Source: http://investoradvocates.ca/viewtopic.php?f=1&t=177&p=4004
Timestamp: 2019-04-25 03:03:11+00:00

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Misconduct and malpractice. Investment industry "best and worst practices". Information to improve public protection. Expert witness services for industry and investors. Forensic investment analysis. • View topic - Financial crime more than every other crime combined?
Financial crime more than every other crime combined?
Re: Financial crime more than every other crime combined?
A dramatic spike in suicides between 2008 and 2010 can be linked with the economic crisis, according to a study published today in the British Journal of Psychiatry.
Researchers from the University of Oxford compared suicide data from before 2007 with the years of the crisis and found more than 10,000 "economic suicides" associated with the recession across the U.S., Canada and Europe.
"During the Lake Forest College lecture, Kidney put up a chart to show how Wall Street’s epic corruption impacted the average American and the U.S. economy.
The chart shows that $19 trillion in U.S. wealth was lost; there was a 30 percent drop in housing prices; 8.8 million American jobs were lost; and 10 million homes were lost to foreclosure."
Former SEC Attorney James Kidney suggests that the US lost $19 Trillion due to financial system design. Design that robs America while unjustly enriching financial players. Perhaps the number one (hidden) cause of economic uncertainty in America.
"During the Lake Forest College lecture, Kidney put up a chart to show how Wall Street’s epic corruption impacted the average American and the U.S. economy. The chart shows that $19 trillion in U.S. wealth was lost; there was a 30 percent drop in housing prices; 8.8 million American jobs were lost; and 10 million homes were lost to foreclosure."
A jaw-dropping video of a lecture James Kidney delivered at Lake Forest College outside of Chicago on October 12 arrived in our incoming email last Friday. The courage and frankness of that lecture took our breath away. It has also, no doubt, caused major ripples among the top brass at what is supposed to be the nation’s most formidable Wall Street cop, the Securities and Exchange Commission (SEC).
In other words, Kidney had enjoyed a stellar career at the SEC until one day in 2009 when a Goldman Sachs case, now infamously known as Abacus, was assigned to him. Abacus became a civil suit brought against Goldman Sachs and one of its lowly salesmen, Fabrice Tourre. Goldman Sachs settled its charges with a payment of $550 million and never went to trial. Not only did the corporation not stand trial, but neither did the American hedge fund owner, John Paulson, who, according to Kidney, plotted with Goldman Sachs to create a bundled pool of assets designed to fail so that he could make $1 billion betting against it (known as shorting). Unsuspecting investors lost approximately the same $1 billion that Paulson’s hedge fund made.
Tourre was found guilty by a Manhattan jury on six out of seven fraud counts and agreed to pay more than $825,000 in fines. He was never criminally charged and did not go to jail.
But it wasn’t just the SEC that failed to bring higher ups on Wall Street to court. The SEC has only civil powers. It takes the U.S. Department of Justice to bring Federal criminal cases against Wall Street which can put people in jail. Kidney noted the following during his lecture at Lake Forest College: “So far as I can determine, and I have followed this closely over the years, only two actual people, employed by Wall Street banks, ever were named defendants by the SEC or the Department of Justice” for crimes connected to the epic Wall Street crash that brought down the U.S. economy. The two were Fabrice Tourre of Goldman Sachs and Kareem Serageldin of Credit Suisse.
During the Lake Forest College lecture, Kidney put up a chart to show how Wall Street’s epic corruption impacted the average American and the U.S. economy. The chart shows that $19 trillion in U.S. wealth was lost; there was a 30 percent drop in housing prices; 8.8 million American jobs were lost; and 10 million homes were lost to foreclosure.
It was the largest financial collapse in America since the Great Depression with troves of documents and whistleblower reports showing that the largest U.S. banks (like JPMorgan Chase and Citigroup) knew that the pooled mortgage products they were peddling to investors were defective. Despite that, the only man to see the inside of a jail cell as a result of criminal charges brought by the U.S. Department of Justice was Kareem Serageldin of Credit Suisse – an Egyptian born trader from a Swiss bank — who was sentenced to 30 months in jail in 2013.
At the time of Chernow’s article, $4 trillion had been erased from the stock market.
Those who have taken a long, hard, honest look at Wall Street understand that it is in critical need of deep structural change: that America cannot begin to heal economically until Wall Street’s invisible hand is removed from our pocket.
Let’s also not forget that quite a number of those 7,300 companies that were listed in 1996 failed in the great dot.com crash of 2000 because Wall Street’s minions pumped out bogus buy recommendations on new companies that didn’t have a prayer of making it as an ongoing business. The real motive behind the listing was to fuel fat bonuses for themselves. The largest investment banks were calling the startups they were peddling to the public “dogs” and “crap” behind closed doors while lauding their virtues in “research” released to entice the public to buy.
“Alex Brown’s roots dated back to 1808. It was involved in the IPO of Microsoft and Oracle Systems. It was acquired by Bankers Trust in 1997 and two years later merged into the German behemoth Deutsche Bank.
“Montgomery Securities, heavily involved in high-tech issues, was sold to Nationsbank for $1.2 billion in 1997. Nationsbank would acquire BankAmerica the following year, but keep the name BankAmerica as the legal entity. In 2008, during the financial crisis, BankAmerica purchased the large retail brokerage firm, Merrill Lynch, which was teetering near insolvency.
Another critical Wall Street reform that must be addressed is restoring the Glass-Steagall Act that would separate banks that hold taxpayer-backed, insured deposits from the gambling casinos on Wall Street. It’s not just that taxpayers should never be put on the hook again for another massive Wall Street bailout. It’s equally critical that five mega banks on Wall Street stop controlling the destiny of the nation through their unprecedented concentration of deposits, derivatives, credit cards, mortgage and commercial loans, hedge fund financing and control of the electoral process through their campaign financing.
And finally, Wall Street’s perpetual invisible hand in our pocket is facilitated by the lack of transparency for its crimes as a result of it setting up its own private justice system which bars the public and the press from these private adjudications which are rigged by their very structure of limiting discovery, selecting arbitrators from a limited pool completely unlike jury pool selection, and ignoring case law and legal precedent in deciding the case. Known as mandatory arbitration, the process has been shown time after time to be as bogus as the dot.coms Wall Street was peddling during the illusory tech boom.
Darkness, fraud and a rigged wealth transfer system currently constitute the business model of Wall Street. Until critical structural reforms are made to Wall Street, all that the Trump followers have is a meaningless slogan on a red hat growing tattered and dusty with age.
A few weeks ago the Board of Trustees of Social Security sent a formal letter to the United States Senate and House of Representatives to issue a dire warning: Social Security is running out of money.
… and that every newspaper in the country would have reprinted this ominous projection out of a basic journalistic duty to keep the public informed about an issue that will affect nearly everyone.
The story was hardly picked up.
It’s astonishing how little attention this issue receives considering it will end up being one of the biggest financial crises in US history.
That’s not hyperbole either– the numbers are very clear.
The US government itself calculates that the long-term Social Security shortfall exceeds $46 TRILLION.
In other words, in order to be able to pay the benefits they’ve promised, Social Security needs a $46 trillion bailout.
That amount is over TWICE the national debt, and nearly THREE times the size of the entire US economy.
Moreover, it’s nearly SIXTY times the size of the bailout that the banking system received back in 2008.
So this is a pretty big deal.
More importantly, even though the Social Security Trustees acknowledge that the fund is running out of money, their projections are still wildly optimistic.
In order to build their long-term financial models, Social Security’s administrators have to make certain assumptions about the future.
What will interest rates be in the future?
What will the population growth rate be?
How high (or low) will inflation be?
These variables can dramatically impact the outcome for Social Security.
For example, Social Security assumes that productivity growth in the US economy will average between 1.7% and 2% per year.
This is an important assumption: the higher US productivity growth, the faster the economy will grow. And this ultimately means more tax revenue (and more income) for the program.
But -actual- US productivity growth is WAY below their assumption.
Over the past ten years productivity growth has been about 25% below their expectations.
And in 2016 US productivity growth was actually NEGATIVE.
