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Nombre de messages : 872
Localisation : montreal
Date d'inscription : 19/01/2006

MessageSujet: Risky bussiness-Part 3   Mar 31 Oct - 13:58

Risky Business? - Part 3

While there's supposed to be mechanisms in place to protect investors, it's obvious that ultimately, investors have to know how to protect themselves.


[Panel Discussion2]

[Talent=Mutsumi Takahashi]

With us are financial analyst, Bill Kovalchuk, Anne-Marie Poitras from the Quebec's Autorité des Marchés Financiers and Gazette business columnist Don Macdonald.

Mutsumi: So I want to ask you now about what consumers should do to protect themselves and I'm talking about small investors here. We're not talking about people with huge amounts of money and we're not talking about people who have a lot of knowledge. Bill, let's start with you because you're in the business. Where do you start?

Bill Kovalchuk: Well, with any amount of money comes responsibility and people need to find out what is it that they want. If they're retiring, it's income. If they're young, they need growth. And then they need to find out what's the best; most appropriate way for them to invest. If they only have $ 25,000, they'll end in mutual funds or exchange-traded products. If they have a half million dollars, then they're more sophisticated and they get tailor-made portfolios. But they have to ask themselves, "what do they want to begin with?" Again, if you're retiring, you want the income going forward.

Mutsumi: Now Anne-Marie, at the AMF, do you have any mechanisms where people can start doing a little bit of research?

Anne-Marie Poitras: Yes, of course. When they call at the centre, we always tell them basics about they should always verify with the Autorité if the business or the representative they want to deal; do business with is fully registered with the AMF, so has the authorization of selling the products they want to buy. They should always read all the documentation they receive. People don't read and they buy products they don't understand. They need to understand all the exclusions, conditions of any contracts; of financial products they buy and they need to take notes, remember, ask questions, feel comfortable with the advisor they're dealing with because if you're not comfortable, you don't have confidence in your advisor, you won't be making good financial decisions. Never take financial decision under pressure or too quickly. If it's too good to be true, it probably is. And at last, because we see this again and again at the compensation fund, stories when we analyze claims that come through, people forward cash and do cheques on their representatives' names. They have great confidence in their representatives and sometimes, it's at their own expense. They lose their money after that.

Mutsumi: But Don, you were talking about you always hear the rumours, you always hear stories of maybe something's not too right there, is it enough? Should we be reading the business pages? Would that be enough to help?

Don Macdonald: Well, I think that people have to remember that this is their life's savings and put in the time to really be diligent and you know, take the time to find the right representative, ask around and as Anne-Marie says, check them out at the AMF. Do they have decisions or complaints against them? Get the information that they can and then, when they're with a representative, to really look at what the investment alternatives are. You know, people are willing to spend more time preparing for their hockey pool than they are in investing and you know, taking care of their life's savings and there's something very wrong there. And a lot of people find it boring or they don't want to do it. But hey, take a couple of hours and take the time to look after what's yours. And I think the idea we spoke to.there's a the problem of greed and people want to get rich fast. I think that we would all agree that the idea is to get rich slow over a number of years and that's the way to do it safely and prudently.

Mutsumi: And I guess it's not just the investment advisor or financial advisor, there's certain questions that investors should be asking themselves, right? Before they start investing money? How much money am I willing to lose? How much risk am I willing to take? Some of those other things where you have to know yourself as well.

Bill Kovalchuk: Are they in fact willing to lose any money? Because if they aren't, then they could be quite happy with T-bills or government bonds. So that is the first question.

Mutsumi: What are some of the other questions that people should be asking themselves before they get into this?

Bill: Besides the regulatory ones, you want to ask education. What type of background experience does the person have? Have they been doing this for two months? Did they take a CFA course which is a diligent 3-year program? Only 30 per cent pass first year. Or did they take a six-week course? Because either way, they can end up in the industry. So you want good education, good background, experience. There's also structural issues. Never write the cheque to the advisor whatever you do.

Anne-Marie: But it still happens.

Bill: Never, ever write the cheque to the advisor. It's always good to have an independent third party holding the money. And reporting as well because that way, you have two reports: one from your advisor and one from an independent third party and they better match or be very, very close.

