By The Book:

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(February 21, 2008) Raymond James Ltd. is in the Investment Dealers Association’s doghouse. On Thursday, the IDA fined the financial company $140,000 and another $10,000 in costs for violating one of the organization’s bylaws.

According to the IDA, the company facilitated the purchase of shares of certain private companies in client RRSP accounts without having “sufficient systems and procedures in place to ensure the adequate review and supervision of the transactions and by failing to ensure adequate account opening and transactional supervision in the client RRSP accounts.”

The IDA says that the transactions in the RRSP accounts were part of an RRSP stripping scheme.

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BCSC orders repayment in Ponzi scheme

(February 21, 2008) The British Columbia Securities Commission has ordered three men to cough up $12.7 million for a Ponzi scheme they perpetrated in that province, in a fraud that ripped off 89 investors.

Malcolm Cameron Boyd Stevenson and Daniel Eric Byer, both of Abbotsford, and Preston Pinkett II, a resident of Virginia, must also pay $4 million in administrative penalties.

The fraud involved an investment vehicle called International Fiduciary Corp SA (IFC), which operated from April 2004 to November 2006. IFC promised investors a return of 6% per month, with no risk to the investment capital.

The “asset growth program” purportedly bought securities called “1st Tier medium term bank notes” at a discount and then sold them for a profit. The men told investors that their money was not at risk, that it would be in their control at all times in a U.S. bank account and could be withdrawn on short notice.

Of course, the “asset growth program” did not exist, and the money was skimmed by Stevenson, Pinkett and Byer. The scheme took in more than $23.3 million and paid out about $10.3 million.

Evidence showed that Pinkett distributed a total of about $5.5 million to Stevenson, $4.8 million to himself, and $2.4 million to Byer. The BCSC hearing panel ordered the disgorgement of those funds into the courts, where investors may have a chance to recover money.

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B.C. takes financial education online

(February 21, 2008) The Financial Consumer Agency of Canada has teamed up with the BCSC to develop a Web-based tool aimed at building “strong financial life skills” among youth. It is modelled after an existing teaching aid currently used in high schools throughout the province.

“Understanding basic concepts such as budgeting and savings, credit and debt, and financial planning will arm students with the tools they need to navigate the financial realities of adulthood,” said FCAC commissioner Ursula Menke.

The program involves fictional characters engaging in real-life financial activities, which students must navigate. There are eight distinct life stage characters who face different financial decisions.

A recent survey of almost 6,000 adult Canadians, commissioned by the Canadian Securities Administrators, found that just 17% recall having taken courses in personal financial management in elementary school.

“Many young Canadians leave high school with very weak financial skills and little knowledge of the financial realities they will face,” said Menke. “As a result, they make costly mistakes with serious long-term consequences. We want to give them a tool that will help them manage their finances and avoid financial problems in the future.”

(02/21/08)