Here’s another one: Social Security is hoping for a fertility rate in the US of 2.2 children per woman.
This is important, because a higher population growth means more people entering the work force and paying in to the Social Security system.
But the actual fertility rate is nearly 20% lower than what they project.
And if course, the most important assumption for Social Security is interest rates.
100% of Social Security’s investment income is from their ownership of US government bonds.
So if interest rates are high, the program makes more money. If interest rates are low, the program doesn’t make money.
Where are interest rates now? Very low.
In fact, interest rates are still near the lowest levels they’ve been in US history.
Social Security hopes that ‘real’ interest rates, i.e. inflation-adjusted interest rates, will be at least 3.2%.
This means that they need interest rates to be 3.2% ABOVE the rate of inflation.
This is where their projections are WAY OFF… because real interest rates in the US are actually negative.
The 12-month US government bond currently yields 1.2%. Yet the official inflation rate in the Land of the Free is 1.7%.
In other words, the interest rate is LOWER than inflation, i.e. the ‘real’ interest rate is MINUS 0.5%.
Social Security is depending on +3.2%.
So their assumptions are totally wrong.
And it’s not just Social Security either.
According to the Center for Retirement Research at Boston Collage, US public pension funds at the state and local level are also underfunded by an average of 67.9%.
Additionally, most pension funds target an investment return of between 7.5% to 8% in order to stay solvent.
Yet in 2015 the average pension fund’s investment return was just 3.2%. And last year a pitiful 0.6%.
This is a nationwide problem. Social Security is running out of money. State and local pension funds are running out of money.
And even still their assumptions are wildly optimistic. So the problem is much worse than their already dismal forecasts.
Understandably everyone is preoccupied right now with whether or not World War III breaks out in Guam.
But long-term, these pension shortfalls are truly going to create an epic financial and social crisis.
It’s a ticking time bomb, and one with so much certainty that we can practically circle a date on a calendar for when it will hit.
Waiting on politicians to fix the problem is not one of them.
The government does not have a spare $45 trillion lying around to re-fund Social Security.
So anyone who expects to retire with comfort and dignity is going to have to take matters into their own hands and start saving now.
Consider options like SEP IRAs and 401(k) plans that have MUCH higher contribution limits, as well as self-directed structures which give you greater influence over how your retirement savings are invested.
These flexible structures also allow investments in alternative asset classes like private equity, cashflowing royalties, secured lending, cryptocurrency, etc.
Learning how to be a better investor can increase your investment returns and (most importantly) reduce losses.
And increasing the long-term average investment return of your IRA or 401(k) by just 1% per year can have a PROFOUND (six figure) impact on your retirement.
These solutions make sense: there is ZERO downside in saving more money for retirement.
But it’s critical to start now. A little bit of effort and planning right now will pay enormous dividends in the future.
That there are large sentencing disparities between white collar criminals and armed robbers shouldn’t be a surprise to anyone. The American legal system exhibits a strong bias toward individuals with resources who can afford top lawyers to negotiate a lenient sentence for, say, defrauding 600 investors out of $1 billion.
But according to data provided by Dynamic Securities Analytics in partnership with Ponzitracker.com, the gaps in sentencing might be larger than one might expect.
Ponzi scheme operators who stole more than $100 million in 2016 were sentenced to 14 years, about 168 months in prison, or 21 days for each $1 million stolen.
By comparison, federal sentences for robbery were 117 months (9.75 years) with a median loss of $2,989, which works out to about 40,372 months in prison for each $1 million stolen.
In other words, robbers served 50,000x more time per dollar than your average financial fraudster.
And the disparity widens as the amount stolen increases. Those who stole less than $5 million received sentences of, on average, 2.75 years, or about 159 months per $1 million stolen.
The disparity for those convicted of theft is less jarring. Typically, convicted thieves served 22 months for a median loss of $137,828. That’s about 159 months per million, or 227 times as long as the average Ponzi operator.
Aside from the presumed wealth of those convicted, what is it that differentiates a Ponzi scheme from a robbery that makes such a dramatic difference in sentencing? A robbery implies force, sure, but is that enough to warrant a sentence that’s 50,000 times longer relative to the amount taken?
Of course, not every Ponzi scheme receives the intense media coverage that Bernie Madoff's did when he stole $60 billion, the largest financial fraud in US history. New York City dominated the Ponzi scheme tables again in 2016 thanks to the collapse of Platinum Partners, whose executives were charged with stealing more than $1 billion. Ten Ponzi schemes collapsed in California, the most of any state.
Joyce Nelson has written in-depth on this subject as well as postal banking, “asset recycling,” the Canada Infrastructure Bank, Iceland’s resistance to austerity, and much more in Beyond Banksters: Resisting the New Feudalism.
One of the most important legal cases in Canadian history is slowly inching its way towards trial. Launched in 2011 by the Toronto-based Committee on Monetary and Economic Reform (COMER), the lawsuit would require the publicly-owned Bank of Canada to return to its pre-1974 mandate and practice of lending interest-free money to federal, provincial, and municipal governments for infrastructure and healthcare spending.
Renowned constitutional lawyer Rocco Galati has taken on the case for COMER, and he considers it his most important case to date.
Created during the Great Depression, the Bank of Canada funded a wide range of public infrastructure projects from 1938 to 1974, without our governments incurring private debt. Projects like the Trans-Canada highway system, the St. Lawrence Seaway, universities, and hospitals were all funded by interest-free loans from the Bank of Canada.
But in 1974, the Liberal government of Pierre Trudeau was quietly seduced into joining the Bank for International Settlements (BIS) – the powerful private Swiss bank which oversees (private) central banks across the planet. The BIS insisted on a crucial change in Canada.
Just paying off the accumulated compound interest – called “servicing the debt” – is a significant part of every provincial and federal budget. In Ontario, for example, debt-servicing charges amounted to some $11.4 billion for 2015.
And that’s exactly what “the fraudsters” did. After 1974, the Bank of Canada stopped lending to federal and provincial governments and forced them to borrow from private and foreign lenders at compound interest rates – resulting in huge deficits and debts ever since. Just paying off the accumulated compound interest – called “servicing the debt” – is a significant part of every provincial and federal budget. In Ontario, for example, debt-servicing charges amounted to some $11.4 billion for 2015.
In February 2015, Rocco Galati stated publicly: “I have a firm basis to believe that the [federal] government has requested or ordered the mainstream media not to cover this [COMER] case.” Subsequently, the Toronto Star and the CBC both gave the lawsuit some coverage last spring and there was good coverage in alternative media. But given the importance of infrastructure-spending in the recent federal election campaign, it’s amazing (and sad) that the COMER lawsuit was so ignored, even by the political parties – especially the NDP.
With the Harper government touting its ten-year, $14 billion Building Canada Fund, and the Liberal Party of Justin Trudeau promising to double that amount of funding by running three years of deficits, the NDP led by Tom Mulcair pledged to balance the budget. The NDP could have explained and championed the COMER lawsuit and even possibly utilized it to somehow justify the balanced-budget promise – a platform plank that likely cost it the election.
It’s those “pools of capital” – including Wall Street titans like Goldman Sachs – that are set to profit handsomely from Canada’s new infrastructure lending and spending spree.
Of course, borrowing from the Bank of Canada at NO interest rates would be even more fiscally responsible, and would keep policy decisions out of the hands of foreign lenders.
Joyce Nelson is an award-winning freelance writer/researcher and the author of five books.
See part 2 of this series: Whose Canada Infrastructure Bank?
"those illegal acts which are characterized by deceit, concealment, or violation of trust and which are not dependent upon the application or threat of physical force or violence"
(1989, 3). While the true extent and cost of white-collar crime are unknown, the FBI and the Association of Certified Fraud Examiners estimate the annual cost to the United States to fall between $300 and $660 billion.
A report issued last week by Wells Fargo is no bodice-ripper, but it does have moments of guile, intrigue and betrayal to match the seediest pulp fiction.
