Small investors push for legislative reform

(July 18, 2005) Ontario’s small investors and seniors are being hung out to dry by the current statute of limitations on civil litigation for breach of trust, according to a group of investor advocates. The advocates and the province’s official opposition critic today called for the repeal of the Limitations Act, 2002.

The call to repeal the law was made in a joint press conference involving Stan Buell, president of the Small Investors Protection Association (SIPA), Judith Muzzi, president of United Senior Citizens of Ontario, Bill Gleberzon of Canada’s Association for the Fifty Plus (CARP) and Conservative MPP Joe Tascona, of the Barrie-Simcoe-Bradford riding.

The Limitations Act, 2002 reduced the statutory limitation on suing over breach of trust to two years from six. The two-year limitation does not apply to acts of fraud, which are covered by the Criminal Code.

“We don’t feel that’s a sufficient period because of the amount of money involved in this industry,” says Tascona, leaving out any mention that it was his own party that crafted the legislation in the first place, before the Liberals won the 2004 election.

“There are many agencies that profess to offer investor protection and yet they have allowed this legislation to go through with out objecting to it,” said Buell. “My question is: who is really providing investor protection?”

The problem with the two-year limitation, Buell says, is that by the time an investor goes through the “proper channels” of filing a complaint with the regulators, the window could be nearly shut.

“Those who try to follow the industry process take a long time to get through the process — quite often more than two years,” Buell said. “The two-year limitation on taking civil action is just not enough, particularly for seniors.”

Buell says it is too easy for accused investment firms to stall the process once the investor files a regulatory complaint, delaying the filing of a suit until the two-year limit has expired.

“It is important that the limitation period be removed completely from the Ontario Limitations Act,” he said. “It is important that people have more time to deal with these issues and seek resolution.”

Despite the fact the limitations were introduced by the former Conservative government, the Liberal government is standing by the current law. Buell shared a letter he received from the current Attorney General’s office which read, in part:

“Our new limitations law has been developed based on principles that recognize and fairly balance the competing interests of both plaintiffs and defendants … [but] we all would also want to be able to live our lives without fear that our past actions may become subject to a legal action so many years into the futures that we would be discouraged from engaging in innovation and entrepreneurship.”

Citing accounting scandals at Enron, WorldCom and Nortel, along with the mutual fund market timing cases and the collapse of Crocus and Portus, the advocates say small investors deserve more protection than potential defendants.

“This change is just another form of financial elder abuse,” said CARP’s Gleberzon. “Like the others on this panel, we urge the government to reconsider the legislation — to at least reinstitute the former time period.”

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com