NDP's Ceci: Ignoring the Law, Enriching the Rich

August 20th 2018

To: Alberta Finance Minister Joe Ceci

     Alberta Securities Commission (ASC) Chair Stan Magidso

     Media

Re: The financial harms to Albertans by ASC's apparent focus on protecting the financial corporations who pay the ASC, rather than on protecting the public from abusive or egregious practices by those corporations.  

Enclosed are just two examples which are contrary to our laws, but which enrich those corporations who pay ASC salaries.

I write Mr. Ceci and ASC Chair Stan Magidson to find a clearer understanding of matters which I estimate to cost Albertans billions each year, while unjustly enriching financial and investment players by billions.

I say unjustly enrich because the matters of concern appear to be willful blindness at best and abusive and/or non-lawful treatment of Albertans, at worst.  They then become hidden forms of financial elder abuse, since when workers who invest their entire lives to retire, discover that a healthy portion (half or more) of their investments may have been skimmed from them by false financial “servants”, they may be forced work long beyond when they had hoped to retire.

The financial servants (investment product sellers) I refer to are those under the regulatory control of the Alberta Securities Commission, (ASC) and the ASC is under the control of the Alberta Finance Minister.

Two basic elements which I feel to be outside Alberta Securities Act law, or outside the spirit of the public protection elements of this law are as follows:

Albertan investors are promised the financial and investment services of investment advisors, while a search of the registration categories in Alberta turns up very few truly registered “advisers” or “advising representatives", and about ten times as many sales agents or “Dealing Representatives”. (those without the same investor-protective duty of care for investors)

The numbers are as follows as of August 2018: 

2594 persons Registered “Advisers” (advising representatives), many of which operate out of Toronto, Vancouver and Montreal, not Alberta, and 27,858 “Dealing Representatives” who are more likely found operating in Alberta. This means that there are over ten times as many “sales-licensed” agents in Alberta as legally registered professional advisers.

Here is what the ASC seems willfully blind to:  Most of those “dealing representatives” are representing themselves to the public as if they were advisors, advisers or the professional advice giving kind of registered professional.  (Advising Representatives is the official category name)



 This is a bait and switch of luring Albertans to give away their trust and their money on false pretenses, and it is contrary to the “representation” requirements in the Alberta Securities Act.  (Section 100) see image attached.

For the Alberta Securities Commission to ignore a consumer bait and switch, in the billions of dollars, and for Alberta’s Finance Minister to do the same, despite previous communication on this matter is to deliberately ignore the law, in favor of the enrichment of the financial industry.  

Financial advice is not selling and selling products is not giving advice.  By having 100% of ASC funding come from the industry itself, there appears to be a conflict of interest built into Alberta's regulatory regime, and this appears to have caused the regulator to become captured.  Complicity in abuse of Alberta investors could then lead to civil liability against the Alberta Government if it can be demonstrated in law that the ASC has not acted in good faith. Agencies like the ASC are only exempted from civil liability if they act in good faith in the performance of their duties to the public.  That is what is under question in this open letter.

Albertans deserve fair and honest protection of the law, and not a system where it seems to be “what we can get away with…” by selecting and paying regulators hundreds of thousands of dollars.

By way of a second example of what regulators and industry get away with, the Alberta Regulator has sold “exemptions” to the law, thousands of times, without public notice, consultation or warning, even to the people who are buying the investments which have received a pass to bypass the law.  It is as if rejected, inappropriate or otherwise illegal offerings can be exempt from law and this “deemed” suitable for sale to the public in a private hearing behind closed doors.  Doors which are locked to the public and for reasons which are concealed from the public.

I count numerous exemptions to banks which allow them to then "dump" poorly performing new investment issues, into their own customers mutual funds, in effect turning each bank's underwriting "mistake", into the bank's customers "problem".  Of course no bank customers know of their part in taking on the bank's errors, because the ASC does these exemptions inside a dome of public silence.  It just does not smack of good faith (or professional) regulatory operations.  Please help me and others to underrstand.

This feels a bit like a government meat inspector doing a side-business, or accepting money for letting contaminated food products into the consumer food chain.  It smacks of something contaminated within Alberta Securities Commission systems. That contaminatio, or design flaw if you prefer, is in the industry financial funding of "millionaire salaries" to government regulatory employees. It is paying milloinaire foxes to guard every Albertan 's financial henhouse.

I seek to better understand how our government securities regulator, and our Finance Minister can allow secret dealings to be done to a trusting and vulnerable public.  Please help me to understand why it is beneficial to the public interest to allow falsified professional license-representations for over 20,000 financial professionals, and further how it is not prejudicial to the public interest to sell exemptions out the back door, to financial firms so they can sell toxic, tainted or unwanted financial products to Albertans.  

Both acts strike me as strange, secretive and by my own estimates from a few decades within the financial system, as costing Albertans approximately $5 billion dollars per year.  

This figure may be compared to harming Albertans by as much as the financial cost of the Fort McMurray fire disaster…Every year...Intentionally caused.

(Catastrophe Indices and Quantification Inc. (CatIQ) reported that insured damage was estimated to have reached $3.58 billion,[93] making the wildfire the most expensive disaster in Canadian history. Wikipedia)

The deception of letting Alberta laws be exempted, skirted or ignored is too unusual for me to understand.  Alberta Securities Commission top four staff,  sharing in combined compensation of $2 million, is also hard to understand as being a typical government salary level.  To then learn that these positions are paid, and influenced by the very people that they police, and not by the Alberta taxpayer, leads me to seek further understanding.

Joe Ceci, please help me to understand why Alberta allows ‘industry-funded’ financial "police”, who allow Albertans to be deceived by investment product sellers, and sold non-legal investments, or investments which require "exemptive relief", done in secret...in order to be offloaded upon unsuspecting Albertan's. (in addition to twelve other provinces and territories thanks to the "Passport" system...)

Regards, Larry Elford

lelford@shaw.ca    

Lethbridge, Alberta

Below image from Alberta Securities Act, Section 100, “representation”