Mutsumi: Don, I thought you made a very good point when you said people are more willing to investigate their hockey pools than they are about their retirement savings. If you're not willing to do that work, to really, really take a look at what you're buying into, then should people be getting into this at all and then, I guess the other fear is if you don't get into it, will you have enough money later on?

Don: This is a concern because even if you leave your money in a savings account which a surprising number of people do because they're afraid of losing their money. There is a risk there too and the risk is inflation; that your money becomes less valuable each year.

So everyone has to invest. It's just finding the right vehicle and the right person to invest with so again, it comes down to how much risk you're comfortable with. I guess there it's the "can you sleep at night test?" If you're into something that's keeping you up at night, then it's probably too risky for you.

Mutsumi: Is it any safer if you go to a bank as opposed to an investment house? If you're going to those big chartered banks, is there any safety there?

Bill: No, there's no implied safety just because of the size or function. You still run the same market risk wherever you are.

Don: I would say one thing. I mean, if you're with small firms, at least with large firms, they have ombudsmen and they have mechanisms for monitoring the behavior of their representatives.

Mutsumi: So there are certain more mechanisms in place.

Don: Whereas if you're at a tiny, little firm somewhere that might not have those mechanisms, but I think you should remember that a lot of these representatives are under pressure to meet sales targets and that brings up another issue quickly which is how is your representative being compensated?
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Nombre de messages : 872
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Date d'inscription : 19/01/2006

MessageSujet: Risky bussiness-Part 2   Mar 31 Oct - 13:56

Risky Business? - Part 2

It is RRSP season and Quebecers will take billions of dollars of hard-earned savings this month and put it into mutual funds and other investments. Now we'd like to think these investments are secure. But with the recent financial scandals, that might not always be the case. Small investors have lost vast amounts of money.


Panel discussion1

[TALENT=Mutsumi Takahashi]

JOINING US NOW IS BILL KOVALCHUK.

JOINING US NOW IS BILL KOVALCHUK.
HE IS A CHARTERED FINANCIAL ANALYST AND PRESIDENT OF CLARET ASSET MANAGEMENT CORPORATION.

ANNE-MARIE POITRAS.

SHE IS EXECUTIVE DIRECTOR OF CONSUMER ASSISTANCE AND COMPENSATION AT L'AUTORITÉ DES MARCHÉS FINANCIERS, QUEBEC'S INDUSTRY WATCHDOG.

AND DON MACDONALD.

HE IS A BUSINESS REPORTER AND COLUMNIST AT THE MONTREAL GAZETTE.

Mutsumi Takahashi: Thank you very much for joining us today. You know what happened with the Darlingtons, I think is every investor's worst nightmare. Anne-Marie, I'd like to start with you. What is the AMF's role in situations like this? I'm not asking to comment so much on the Darlingtons so much as in similar situations, what is the role to protect people like this?

Anne-Marie Poitras: First of all, I'd like to remind you that the AMF is the regulatory body that is in charge of overseeing all the financial sectors so concretely, we regulate the security sector, the financial distribution sector and the solvency of financial institutions.

And furthermore, now we have in Quebec a consumer assistance centre where a consumer can call us and ask as many questions as they wish and we do process their complaint, analyse what they bring to us and if it's possible, we do proceed and send the information to our investigators who will look through their stories more carefully and this is basically what we do. We're the regulator of all the financial sector.



Mutsumi: I guess when you say that people can come to you with their complaints, a lot of people would say by the time you have a complaint, it might be too late. Is there any mechanism in place right now in Quebec that protects the small investor, that prevents these things from happening in the first place?

Anne-Marie: First of all, it always comes with a complaint so we do encourage all the consumers to come to us and tell us about any situation that might be surprising to them or they might have questions about. So first when we receive complaints, we deal with the complaints and we do as quickly as we can follow all the information to investigators. Obviously, we have to do our job. And sometimes it takes time to know about the story. And sometimes it's very complex scams and this is why we have to act rapidly and to do our best to have all the information we need to do our job. So if it's enough.

Mutsumi: But Don, you've covered a lot of stories. Is this how it's supposed to be? There's got to be a better way, I think is what a lot of people are saying.