Nearly a third of the fraud described in the report was concentrated in California, which, when the bad behavior began, was still reeling from earlier actions of a different set of rogue bankers whose practices led to a host of problem from the subprime loan meltdown and taxpayer bailouts to the mortgage default crisis for which the Northern San Joaquin Valley was ground zero in 2008.
The report attempts to explain how managers at a Big Four bank could have cultivated thousands of dishonest underlings who then created as many as 2 million bogus accounts and engaged in other chicanery. Branch personnel at Wells Fargo have been accused of preying on non-English speakers, young adults and the elderly. It also hoodwinked other pitifully gullible members of society like professional investment managers and writers of popular business management books.
The report whitewashes some of the abuses.
For example, it describes a practice of wiring money in and out of accounts without the knowledge of depositors as “simulated funding.” Less kindly observers might call it wire fraud.
The report also references employees “opening unauthorized accounts” to pocket bonuses. Here, too, less kindly observers might be tempted to call the practice identity theft.
The report paints a picture of fraudsters ravaging the bank like a plague of locusts.
We meet John Stumpf, Wells Fargo’s former chairman and chief executive officer; and Carrie Tolstedt, a bespectacled former senior banking executive. Both shoulder much of the blame in the pages of the report. The bank’s board is now trying to claw back millions in bonuses promised to the two, though it’s unlikely either will have to pay back the millions already paid them over many years as a result of the institutionalized petty larceny.
Before the revelations, Wells was known for its skill in cross-selling all manner of accounts, services, credit cards and mortgages. In 2009, it claimed it had reached a point of getting each retail customer to subscribe to an average of nearly six Wells Fargo products. That claim now seems fishy.
In 2009, America was more than a year into the Great Recession. People were upset with their banks. No one had much brand loyalty. It’s just not believable.
The report finds the fraud disproportionately affected California, Arizona and Florida – states heavily hit by the subprime meltdown. At Wells, the Golden State had the highest number of sales practice-related allegations (27.9 percent of the total) and terminations coupled with resignations (28.2 percent of the total).
The report is silent on the role junk fees have come to play in banking since the end of the Great Recession.
As a result of Dodd-Frank reforms and unresolved problems with Fannie and Freddie, fees have increasingly become the raison d’être of big banks as lending becomes more problematic. In 2016. three of America’s biggest banks – JPMorgan Chase, Bank of America and Wells Fargo – are getting rich on fees. They raked in more than $6.4 billion from ATM and overdraft fees, according to an analysis by CNNMoney and S&P Global Market Intelligence.
That’s up almost $300 million from the previous year.
Meanwhile, a wave of investigations continues. In March, the Wells Fargo reached a $110 million settlement over the creation of the fake accounts. Though the accounts were fake, the fees they generated on unsuspecting depositors were all too real.
Moreover, the fraud cost ordinary people countless hours trying to identify and unwind accounts.
Wells Fargo ended up firing 5,300 employees (averaging as many as 377 fake accounts each) and launched its mea culpa tour.
In the background, U.S. banks push for more ebanking, incentivize direct-deposit programs and would like to eliminate legal tender from transactions wherever possible. In places like Sweden, this is happening.
From 2005 to 2015, the total value of ATM withdrawals in Sweden fell by 47 percent. During the same period, card payments increased by about 50 percent. One statistic shows that cash transactions made up barely 2 percent of the value of all payments in that country in 2015.
In a government study in the U.K., researchers found cash was only the second-biggest threat for criminal activities like money laundering. The bigger threat, according to researchers, was the banks themselves.
Jeremy Bagott, a former journalist, writes about finance and land-use issues in the state. He wrote this for The Modesto Bee.
Thanks to all who contribute to this report by sending in examples, with a source-link so they can be added to the tally.
The research question is this: “How does the cost of systemic financial and investment industry failures or wrongdoing, compare to the economic harm done by the ‘ordinary’ crime in America....comparison of crime/harm done by ‘trusted’ perpetrators of harm, verses ‘non-trusted’ perpetrators of harm.
People who we tend to trust, as compared to those whom we do not trust.....who does more financial damage to America?
Orange County, Ca south bankruptcy do the the kind of help one gets from an unregulated, "honour system" of financial games playing.
The treasurer of Orange County managed to ‘erase’ $1.7 billion of the $7.5 billion entrusted to him. I would ascribe a great deal of his ability to erase this much money to the ‘help’ and guidance that he may have received from a Wall Street advice giver...while a survey in the TIMES ORANGE COUNTY at the time read thusly: "Poll: Poverty seen as a sign of personal weakness”.
It is now 20 some years later and I think the world is coming to terms with the probability that poverty might be a sign of unchecked economic criminality, and not a sign of weakness. That is my view in 2017.
To be continued...work in progress....any good sources/examples (with a link) sent to visualinvestigations@shaw.ca, and thank you for helping flesh out this issue.
Current regulations allow advisors to earn more on some products than others.
One thing that has become increasingly clear to me over the years is that all these regulations that are supposedly there to protect investors actually operate as carve outs from common law. Under agency law an advisor acting under instruction to buy a security would not be allowed to sell you a product that is more expensive than another because he gets paid more for doing so; he would owe a duty of loyalty to the principal and not to the third party to do otherwise.
At present there are no material regulatory or common law protections for advice.
Current regulations allow advisors to earn more on some products than others. The present best interest standard proposals via the CSA Consult appear to me to be attempting to right this carve out in an attempt to prevent advisors from recommending higher cost similar products – this is a best product standard and conforms to agency law with respect to duties of loyalty and performance. It is not a best interest standard for advice.
All a fiduciary standard is, is a common law duty, and in the case of advice, this common law duty is applied to advice. Securities Acts allowed this carve out in the US in 1940 and Canadian Securities Law is drawn from this root. At present there are no material regulatory or common law protections for advice. Suitability is a half way house, a recognition that advice is being provided, that the typical agency relationship of instruction is actually one that includes advice but that regulation of the transaction on its own omits important liabilities associated with this non regulated duty.
The Statutory Best Interest Standard (SBIS) from the expert committee appears to be a best interest standard applied to advice with carve outs from common law that weaken the duties and obligations of the fiduciary duty. The expert committee should provide an explanation as to what the carve outs are exactly. Its standard complements the CSA proposed standard in that it deals with different duties: one is the best product, the other the best advice. But the SBIS, as I said, has critical carve outs that would not be allowed at common law. These carve outs will weaken attempts by individuals to take complaints to court in that a determination has already been made, at a statutory level, that the duty to advice in a client’s best interests is not a fiduciary duty as such and not deserving of its protection.
4% cost to investors in the U.S., and 3.8% "haircut to Canadians"
This compilation of info from two of Canada's top investment academics and professionals, with decades of experience is well worth reading in my opinion.
It looks at mostly Canada, with a bit of commentary about the costs of biased financial advice in the U.S. as well, from studies quoted in this report.
Please find enclosed our comments made in response to CSA Consultation Paper 33-404. The comments are solely in our personal capacity.
Please feel free to follow-up with either of us. Ed Waitzer can be reached at ewaitzer@stikeman.com . Keith Ambachtsheer can be reached at keith@kpa-advisory.com .
Thank you for the opportunity to submit our views on this important topic.
We see the CSA’s initiative as requesting guidance to create and implement measures that will achieve better financial outcomes for the clients of Canada’s retail investment advice and management industry.
As two individuals who have studied this question from both academic and professional perspectives for multiple decades, we believe we are well-placed to respond and contribute to the CSA’s request.
In 1994, the Ontario Securities Commission asked Commissioner Stromberg to undertake a review of regulatory issues facing the then rapidly growing investment fund industry. Her report, released in January 1995, highlighted inherent conflicts of interest with respect to the structuring and management of investment funds and the distribution of securities generally – all resulting in the interests of clients not being placed first. She also noted the inadequacy of the training and proficiency of many of those who sell and manage investment funds. Her proposals addressed these conflicts of interests and proficiency gaps.
a strong financial services sector depends on public trust.
