Everyone in the securities industry will want to give Superior Court Justice Thomas Lederer a big hug after reading this article describing the March, 2008, decision in which he dismissed a client’s claim when he sought to have his advisor (Leach) and investment dealer (Merrill Lynch) reimburse him for losses after seeking high returns in a risky investment strategy.

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There are no limitation periods specified in the Investment Dealers Association’s registered bylaws with respect to disciplinary actions, and to date the IDA has seemingly proceeded on the basis that it was not governed by any limitation period.

The IDA was prosecuting claims involving events that occurred years in the past, some dating back as far as the 1990s. Consequently, member firms and investment advisors could not only be prosecuted for recent events, but could be disciplined for events that occurred in the distant past. Those in the industry simply assumed the IDA had jurisdiction to do what it was doing, and never questioned or challenged the association in that regard.

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James Smith, Jim Smith and Jimmy Smith are all born on Aug. 27, 1962, and they are all engineers, but only one has been tried and found guilty of drug trafficking. How can advisors and dealers identify their clients and report any potentially politically exposed foreign persons (”PEFPs”) to FINTRAC pursuant to obligations under the new Bill C-25 amended regulations to the Proceeds of Crime and Money Laundering and Terrorists Financing Act?

pull text from http://www.casselsbrock.com/docs%5CDiligence_Helps_Combat_Fiscal_Fraud.pdf

My previous column described risks for advisors in the securities industry, yet the most significant risk to advisors is credibility risk – the risk that a judge or arbitrator will believe a client’s testimony over that of the advisor.

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Older clients seem to be at the heart of most litigation and regulatory risk in my practice these days. Senior clients launch complaints with the MFDA, IDA and securities commissions and sue their advisors in court, asserting that investments were unsuitable, using their oft-used mantra:

“We are unsophisticated and unable to understand the investments in our accounts.”

How can advisors protect themselves from the regulatory and litigation risk associated with the very clients who are reported to be the wealthiest segment of our population, i. e. advisors’ target market?

pull text from http://www.casselsbrock.com/docs%5CCoping_with_Senior_Clients_Risk_Tolerance.pdf

Risk is a must-read for those who operate in the financial and insurance industries who wish to avoid becoming the target of client complaints, regulatory investigations, litigation proceedings, and damaging press releases. Author Ellen Bessner has created an easy-to-read guide for advisors and dealers that offers tips on withstanding the scrutiny of regulators, trial judges, the press and the investigating public.

In her work, Bessner takes an in-depth look at and assessment of risks to advisors, and provides protective strategies for the investment and insurance industries to employ. Advisor at Risk will empower these industries with a new way to secure their business. Bessner stresses the importance of understanding clients and managing their expectations while developing a solid paper trail so that evidence can be corroborated with the necessary proof to render them credible should a dispute emerge.

Although written by one of Canada’s foremost authorities on the subject, Advisor at Risk is not a legal text peppered with abstract legalese. Bessner writes with a clarity and humour that makes Advisor at Risk an engaging and accessible read from start to finish.

Members of the financial and insurance industries need be proactive in identifying their risks and managing their business in order to protect their reputation, license and livelihood. Advisor at Risk is the ideal guide for taking control of risk and securing good business.