Don: Well, there has been a lot of criticism of the regulators in Quebec. And especially this past year, we've seen major, major scandals and a lot of people in the investing public are very concerned. And I think there is a lot of room for concern and criticism of the regulatory action that we're getting in Quebec. I mean, I think that it's clear that we need to be more aggressive in finding out about these cases and then when they do come to light, going after the culprits more aggressively in bringing them to justice.

Mutsumi: Well Bill, you're in the industry yourself. What do you see around you? Is it possible, is it realistic to put preventative measures in place, do you think?

Bill Kovalchuk: No, I don't think you can legislate morality. I think people will do what they want to do. What you have to assume is people are good and then put sufficient safeguards in place. Then if they're not good, that you penalize them very severely, very quickly.

And I don't think we're seeing the penalties or the quickness that people would like to see.

Mutsumi: You know what, I would love to assume all people are good but given that, this is my life savings.

Bill: Very important.

Mutsumi: What is being done for me to protect me so that all my savings don't.one day I wake up and a headline in a newspaper tells me that they're all gone?

Bill: There are many things you can do in terms of.first of all, a smell test. If you have consistent returns of 25, 30 per cent. Well, don't necessarily believe that. That's your first warning. There is a regulatory issue here in terms of getting into these problems early. From a practical perspective, you can see when you have a number of private placements, flow-throughs, issues that are highly speculative, then you're going to ask for trouble.

Don Macdonald: Bill, in the case of Norbourg, we had indications in the industry; people who were in the mutual fund industry in Montreal were seeing things that were troubling back as far as 2004 and even before, there was an article in an industry newspaper with a big headline "The Norbourg Mystery". Where was the money coming from to finance the many acquisitions that firm was making and the lifestyle of the CEO? I mean, these were in the mutual fund and the financial industry in Montreal so we have to ask ourselves, how can we get the regulator in this case, the AMF to move faster and to be sensitive and to have their ear to the ground of the financial industry to get an earlier warning and a heads-up that there's problems in this or that firm.

Mutsumi: You know because I look at the case of Hollinger and Conrad Black and you see that Conrad Black is facing charges in the United States for a Canadian-based company. Now why is it that the United States is taking action on this and not the Canadians?

Bill: That's a wonderful point. The current system we have doesn't work. They don't have the resources to go out and solve the problem . They don't have the budget, the manpower.

Mutsumi: Is the regulations that are lacking or is it the application of the regulations that's lacking?

Bill: Both. We have 13 regulators.

Anne-Marie: Just to make sure the key player in our society understands that economic crime has to be taken seriously. For example, AMF is asking for more investigators, more inspectors and we'll probably have those resources that will be added to our enforcement staff but besides that, when you go to court and you ask for bigger you know, for bigger fines or jail sentences, economic crime has to be taken seriously by judges. So this is why it's a mix of many different elements that makes the regulator, everybody being more efficient but we think we have the sufficient staff to do our job but it's just a matter of having all the information before taking a legal action. So this is why we have to be prudent before coming out. And when we have the sufficient information to act, we act. We do it rapidly, as soon as possible.
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Date d'inscription : 19/01/2006

MessageSujet: CTV   Mar 31 Oct - 13:51

Risky Business? - Part 1

This year, the first of Canada's baby boomers turns 60 and over the next 20 years, this largest age group in our population -one in every three Canadians - will be approaching retirement age. With government resources stretched to the limit, many people are no longer counting on government pensions to get them by. They're investing their money to try to save for the future. But with the recent financial scandals, Norshield, Mount Real, Norbourg, people have seen their retirement dreams and life savings disappear. Tonight On Assignment asks the questions. how do we keep our money safe? Whom can we trust? Who protects the investor? And who is ultimately responsible? Later in our program, Mutsumi Takahashi will talk to a panel of industry experts to answer some of these questions. But first, Rob Lurie with a cautionary tale of one couple whose retirement plans have been postponed indefinitely.


[NORBOURG]

[Reporter=Rob Lurie]

(music)

(montage + black and white shots of newspaper clippings)

(s/up) "The offices of a Montreal-based mutual fund manager raided..."

"The offices of a Montreal-based mutual fund manager raided..."
(s/up) "We made a lot of sacrifices."

"We made a lot of sacrifices."
(s/up) "Well, my best hope is that we can recover the money...."