With the passage of over twenty years, the significance of the issues highlighted in the Stromberg report now have systemic implications. For one, a strong financial services sector depends on public trust. This has been seriously eroded and is unlikely to be restored (or a sound regulatory framework built) unless investors are entitled to expect that the financial professionals they rely upon are proficient and will be held accountable to a uniform best interest standard. As importantly, the lack of workplace pension coverage for the majority of Canadian workers, coupled with the ongoing transfer of wealth from savers to the financial sector through high investment fees, have become challenges to the adequacy of retirement income savings. The time has come to act, rather than continue to kick the can down the road.
Separately and together, we have published a series of articles and studies on the question over time. The most recent (a copy of which is attached) is our article “Our investment advisers’ moral compasses are still being aligned” in the August 16, 2016 edition of the Globe & Mail. Bios can be found appended to this submission.
Simple logic predicts that when retail investors are advised by people with conflicting interests and limited competencies, poor financial outcomes will result.
Simple logic predicts that when retail investors are advised by people with conflicting interests and limited competencies, poor financial outcomes will result. There is considerable evidence that this is in fact the case. For example, in a recent Financial Analysts Journal article, Jack Bogle reports a - 4%/yr. average underperformance relative to the market for U.S. mutual fund investors for the 15- year period ending June 30, 2013.
A new paper by researchers from the University of Chicago, Northwestern University, and Western University sheds important light on the ‘value-of-financial- advice’ question in a Canadian context.iii Their study compared the investment behavior and results of a large sample of Canadian mutual fund investors and those of the people who advise them. The researchers found that while conflicts of interest do appear to impact the behavior of some advisers, there is a bigger problem.
However, their own investment results were, on average, worse than their clients’.
They found that in most cases, there was a strong correlation between how advisers advised their clients to invest, and how they invested themselves. However, their own investment results were, on average, worse than their clients’. While their clients underperformed their passive benchmarks by an average -3%/yr., the advisers’ own portfolios underperformed by an average -4%/yr. These findings led the researchers to conclude that in too many cases, advisers are drawn into the industry with the misguided strong belief that the combination of high-fee funds and high turnover will improve investment performance.
These new findings confirm yet again the wisdom of Commissioner Stromberg’s 1995 dual recommendations of establishing a clear ‘best interest’ fiduciary standard, as well as a clear competency standard for individuals providing investment advice in Canada.
As noted by one of us in a related op-ed (attached), Canada takes justifiable pride in our financial institutions and infrastructure. In doing so, we can ill afford to gloss over the nature of customer relationships or be perceived to lag other jurisdictions in our efforts to ensure fair dealing in financial markets. The stakes are too high (and are growing).
ii See Bogle (2014), “The Arithmetic of ‘All-In’ Investment Expenses”, FAJ, Jan-Feb.
iii Linnainmaa, Melzer, and Previtera (2015), “Costly Financial Advice: Conflicts of Interest, or Misguided Investment Beliefs?”, Working Paper. The study was based on a sample of some 500K Canadian mutual fund investors with collective assets of $20B, being advised by some 5K investment advisors.
iv We noted that the client investment performance results reported in the new LMP (2015) study are consistent with those of prior studies of mutual fund performance performed over the course of the last 20 years. However, as far as we know, this is the first study to document that the average investment performance of the advisors’ own portfolios were even worse than those of their clients’. The study’s general findings are also consistent with a personal experience of one of the authors of this submission from some time ago. A 65-year-old just-retired friend requested an assessment of her $300K retirement savings portfolio. It was made up of five high-fee equity mutual funds with no obvious connection to her age, risk tolerance, or her approaching need for supplemental retirement income. Her ‘advisor’ was shocked when she informed him that she was closing the account and moving to a lower-cost solution more suitable to her circumstances.
v See “Make advisors work for investors” in the February 14, 2011 edition of the National Post.
Keith Ambachtsheer was named ‘Top 30 Difference-Maker’ by P&I, the ‘Globe’s #1 Knowledge Broker in Institutional Investing’ and in the ‘Top 10 Influential Academic in Institutional Investing’ by aiCIO, in the ‘Top Pension 40’ by II, ‘Outstanding Industry Contributor’ by IPE, the Lilywhite Award winner by EBRI, and the ‘Professional Excellence’ and ‘James Vertin’ Awards winner by the CFA Institute.
He is Adjunct Professor of Finance, Rotman School of Management, University of Toronto, and Director Emeritus of its International Centre for Pension Management. He is a member of the Melbourne-Mercer Global Pension Index Advisory Council, the CFA Institute’s Future of Finance Advisory Council, and the Georgetown University Center for Retirement Initiatives Scholars Council.
Edward Waitzer served as Chair of the Ontario Securities Commission from 1993 to 1996. He holds the Jarislowsky Dimma Mooney Chair in Corporate Governance at Osgoode Hall Law School and the Schulich School of Business (York University) and is a senior partner (and former Chair) of Stikeman Elliott LLP.
"If the product sold is that of advice, then that advice should be in the best interest of the client. Anything else is fraud, because the seller is delivering a service different from what the consumer thinks he or she is buying."
In January 2004, the Ontario Securities Commission released a concept paper advocating a "fair dealing model." The paper acknowledged that the regulatory regime -- regulating dealers and their representatives through the products they sell -- was based on the outdated assumption that transaction execution is the primary reason people seek financial services. Recognizing that most customers are seeking advice, the concept paper proposed changing the regulatory framework to focus on the advisory relationship.
Financial professionals and salespersons in Canada are allowed to call themselves advisors, irrespective of their professional designation. Few, however, are compensated directly for their advice. Instead, they are paid commissions to sell specific products. Addressing the conflicts of interest that result from commission-based compensation, the paper proposed that retail clients should be entitled to rely on objective advice that is in their best interest and, when there are conflicts of interest, they should be clearly disclosed so that the client can understand the conflicts and how they may affect the advice given.
In September 2004, the proposal was swept into a broader project of the Canadian Securities Administrators (CSA) and rebranded as the "client relationship model." Last month, the Investment Industry Regulatory Organization of Canada (IIROC) published its proposed reforms to establish requirements for the client relationship model. They specifically avoid imposing a duty on firms and their representatives to act in the best interest of clients, focussing instead on improving compliance with the existing "suitability" standard and improving disclosure with respect to conflicts of interest and performance reporting. IIROC noted that part of what influenced its thinking was an effort to harmonize with existing and proposed CSA standards (and other standards applicable to firms not under its jurisdiction).
solution and a disclosure obligation isn't likely to stand in the way of a motivated salesperson. If the salesperson had been bound by a "best-interest" standard, he would recommend a simpler, more reliable and affordable unit.
are unaware of these differences or their legal implications or find them confusing. In the wake of the global financial crisis, the Dodd -Frank Act required the Securities and Exchange Commission (SEC) to evaluate the effectiveness of existing legal or regulatory standards of care for providing personalized investment advice to retail customers. Five months later and with the benefit of over 3,500 comment letters as well as a survey conducted by the CFA Institute (which already requires both a suitability and best-interest standard of its members in order to use the Chartered Financial Analyst professional designation) SEC staff released its analysis and recommendations.
It has proposed a uniform standard of conduct for all brokers, dealers and investment advisors providing personalized investment advice about securities to retail customers to act in the best interest of the customer.
The SEC staff study acknowledges that working through the details of such a standard so as to ensure it is practicable and cost effective will be complex. It does not propose a strict fiduciary duty, nor does it suggest rules to try to eliminate conflicts.
The U.K. Financial Services Authority (FSA) recently banned commissions for advised sales of retail investments and released proposals which would require advisors to explain why a product is better than a cheaper alternative. This and other more intrusive proposals are based on the FSA's realization that there are "fundamental reasons why financial services markets do not always work well for consumers."
The contrast in the direction, speed and intensity of regulatory reform between Canada and other major developed markets raises a number of questions and suggestions. Why did the OSC start down the path of a "best-interest" standard in 2004 and, while others (including the U.K., Europe and Australia) have caught up, we appear to have fallen back to where we started -- disclosure requirements and a relatively static "suitability" standard? To what extent is this a function of a fragmented regulatory framework suffering from bureaucratic inertia (and an industry suffering from regulatory fatigue)? What accountability mechanisms are required to motivate a more focussed and intense effort?
responsibility to do due diligence and shop around for the best price. But should caveat emptor apply when buyers think they are hiring a professional to do the shopping?
