserve?
Since
the SFSC
relies
upon the
SROs to
perform
a
function
that
they
would
otherwise
perform
themselves
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investors are
not
properly
protected.
Will
the SFSC
pick up
where
the SRO
system
fails?
Will the
SFSC
fill
that
lacuna?
Obviously
the
contractual
agreement
by which
the IDA
regulates
its
members
is
insufficient.
Why
don't
the
statutory
regulators,
which
administer
the securities
laws, do
their
own job
and
protect
investors
from
unscrupulous
brokers
instead
of
relying
upon the
industry
to do it
themselves
- which
they
obviously
can't -
legally
or
otherwise.
This
is very
serious
and very
scary.
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Saskatchewan
regulator rules against IDA |
10 February 2006 |
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"I suspect we are
going to see a flurry of others making similar applications until
the Saskatchewan decision is either overturned or confirmed," says
Popovic. Since the SFSC applies only in Saskatchewan, it's too
soon to say how much impact it will have in the rest of Canada.
I think the Ontario
divisional court decision trumps the Saskatchewan commission
decision," Popovic says. "We'll have to wait and see."
-Alex Popovic, VP of
enforcement, IDA
Wait and
see what???
Mr. Popovic is
correct that an Ontario Court decision does "trump" a
Saskatchewan Financial Services Commission decision.
In fact the SFSC
relied upon
Chalmers v.
Toronto Stock Exchange, an Ontario Court decision,
in forming their own decision- which is consistent with
Chalmers.
(Please note: This decision has
stood since 1989)
If the IDA had
another Ontario Court decision - I am certain that it would have
been argued by the IDA before the SFSC in an effort to win
their case.
As for "the rest
of Canada", IDA By-law 20 is the same in Saskatchewan as it is
in any other province that the IDA has been able to get a
foothold in.
The investing
public is therefore no more protected in any other province than
they are in Saskatchewan.
Well, at least they are showing some consistency.
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Matrix
Financial won’t face hearing |
11 July 2007 |
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Investment
Dealers Association took too long: court |
11 July 2007 |
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Power Appeal:
Saskatchewan bill to give SROs statutory power in the works |
28 March
2007 |
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SRO powers
under scrutiny |
22 February
2007 |
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IDA appeals
SFSC ruling |
24 October
2006 |
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IDA Pact
Questioned |
27 April
2006 |
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IDA to appeal
Saskatchewan ruling |
26 April 2006 |
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Provincial
regulator threatens Canadian dealer group's powers |
03 April 2006 |
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IDA appeal has wider implications
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10 March
2006 |
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"It said what
investors have said for a very long time that they don't have the
power to collect fines and penalties...because their contract is
unenforceable." - Robert Kyle
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IDA appeals
decision by Saskatchewan regulator |
09 March 2006 |
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IDA can’t discipline former registrants |
08 February
2006 |
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Dec. 8 hearing
sets precedent |
01 December
2005 |
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Investment
panel won't drop charges |
26 November
2004 |
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IDA hearing
held in camera |
25 November
2004 |
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Former adviser
faces hearing |
28 October
2004 |
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So
why doesn't the Saskatchewan Financial Services Commission
take
legal action in order to protect investors since the IDA cannot?
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It
certainly explains why aggrieved investors are so disillusioned when the
provincial securities commissions direct them to go to the IDA.
For 10 years the IDA has craftily
window-dressed their existence by issuing hollow "Orders" for the
repayment of ill-gotten gains and levying million dollar fines
against brokers who left the industry years before.
Neither the MFDA or the IDA has ever
had the authority to enforce fines/penalties against brokers who
have left their club(s).
It is clear that this was all a sham.
Not even Doug Henning could have
pulled this off for such a long time.
File a complaint - make your voice
heard.
We need proper regulators - not
con artists. |
The
IDA passed By-law 20 by misrepresenting facts to its members and the
public. The Ontario Securities Commission,
while aware of those misrepresentations, approved
the IDA by-law.
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IDA By-law 20
PART 4
- CONTINUING JURISDICTION
20.7
Former Members and Approved Persons
(1) For the
purposes of By-law 19 and By-law 20, any Member and any Approved
Person shall remain subject to the jurisdiction of the
Association for a period of five years from the date on which
such Member or Approved Person ceased to be a Member or an
Approved Person of the Association, subject to subsection (2).
(2) An enforcement hearing under Part
10 of this By-law may be brought against a former Approved
Person who re-applies for approval under Part 7 of this By-law,
notwithstanding expiry of the time period set out in subsection
(1).
(3)
An Approved Person whose approval is suspended or revoked or a
Member who is expelled from membership or whose rights or
privileges are suspended or terminated shall remain liable to
the Association for all amounts owing to the Association. |
September 02, 2004
Prior to the OSC approving By-law 20 the members of the IDA were asked
for comment. The following was a joint submission made by:
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RBC Dominion
Securities
HSBC
Securities (Canada) Inc. Scotia
Capital
TD
Waterhouse |
7 January 2004
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4. Part 4 - Continuing Jurisdiction, 20.7(1)
"We also question generally whether the Association has the power to
regulate former Members or employees."
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The IDA responded to its members with the following: |
27 January 2004
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"The
Court in Derivative Services Inc.2
affirmed the IDA's authority to investigate former members for
business while a member, thus (current) By-law 20.21, which is carried
through in the proposed amendments to By-law 20, would likely not be found
to be ultra-vires as was the case in Chalmers.
Therefore, the IDA has the
necessary authority to extend its regulatory reach to impose penalties on
former members/individuals in respect of conduct that arose prior to the
lapse of membership or approval." page 5., para.5
2The Investment Dealers Association of Canada and Derivative
Services Inc. and Malcolm Robert Bruce Kyle [I999] I.D.A.C.D. No.29 |
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Since when did the
Ontario District Council of the IDA become a Court
of Law?
(clicking
here will
take you to "I.D.A.C.D. No. 29")
The IDA has misled both its members
and the public.
The OSC has been complicit by
refusing to
rectify the problem
which leaves the investing public hanging in
the wind.
How protected do you feel?
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Chalmers
v. Toronto Stock Exchange |
06 November 1989 |
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"It follows
from what I have said that since the Act does not authorize
regulation of persons who are former members or employers of
same, s. 17.19(1) of the By-law is ultra vires and of no
force and effect."
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