"Well, my best hope is that we can recover the money...."
[Robert Darlington] I was sitting at the table one morning and I read in the newspaper about Norbourg and I said to the wife I'm going to go downstairs and pick up our files because I think we're involved with this Norbourg group.

I was sitting at the table one morning and I read in the newspaper about Norbourg and I said to the wife I'm going to go downstairs and pick up our files because I think we're involved with this Norbourg group.
(music + articles)

(dissolve to linda)

[Linda Darlington] I was just totally devastated. I couldn't believe it.

I was just totally devastated. I couldn't believe it.
[FADE TO BLACK]

(s/up) "...accurately reflecting investors' profile..."

"...accurately reflecting investors' profile..."
THEY THOUGHT THEY WERE DOING EVERYTHING RIGHT.

THE DARLINGTONS WORKED HARD.

LIVED WITHIN THEIR MEANS.

AND SAVED DILIGENTLY.

THIS WAS SUPPOSED TO BE THE PAYOFF.

THEY HAD THEIR DREAM RETIREMENT HOME PICKED OUT, AND WERE WAITING FOR THE GOLDEN YEARS.

[Robert Darlington] I never was under the impression that this would happen to anyone, not only to me but to anyone.

I never was under the impression that this would happen to anyone, not only to me but to anyone.
THEIR STORY BEGINS IN 1995 WHEN THE DARLINGTONS MET THIS MAN, FINANCIAL PLANNER CLAUDE BOISVENUE.

A MAN, THE DARLINGTONS TO THIS DAY, INSIST WAS A GIFTED MONEY MANAGER

[Robert Darlington] We did fantastic. We had great numbers. Some years, he generated for us up to 30% on our investments.

We did fantastic. We had great numbers. Some years, he generated for us up to 30% on our investments.
BUT BOISVENUE MADE ONE MOVE THAT COST ALL HIS CLIENTS DEARLY. IN 2004, HE SOLD HIS COMPANY TO NORBOURG ASSET MANAGEMENT.

[Robert Darlington] Based on his knowledge and experience in the industry, I thought he must have really done his homework on this and therefore it must be a great venture for him to go into and we're all going to benefit from it.

Based on his knowledge and experience in the industry, I thought he must have really done his homework on this and therefore it must be a great venture for him to go into and we're all going to benefit from it.
(s/up news headlines) "Very worried. My wife was crying this morning."

"Very worried. My wife was crying this morning."
[ANNCR] The Mounties move in as millions are lost in a Montreal mutual fund scandal."

The Mounties move in as millions are lost in a Montreal mutual fund scandal."
BUT THE NORBOURG AFFAIR BECAME THE DARLINGTONS NIGHTMARE.

LAST AUGUST, THE RCMP RAIDED NORBOURG'S OFFICES.

AUTHORITIES ALLEGE NORBOURG'S CEO, VINCENT LACROIX DEFRAUDED MORE THAN 9,000 INVESTORS OUT OF 130 MILLION DOLLARS. THE DARLINGTONS LOST A HUGE PART OF THEIR SAVINGS

[Robert Darlington] It made me think of people in 1933 during the crash what it must have felt like when the guy had all kinds of money and then the next day, he woke up and he had nothing left.

It made me think of people in 1933 during the crash what it must have felt like when the guy had all kinds of money and then the next day, he woke up and he had nothing left.
EVERYONE KNOWS THAT INVESTING IN MUTUAL FUNDS IS LIKE INVESTING IN STOCKS.

IT'S RISKY. AND EVEN SAVVY INVESTORS CAN LOSE THEIR SHIRTS.

BUT THIS ISN'T A CASE OF BAD INVESTING.

THE AUTHORITIES BELIEVE THIS IS A CASE OF FRAUD.

BUT IS THE PROVINCE DOING ENOUGH TO PROTECT INVESTORS?

[Brahm Campbell/Investors' Lawyer] They're doing a terrible job.

They're doing a terrible job.
LAWYER BRAHM CAMPBELL DEFENDS INVESTORS.

HE SAYS UNLIKE IN THE STATES, QUEBEC IS OFTEN TOO SLOW WHEN IT COMES TO FIGHTING FRAUD.