There may be light at the end of this tunnel. Hopefully, the robust regulatory reform efforts underway elsewhere will inform and impose some discipline on our own. The OSC has a new chair. It recently established a highly credible Investor Advisory Panel, which has added this issue to its list of initiatives. FAIR Canada, the Hennick Centre for Business and Law, and the Toronto CFA Society are convening a second annual symposium on the subject next week. Finance Minister Jim Flaherty has demonstrated genuine interest in investor protection -- most recently supporting a national strategy to strengthen financial literacy.
Canada takes justifiable pride in its financial institutions and infrastructure. In doing so we can ill afford to gloss over the nature of customer relationships or be perceived to lag other markets in our efforts to ensure fair dealing in financial markets.
- Edward Waitzer is a professor and director of the Hennick Centre for Business and Law at York University and a former chair of the Ontario Securities Commission.
Keith Ambachtsheer is director emeritus of the International Centre for Pension Management at the Rotman School of Management, University of Toronto, and president of KPA Advisory Services.
Edward J. Waitzer is Jarislowsky Dimma Mooney chair and director of the Hennick Centre for Business and Law, Osgoode Hall Law School and Schulich School of Business, and senior partner at Stikeman Elliott LLP.
In 1994, the Ontario Securities Commission asked one of its commissioners to undertake a review of regulatory issues facing what was then a rapidly growing investment fund industry. Commissioner Glorianne Stromberg’s report, released in January, 1995, highlighted inherent conflicts of interest with respect to the structuring and management of investment funds and the distribution of securities generally – all resulting in the interests of consumers not being placed first. She also noted the inadequacy of the training and proficiency of many of those who sell and manage investment funds. Her proposals addressed these conflicts of interests and proficiency gaps.
More than 20 years later, the Canadian Securities Administrators is still studying these issues. Many in the industry continue to argue that it is the client’s responsibility to do their homework. Should caveat emptor apply when buyers think they are hiring a professional to help them do the shopping?
With the passage of time, the significance of the issues highlighted in Ms. Stromberg’s report now have systemic implications. For one, a strong financial-services sector depends on public trust. This has been seriously eroded and is unlikely to be restored (or a sound regulatory framework built) unless investors are entitled to expect that the financial professionals they rely upon are proficient and will be held accountable to a uniform best- interest standard. As importantly, the lack of workplace pension coverage for the majority of Canadian workers, coupled with the ongoing transfer of wealth from savers to the financial sector through high investment fees, have become challenges to the adequacy of retirement income savings. We continue to kick the can down the road.
The notion that financial professionals must act in the best interests of their clients and make full disclosure, particularly regarding conflicts of interest, is long overdue. The need for such core principles have been recognized in most other mature market economies. The suggestion by some Canadian securities regulators is that incremental rules, in the absence of strong foundational principles, may be sufficient. The result, if this approach is taken, will defer practical solutions and raise expectations, which will be disappointed.
We must also look beyond principles that seek to provide a strong moral compass for the industry and focus on ensuring the proficiency of investment “professionals.” If accountants, actuaries and lawyers need to go through rigorous certification processes to practise their profession, why not investment advisers and managers? The stakes, for clients, are often higher, as a recent study concluded.
The study compared the investment behaviour and results of a large sample of Canadian mutual-fund investors with those of the investment advisers who serve them. The researchers found that while conflicts of interest impact the behaviour of some advisers, there is a bigger problem. In most cases, there was a strong correlation between how advisers advised their clients and how they invested themselves. In fact, on average, their investment results were worse than those of their clients. The researchers concluded that, in too many cases, advisers are drawn into the industry with the, misguided, strong belief that the combination of high- fee funds and high turnover will improve performance. This suggests that most investment advisers know no more about successful investing than their clients do.
Finally, it should not be surprising that countries with the strongest best-interest standards for financial advisers also have the strongest rules regarding workplace pension-plan participation. While fiduciary principles-driven funds will easily generate twice the pension per dollar of contribution than the average mutual-fund option, more than three-quarters of Canadian private-sector workers do not participate in a pension plan other than the Canada Pension Plan. The recent agreement to enhance CPP benefits has moved Canada’s retirement savings yardstick in the right direction, but will not fully bridge this looming retirement savings gap. Canada’s financial-services regulators and industry should play a constructive role by raising the bar on fiduciary conduct and designing and offering cost-effective workplace pension plans for 21st-century realities.
This post will serve as the Executive Summary of the longer post immediately following, which contains data.
ANNUAL fees, commissions, costs and abuse of market dominance (price gouging) by giant financial institutions in Canada appears to be costing the Canadian economy an amount of money that is close to the government measured stats of the financial cost to Canadians of all the measured criminal acts in the land.
Comparison of two Morgan Stanley statements show the "Bait" of luring clients with promise of trusted advice....then the "Switch" of delivering them a commission broker who is not responsible for advice.
1. Annual harms which are "built into" the systems, the investment (fees etc) and the annual cost of those investment products and systems.
2. Individual (one off) investment products, tricks or traps which the system allows due to the self-regulatory, or captured-regulatory nature of the game.
3. Systemic issues which ensure that causing financial harm, or ensuring a good financial 'harvest' of people who invest and save, becomes easier for those portions of the industry who practice in this manner.
Consumer Federation of America report on the fraud of commission brokers using self-title (advisor) to pretend to be SEC Adviser. The bait and switch of one "vowel movement".
Please scroll down to the next posting to see a lengthy list of financial harms done to Canadians by our financial services providers and allowed to be done by literally dozens of financial regulatory agencies.
ANNUAL fees, costs and abuse of market dominance (price gouging) by giant financial institutions in Canada appears to be costing the Canadian economy an amount of money that is close to the government measured stats on the financial cost to Canadians of all the measured criminal acts in the land.
In a recent report by the Small Investor Protection Association of Canada, we were shown how easy it was to pull the wool over investors eyes. To conceal the true license of investment sellers, hiding their commission-sales role and giving investors a falsified impression of professional trust and agency duty. In Canada, over 100,000 Investment Advisors do NOT hold an Advisor license, nor the implied duty of care.
Imagine if our most trusted financial institutions were misinforming or misdirecting their trusting clients, in order to glean more money for themselves. Imagine how much money could be made if it were possible to profit, from deceiving the public. In Canada.
In this report, we look at a fraction of the costs imposed upon Canadian society and investors, arising as a consequence of the deceptions in the previous report. We view a partial record, by no means complete, of the financial harm to Canadians over the last two or three decades.
investment harms to Canadians, by investment industry professionals,appear to equal or exceed the financial cost of each and every crime in the land.
If this were found to be possible, it would constitute one of the largest economic drains in the entire nation, and an injustice to every honest citizen. We let the numbers speak for themselves, and hope readers will add their voices, corrective comments, and forward this report to legislators both Provincially and Federally.
Trickery in this report is understood as professional self-dealing, deceptions, and abuse of market dominance, among other tricks and tactics. These result when investment sales agents, Dealer Representatives and commission salespersons, intentionally conceal their license and registration categories, as well as their agency duty to investors. These deceptions are contrary to Canada’s laws, as well as moral codes or conduct, and yet appear to be rampant and accepted, exempted, or ignored, by all regulatory bodies. The public is thus led into a false sense of trust based on deliberately false information.
An OSC statement of allegations said some clients were also not advised they met the minimum investment thresholds to qualify for lower-cost mutual funds within the same class, and instead were sold funds with higher management expense ratios. The OSC said the problem stretched back to August, 2006.
CIBC is the latest in a string of investment firms to face an OSC hearing for overcharging clients on mutual fund or account fees.
In July, three Bank of Nova Scotia divisions agreed to pay $20-million to compensate almost 46,000 clients who overpaid for investments back to 2009. Mutual fund giant CI Investments Inc. reached a deal in February to return $156-million to 360,000 clients who bought mutual funds over a five-year period when the company failed to detect errors in calculating fund valuations. In 2014, three subsidiaries of Toronto-Dominion Bank agreed to repay $13.5-million to clients who were overcharged fees.
