Investors Scrutinizing the Regulators

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Securities Regulation In CanadA

Fox Guarding the Hen House



Advocate flouts regulator

Naming brokers facing complaints


Monday, February 12, 2007

By Gary Norris

TORONTO -- The Canadian securities industry's self-regulatory organization is being defied by an investor advocate who is a longtime critic of, as he sees it, letting the foxes regulate the henhouse in the investment business.

Robert Kyle has spurned the Investment Dealers Association's demand for removal of what the industry group says is confidential information posted on his website,

At issue are the names of 2,800 stockbrokers in a database of IDA registrants involved in client complaints between October 2002 and June 2005.

Kyle said he uncovered the data by double-clicking on information that the IDA does make public at its website regarding ComSet, its complaints and settlement reporting system.

ComSet is intended to give the public only bald totals of complaints, not the identities of the investment advisers involved.

But those totals are impressive -- 177 in January alone, or eight every working day, including 36 civil claims and three criminal charges. And this reflects only "events" reported through brokerage firms, not numerous client complaints submitted directly to the IDA.


For all of 2006, the IDA reported 1,932 complaints through ComSet plus 616 via other channels, with some overlap of investors who complained both to their securities firms and to the IDA or securities commissions.

The association currently has 108 disciplinary cases underway.

The IDA argues it would be unfair to identify brokers named in ComSet, because many complaints involve minor matters such as delayed cheques, and almost all have not been proven.

But the historical database uncovered by Kyle shows that some individuals amassed disproportionate volumes of complaints.

Heading the list was Bertrand Trudel of the Joliette, Que., branch of what now is National Bank Financial, with 45 complaints and 14 civil claims during the 32 months covered by the ComSet listing.

The IDA insists it was pure coincidence that it announced a disciplinary hearing against Trudel on Jan. 29, three days after pulling the ComSet names from its website.

Alex Popovic, the IDA's vice-president of enforcement, noted it takes months -- not just over a weekend -- to arrange such a hearing. Allegations against Trudel, dating from 1990 to 2002, include conducting unauthorized transactions, making unsuitable recommendations and failing to disclose a personal holding in a company in which his clients invested.