Investor grievances focus of new report

(March 3, 2004) A lobby group representing small investors is taking its campaign to beef up investor protection to a higher level. The Small Investor Protection Association (SIPA) sent a 100-page report to politicians and regulators last week.

Robert Kyle — recently named as the association’s executive director — says the report won’t be made public until the initial target audience gets a chance to respond. But he says the document clearly outlines problems with the current regulatory system, including statements from dozens of unhappy investors.

“The report is damning, it really is,” Kyle says. “Investors are disillusioned to say the least, lost as to where to go and they aren’t getting the response they require from our regulatory regime.”

One of the main grievances outlined in the report concerns redress for investors who have lost money. “There are no redress mechanisms for Canadians,” Kyle states. “There is nowhere independent the investor can go to other than the courts. And if you can’t afford that, you’re toast.”

Self-regulation is another big issue for SIPA, Kyle adds. “We’re not pleased with the self-regulatory organizations. Who has the legislative mandate to protect the public? Is it the SROs or the securities commissions?” he asks.

SROs do not have the authority to determine the balance between investor protection and member protection, claims Kyle. “This is not merely a conflict of interest, it’s a conflict of mandate.”

This is familiar territory for Kyle. Though not a disgruntled investor, he has been fighting with the IDA and the Ontario Securities Commission (OSC) for years. His former futures trading firm was fined by the IDA after Kyle refused to provide information to investigators and challenged the SRO’s regulatory powers.

Kyle spent three days before the OSC in 2002, which upheld the IDA’s ruling.

“This case has some serious implications,” Kyle says. “The IDA says they are not subject to private law because they perform a government function, but they’re not a government entity because they’re a private association. So are they subject to private or public law?”

Kyle’s case is scheduled to go to court in September.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com