Would investors willingly pay each of these costs if they knew it was a “fee grab” and not investment “Advice”, as promised?
If we examine tables 13 and 15 of the CSA consultation document we find that only $12 Billion of the $30 billion in mutual funds are D class which means that $18 billion is invested in full trailer commission paying funds. Since discount brokers cannot and do not provide investment advice , clients are being robbed of returns. Clients are not being treated fairly, honestly and in good faith as required by securities laws. We've been asking IIROC for years to enforce the law ; we're still waiting for an answer. By the way, at 1% trailing Commission , that amounts to $180,000,000 that isn't going towards the retirement funds of Canadians!
It seems like mutual fund self dealing comes in between $25 Billion per year, and $50 Billion per year, depending on whether we rely on U of Toronto Pension study numbers of 2007, or bring this up to date with 2017 numbers.
The latest statistics provided by the Canadian Securities Administrators (CSA) showed that in 2011 mutual fund investors paid $4.6 billion in trailing commissions to advisers and their firms, representing 34% of total revenue from MERs for that year.
3.) Mutual funds that raised their trailer fees experienced a drop in performance, while funds that lowered their trailer fees experienced a rise in performance.
Canadian securities regulators have been mulling a ban of trailer fees or embedded commissions for over two decades. The mutual fund industry, as you can imagine, is vehemently opposed to such a ban.
Sales practices that maximize commission costs to customers and commission revenues to broker =up to $X bil each year on $YY bil per year in funds sales, @5% Deferred Sales Charges (DSC) ???
We appreciate that the industry has a substantial financial interest in keeping trailer fees in Canada, with over $5 billion per year charged to Canadian investors. My co-authors and I have no financial stake one way or the other. We simply report what the data indicate. Blame the data. Please don’t shoot the messenger.
University of Toronto 2007 pension study suggested that costs to Canadians of $500 million weekly, from Canadian mutual fund products alone when compared to institutional pension fund costs.
If the Canadian people, are being harvested by $500 million (2007 actual study figures) to $1 billion WEEKLY (our 2016 estimates), it is time that the financial regulatory forces of this nation received a gentle wake up, perhaps a shake up.
Fractured regulators = $10 billion each year Prof John Coffee, Columbia University, or approx $100 billion out of pockets of investors since this article was written in 2007.
I met with an elderly investor recently…..with a large account which her “advisor” (truly a commission salesperson representing the interests of dealer revenues) wanted to put him into the latest and greatest Investment Dealer trend, a “Fee Based Account”. This would have merely added 2% fees to the account and otherwise done little else, and would have added sixty thousand dollars to this account.
As client age, they become more and more vulnerable, and (non fiduciary) advisors/dealers find ways to squeeze greater amounts of fees from their trusting elderly clients. The trend toward fee-based accounts and products is like creating an “annuity” to the dealer, from the accounts of their clients and not always done for the best interests of the investor.
LSIF’s- just don’t make money A labour-sponsored venture capital corporation (LSVCC), known alternately as labour-sponsored investment fund (LSIF) or simply retail venture capital (RVC), is a fund managed by investment professionals that invests in small to mid-sized Canadian companies. The Canadian federal government and some provincial governments offer tax credits to LSVCC investors to promote the growth of such companies.
Structured products – complex/expensive, forensic analysis of one bank structured product discovered up to five layers of fees buried in them. A veritable bounty of fees to the investment bankers peddling these.
Reverse Churning: The art of placing as much of ones clients into annual-fee- based accounts, and then collecting an annuity of up to 2% from every dollar in every client account, every day of the year.
Fee based accounts, where the objective is to create a “fee annuity” to the dealer and not necessarily or primarily in the interests of the investor.
List Source Diane Urquhart, independent consulting analyst. Toronto.
provincial securities commission regulatory restrictions or investigations.
Exemptions to the law are the hidden way in which investment product makers and sellers can dispose of defective products….silently dumping them onto the consumer without notice of the defects, or warning of the exemptions. No public notice need be given when laws are exempted. No public input or discourse is allowed, and you may never know if you have been the victim of an investment which received an exemption to be sold to you, by the regulator who was charged with protecting you. It feels like a world where the regulator is “running a business within a business”, which endears them to the industry, feathers some nests and justifies the industry paying our Canadian regulators up to $700,000 salaries. (for a “government” regulator:).
The regulatory racket of granting exemptive relief from the law, appears not to be making things better for the public, but in “milking” things better…from the public.
PS. Provincial regulators when asked, will give no protocols, no procedures and no public interest reasons for granting exemptions to our laws. They act completely above the need to be accountable to the public.
The non-bank ABCP market collapsed in August, 2007, leaving investors holding about $35-billion of frozen notes, including 2,542 individuals with investments totalling $317-million.
Private (non regulatory authorities) "negotiate" free do not go to jail passes for participants in return for a refund of small investors monies, and when they have legal immunity, they still do not return the money as promised. (see Purdy Crawford for get out of jail on this one and on $1 bil tobacco smuggling cleanup) Governments have to bail money into this sinking ship in order for small investors to get refunds. Thanks Purdy, keep up the great work you do for……….
Each of these toxic pools of sub-prime debt, did not meet the rating requirements to be sold to the public, but Dealers were stuck with the product and desperately needed to “dump” them like a hot potato.
Enter the byzantine world where Securities Commission will accept a “fee”, and without notice to the public, or warning to investors, will allow public protective laws to be “exempted”, which allows some fairly bad investment products to be unloaded upon the investing public.
Here is a fraction of the investors (from memory only) who got these toxic products dumped on them by salespersons, posing as “advisors”.
Over 2500 smaller investors……some whose lives were ruined with alcoholism, depression, suicide, family breakup. The list of harms to society includes far more than merely being Canada’s greatest economic drain. It is putting some of our most vulnerable people, often seniors, into poverty and despair.
Regulator fines and settlements from the 7 investment banks who settled, and the Coventree fine was only $140 million. All of the investment banks received immunity from lawsuits.
The fines imposed in the end amounted to less than one half of one penny for each and every dollar missing.
More than a hundred pension funds in Canada had invested their cash directly or through their manager in commercial paper backed by financial assets. About $16 billion in total. This was not by greed, but by fiduciary duty to maximize the return on assets to their participants. A possible error, but there was also a tragic lack of information in this fully deregulated market.
There are big name losses among those pension funds: Domtar ($455 million), Ontario Teachers ($60 million) and plans for university professors of Western Ontario ($30 million), Alberta (over $40 million) and British Columbia, the pension fund of credit unions ($60 million), Canada Post ($27 million), but also more pension funds managed by the Caisse de dépôt et placement du Québec ($12,600 million) and the Public Sector Pension Investment Board ($1,972 million).
The Public Service Pension Plan of Canada (PSPP) took a writedown/loss in their 2008/2009 financial report for approximately $2 billion dollars. This is the pension plan for retired RCMP and judges. Ironically, the RCMP did not even know their pensions were being robbed, when they worked alongside the regulatory bodies to quietly close a complaint file alleging criminal activity. The RCMP also did not seem to know that the regulatory bodies they “collaborate” with, are the very agencies who granted exemption to our laws to allow these tainted investments to be sold in Canada.
When I search for the word “Exemption” at my local securities commission I get 8,764 results. But not a single document to justify the exemptions as being in the public interest.
I recall one exemption which was granted to a bank, late one friday evening, when one the bank’s underwriting department, was having difficulty selling a new investment issue, it was not being well received in the marketplace. Yet the bank’s underwriting people could not “look bad” internally and let the bank be stuck with a bunch of junk product on the shelf. What did they do, they applied for an exemption to the laws which prevented them from dumping the bad product into their bank customer’s mutual fund holdings, and Viola!. Problem solved with the swipe of a pen, from a friendly regulator.