[Campbell] You want speed and enforcement of your laws and the Americans have speed and we, in Quebec unfortunately don't have that speed and that's a big minus for us.

You want speed and enforcement of your laws and the Americans have speed and we, in Quebec unfortunately don't have that speed and that's a big minus for us.
QUEBEC HAS ITS OWN SECURITIES REGULATOR CALLED THE AUTORITE DES MARCHES FINANCIERS.

THE AMF WORKS WITH POLICE TO ENFORCE THE LAWS AROUND STOCKS AND MUTUAL FUNDS.

AND THERE ARE GOOD LAWS HERE,

BUT SOME SAY THE PROBLEM IS

THE AMF DOESN'T HAVE THE MANPOWER.

[Campbell] Unless they're going to enforce the laws, then I don't think we can safely say that anything is being done right. And I don't think they properly regulate and certainly they don't properly enforce.

Unless they're going to enforce the laws, then I don't think we can safely say that anything is being done right. And I don't think they properly regulate and certainly they don't properly enforce.
[Yves Michaud/Industry Watchdog] I still think that the financial market - it's a rotten world.

I still think that the financial market - it's a rotten world.
BUT OTHERS SAY THE PROBLEM GOES DEEPER THAN THE AMF.

YVES MICHAUD DEFENDS INVESTORS RIGHTS.

HE THINKS PEOPLE ARE TOO QUICK TO HAND OVER THEIR MONEY TO FINANCIAL PLANNERS AND TOO NAIVE WHEN IT COMES TO THEIR INVESTMENTS.

[Michaud] The broker or financial advisor, mainly I would say there are exceptions of course, they are looking for their interests first, put money of the investors in their pocket and after that, so much the better if it goes well for the investor.

The broker or financial advisor, mainly I would say there are exceptions of course, they are looking for their interests first, put money of the investors in their pocket and after that, so much the better if it goes well for the investor.
Where there is money, there is always temptation.

BUT CLAUDE BOISVENUE, THE DARLINGTONS FINANCIAL ADVISOR BELIEVED HE WAS ACTING IN HIS CLIENTS BEST INTERESTS WHEN HE SOLD HIS COMPANY TO NORBOURG.

[Rob Lurie] How much did you sell your company to Mr. Lacroix for?

How much did you sell your company to Mr. Lacroix for?
[Claude Boisvenue] I sold the group of companies for $ 4.3 million.

I sold the group of companies for $ 4.3 million.
AS FOR NORBOURG'S CEO, VINCENT LACROIX, HE'S STILL LIVING IN THIS LUXURY HOME IN CANDIAC. TO THIS DAY, WHILE THE INVESTIGATION CONTINUES, NO CRIMINAL CHARGES HAVE BEEN LAID. HOWEVER IN AN UNPRECEDENTED MOVE, THE AMF IS SUING LACROIX FOR $ 94 MILLION DOLLARS ON BEHALF OF INVESTORS.

LACROIX HAS ALWAYS DENIED ANY WRONGDOING.

[Linda Darlington] He shouldn't be allowed to enjoy his life as you know, he's prevented other people from enjoying their lives; their retirements.

He shouldn't be allowed to enjoy his life as you know, he's prevented other people from enjoying their lives; their retirements.
MEANWHILE MANY FORMER CLIENTS ARE NOW BROKE.

IN JANUARY, COURT PROCEEDINGS BEGAN.

A JUDGE IS TRYING TO DECIDE HOW TO DIVIDE WHATEVER MONEY IS LEFT IN THE 29 NORBOURG MUTUAL FUNDS.

[Campbell] Unless we're going to get a man in Quebec who comes down hard, forget it. Quebec people are going to keep on losing money in the securities field, that's all.

Unless we're going to get a man in Quebec who comes down hard, forget it. Quebec people are going to keep on losing money in the securities field, that's all.
(s/up shovelling)

THE DARLINGTONS DREAM RETIREMENT PLANS ARE NOW ON ICE.

[Robert Darlington] Our total plans for our life went down the tubes that very day.

Our total plans for our life went down the tubes that very day.
NOW THEY'RE LEFT WONDERING IF THEY'LL EVER GET THEIR MONEY BACK AND IF THEY'LL EVER BE ABLE TO DIG THEMSELVES OUT OF A HUGE MESS.
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