There are so many like that. Or the mutual fund and life insurance dealer that learned (and bragged) on it’s share selling prospectus that they could earn “nine to sixteen times” more money if they switched their trusting clients out of high quality and independent mutual fund investments, and into their own “house brand” created funds, with higher commissions, higher annual fees, and zero track record. They applied and received an exemption for just this, and another exemption backdated, for all the provinces that they did this in without asking to skirt the law……they skirted the law first, took advantage of the clients, THEN applied for for exemption a year or two later….I am not making this up.
There are exemptions on the books granted (in Alberta) to Goldman Sachs, JP Morgan, HSBC, every Canadian Bank and investment dealer, etc.
Here is an exemption to the Oleary Funds seeking to obtain relief from restrictions on only being able to lend out 50% of the underlying assets of their investors mutual funds…..or something to that effect. Read it yourself and see if you can spot how regulators, lawyers and financiers apply to bend the rules. Rules designed to protect investors.
Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.
some actual exemption examples with links so you can read for yourself what happens behind closed doors at Securities Regulators offices.
the test set out in the Legislation??
something about it …..must not be “detrimental to investors or the public interest”…..but no commission I have seen has ever demonstrated a protocol or procedure to determine this, nor have I seen any documentation in ANY exemption decision to support such a protocol. I have asked for such documented protocol and been refused 100% of requests.
When banks get stuck with a bad underwriting, and they cannot sell it to the public, they CAN dump them into customers-owned mutual funds…..funds which are managed and run by the banks…….A bad but usually hidden example of self-dealing by banks, while doing harm to bank mutual fund investors. All they need to do is to apply to their securities commission for exemption to the laws.
An exemption to Assante to give commission rebates to clients who are “advised” out of their independent third party funds, and instead sold the Assante house-brand funds.
Commission rebating to encourage switch of client independent mutual funds to Assante’s “house brand” to earn Assante Nine to Fifteen times greater earnings as stated in their 1999 Prospectus……self dealing with clients trust?
Exempt Market Securities are often investment issues which are smaller in size, and may not be able to afford the $1 million dollar cost of drawing up a legal prospectus.
They often involve condominium projects, golf courses, and other developments of all kinds, but of much smaller scale than typical Investment Dealer offerings. As a result, they apply to eliminate the cost of the prospectus, and market them through specific types of dealers who seem to specialize in these products.
Without impugning the products, I find them often sold to investors for whom they are unsuitable, and marketed in a manner designed to lure less sophisticated investors, who are starved for investment yield and investment solutions, and will jump at nearly any shiny brochure with a hotel ballroom sales pitch. There may of course be legitimate exempt market products out there, I just have not been witness to them.
In my community I can point to a church-related organization which raised over $500 million during the boom years, failed to complete a single project out of about two dozen, and instead gave investors 100% losses. I can point to considerable numbers of such schemes in Alberta alone.
Sadly, because they have been approved for sale by Securities Commissions, most marketers and investors can too easily assume a level of scrutiny and legitimacy to this market, and I do not find this a safe assumption to make overall.
Exempt market securities in Alberta lose $2 billion. Most lose 100%, TOTAL loss.
Between 20,000 and 30,000 Albertans have suffered TOTAL loss of their investments, and in some cases their life savings as a result of products sold under the approval of the Alberta Securities Commission, but with “exemption” from the prospectus requirements of our Securities Act? (exempt market products) This (exempt market products) is another entire realm of abusing securities laws to abuse Albertan’s.
Other Canadian Provinces all have their own Exempt Market stories to tell.
Click on image to enlarge and zoom in.
So….which does more harm to Canadians and to society, investment products “sold” to investors by commission salespeople posing (falsely) as “advisors”….or any number of typical criminal offences against society?
It is fairly easy to search for the costs of criminal offences in Canada, but this report on investment industry practices, may be a beginning towards tabulating the cost of the hidden systemic financial harms to society.
Justice Canada’s previous study was in 2008, and it put the social and economic costs of Criminal offences in Canada at $31.4 Billion per year.
While in 1998 Canada spent over $42.4 billion on crime—$15.5 billion on what we think of as the direct cost of crime and the remainder on the less easily measured consequences for the victims—today’s estimates reveal that Canadians spend over $85 billion being victimized by, catching, and punishing crime. Victims’ losses through criminal acts committed against them amount to over $47 billion, more than half of the total. The current cost of crime is over 5% of our national product and this is an underestimate.
And according to Stats Canada, the number of property crime violations in 2015 was 1,154,315 offences.
By way of comparison, our industry-insider estimates in this report come up with costs of systemic and/or intentional harm done to Canadians by a self-regulating investment industry (not counting banking industry offences) is seen to be in the neighbourhood of $65 Billion per year, on average, plus a steady stream of one-off, imaginative “flavour of the month” investments which appear more designed to prey upon Canadians…than to be of service to them. One offs listed herein amount to over $76 Billion.
Although it's extremely difficult to accurately put a price on crime, a recent report from the Fraser Institute, titled The Cost of Crime in Canada, has made a valiant attempt. Not surprisingly, it concluded that crime is an incredibly expensive drain on society.
The report estimates that crime cost Canadians more than $85 billion in fiscal year 2009-2010. That's roughly five percent of GDP. Some recent estimates go as high as $100 billion per year. That's all-in justice costs and impact on lost productivity.
It is hoped that these numbers can be used as a base for more thorough academic study into the social and economic cost of systemic, self regulated investment industry harms to Canadian society. Readers who wish to send me corrections or additions to this topic will find them welcomed and added where they may fit. In this way a report such as this may grow and change over time, becoming more accurate, and more useful to society.
The total harm is estimated at $139 billion from the varieties of systemically harmful products followed herein.
2 mil street crimes in Canada 2015 did harm of $40 billion in round numbers, while a number of a few thousand “Suite Crimes” can do harm to Canada of $139 billion.
In the case of Hollinger, where Conrad Black was convicted of doing some $500 million in economic harm, and was one of two persons convicted, his position allowed him to do a similar amount of crime than could be done by 50,000 street level offences. One man able to do the crime of 50,000 people, and yet in Canada, we can count the prosecutions of this type of thing on one hand……and someprosecutions (Livent, Garth Drabinsky, $ 500 million, take time measured not in months, but in decades, here in Canada.
Sadly, his (Conrad Black’s) conviction did not even take place in Canada, but it was the U.S. system of justice which convicted him. Canada simply appears to be most interested in NOT prosecuting it’s highest status financial mobsters. It seems to be the Canadian way.
One could go a step further and imagine that a single systemic financial infraction can do as much economic and or social harm to Canada as the total harm done by one million ordinary crimes. $35 was billion taken from Canadians, in just one type of crime, with sub-prime mortgage investments 2008.
Now let us look at how much money is spent on catching ordinary criminals verses the systemic financial folks.
courts	$1 Billion	unknown est. single digit millions?
jails and corrections $5 Billion	unknown est. single digit millions?
Court and jail costs for mega criminals needs more work, as the small number of court cases and jail time in Canada reflects a reluctance to even bother pursuing mega criminals in Canada. Conrad Black had to be pursued in a Chicago courtroom for example. No prosecutors could bother in Canada. I am willing to update this report at anytime that better information becomes available.
When we look at the dollars spent on the systemic investment crimes, verses those spent on “ordinary” criminal offences, it seems apparent that 466 times as many resources are spent on catching crime in the streets, while only 2/1000ths of the funds are dedicated to crime in the suites….
And that may explain why fines of less than one-half of a penny, for every dollar taken in Canada’s largest financial ripoff were levied…..
the regulators were in on granting the permission slips (exemptions to our laws) to allow the ripoffs….
It is almost like Canada’s systems are designed and incentivized more to NOT catch our most harmful criminals.
And yet a gang of well dressed criminals in a boardroom, can do the same social and economic harm as the harm done by one thousand or more criminals in the streets.
What if our “trusted” bankers, investment dealers, and offshore tax specialists, are doing ten, one hundred or one thousand times, greater harm than do the Hells Angels or Mafia?
An economic study by P Puri, University of Toronto, 19)?? stated that Canada suffers from having the strongest financial institutions in the world, alongside the weakest regulators in the world…perhaps there is a design for this imbalance?
Perhaps it is the Canadian disadvantage…the largest drain on our entire economic health, and the greatest financial harvest in the country.
It also must be noted, for students wishing to study systemic financial crime, that OBSI, the official banking ombudsman office has as recently as a few years ago been FORBIDDEN to investigate or pursue systemic financial issues. Forbidden to look. What could go wrong with an industry so powerful that it gives orders to the regulators as to what they can and cannot look into.
Furthermore, when some banks (RBC TD etc) were unhappy with the penalties or decisions of this particular regulator, they either refused to pay the penalty, or simply walked-away from this ombudsman, and hired their very own legal entities to “arbitrate” complaints against them. This is another sign of hidden systemic cracks, that, like and underground oil well frack, can cause earthquakes of unimaginable magnitude, harming the financial foundations of every citizen in Canada.
Regulators, police and prosecutors in Canada seem “throttled back” or restrained from investigating anything large, systemic or meaningful….and instead focus on the minor or crimes and minutia only.
This provides a “facade” of what appears to be protective financial industry regulation, while actually allowing the largest and most harmful effects of financial crime, to drain the economy of Canada, and diminish the economic security of every Canadian.
Thus, the unique violence of unregulated financial crime. Hidden. Unprotected. Unprosecuted. A tremendously rewarding, low risk career for any financial “professional”. This is due to our most “trusted” institutions being well above the reach of our mechanisms of justice.
Provinces who wish to protect the public from unfair dealing, should establish Investor Protection Agencies, with government staffing, government funding, and police-like powers, including a mandate to involve the criminal code, which is now often ignored in favour of “self” regulation. These agencies could direct their energies to sole protection of consumers, rather than the “dual-master/dual-mandate” style of regulation that is failing us.
An Investor Protection body should not contain committees or boards who are filled with industry spokespersons, but should be over-weighted towards persons who can demonstrate and uphold a strong public interest protective mandate. Any board protecting the financial health of a nation, or its citizens must be designed to be robust enough to resist the pull of billion dollar corporations.
"The first crime is the actual abuse of trust, whether it be a financial advisor taking advantage of his client for personal gain,, child abuse, malpractice, embezlement, bribe, whatever."
"The second crime is the cover up, involving individuals of considerable power or influence who were not involved personally in the initial wrongdoing, but whose sense of loyalty is stronger than their attachment to honesty and openness. Since exaggerated loyalty may be the very quality that gives such people power and influence, it is hard to know what can be done about loyalty as self serving weakness."
"The third crime is the hoodwinking of police and the public with false assurances that all is well."
In 2008, the total (tangible) social and economic costs of Criminal Code offences in Canada were approximately $31.4 billion. 1.
Total Correction Costs for white collar criminals?
How many bankers and investment bankers do you know of who go to jail?
Total Value of Pain and Suffering White collar systemic Crime =Not measured?
Year-end operating expenditures for police services in Canada in 2014/2015 totalled $13.9 billion in current dollars.
The Integrated Market Enforcement Teams (IMETs) are special RCMP-led units that detect, investigate and deter capital markets fraud. They promote compliance with the law in the corporate community and assure investors that Canada's markets are safe and secure. The IMET Initiative is a partnership with Justice Canada's Federal Prosecution Service, provincial and municipal forces and securities commissions and market regulators.
(teaming with sec commissions, who are paid 100% by industry players, taints the criminal investigative process when the regulators involved themselves (granting exemptions to our laws) in actions that precipitated or helped in the removal of $35 billion from Canada.
Feb 5, 2013 - Is the federal government finally pulling the plug on the RCMP Integrated Market Enforcement Team? There.
We conclude that investment harms to Canadians, by investment industry professionals, equals or exceeds the financial cost of each and every crime in the land.
We appreciate that the industry has a substantial financial interest in keeping trailer fees in Canada, with over $5 billion per year charged to Canadian investors. My co-authors and I have no financial stake one way or the other. We simply report what the data indicate. Blame the data. Please don’t shoot the messenger."
Is there a Two Tiered System of Justice In Canada?
Commit fraud as a citizen and go to jail.
Commit fraud as a financial advisor,....no jail. Ever?
Crime is free when your industry pays the salaries of every Securities Commission, and self-regulator in the land.
52 year old woman found guilty of defrauding social assistance of more than $111,000. Penalty: 90 days in jail, probation for three years, 200 hours of community service, $1,191.41 in restitution, a separate restitution order for $100,000, garnishing of future wages, apology letter, and a $200 victim surcharge.
52 year old woman decides to use time in prison to study Canadian Securities Course and become a Financial Advisor!
Bank CEOs are the New Drug Lords.
Here is a list of some of the banks managed by Bank CEOs, aka the new Drug Lords, that were fined billions of dollars for fixing LIBOR rates and stealing money from clients: Lloyds Bank, RP Martin, Barclays, Deutsche Bank, Royal Bank of Scotland, Société Générale, JP Morgan, Citigroup, Barclays, United Bank of Switzerland and Rabobank.
Here is a list of some of the banks in which the Bank Lords fixed FX rates and are currently negotiating fine amounts with the UK Financial Conduct Authority (FCA): Citigroup, HSBC, Royal Bank of Scotland, Barclays, JP Morgan and United Bank of Switzerland.
That is why HSBC is not the only cartel that houses bankers who have been caught laundering blood money in recent years. Wachovia Bank, Citigroup, Banco Santander, and Bank of America bankers have all been caught leading their banks in participation of this dirty deed as well. According to Paul Campo, head of the U.S. Drug Enforcement Administration’s financial crimes unit, drug traffickers used Bank of America to finance their drug smuggling operations for 10 tons of cocaine and laundered drug money through Bank of America accounts in Atlanta, GA, Chicago, IL, and Brownsville, TX from 2002 to 2009.
If we can make a strong case for a Drug Lord providing more social value and benefits than the largest Bank CEOs in the world, all else being equal, then this is the point when we know our future is dire, especially if we refuse to collectively revolt right now against the very banking system that enslaves us.At first you may think that my aforementioned question is a ludicrous question. After all, how can the positive social benefits provided by a violent, murderous Drug Lord possibly exceed the social benefits, as non-existent as they may be, provided by the heads of the largest bank crime syndicates? Before we dismiss this question, let’s seriously explore it and see what conclusions we may draw from this exercise.
Every large drug cartel in the world, whether it was Pablo Escobar’s infamous Colombian Medellín cartel in the 1980s or El Chapo Guzman’s notorious Mexican Sinaloa cartel of today, has required the logistical support of a sophisticated banking division not just to survive, but to truly thrive. In fact, without the support of a large global Bank CEO, the largest drug cartels in the world would quickly crash and burn and the Drug Lords would disappear. As we explain in the next section, it is simple to conclude that without the consent and help of global Bank CEOs, the world’s largest drug cartels would not be viable. In the 1980s through the early 1990s, Pablo Escobar chose the Italian Banco Ambrosiano and allegedly the Vatican Bank as well to launder billions of his dirty money, while in more contemporary times, El Chapo Guzman handpicked HSBC Bank USA as his preferred bank to launder his billions. Murder and Crime: Drug Cartels v. Global BanksDuring his reign of terror, Pablo Escobar ordered the murder of an estimated 4,000 people, including hundreds of police officers, judges, lawyers, journalists and anyone that dared to oppose his violent drug cartel. Escobar even allegedly tortured his own associates that proved to be disloyal to him. However, of the thousands of murders committed by Pablo’s cartel, it was likely that he did not commit the murders himself. Drug Lords are notoriously careful about committing homicidal acts that would provide the evidence prosecuting attorneys need to put them behind bars for a very long time. It is more than likely that a man like Pablo Escobar paid others to carry out his murders for him. However, Banco Ambrosiano and Vatican Bank executives, if they did indeed knowingly launder Pablo’s billions as has been alleged, share a significant measure of complicity in Pablo’s murders. Without having a bank to launder his money, there would have been no reason for Escobar to continue operating his cocaine cartel and murdering the people that opposed him.
Likewise, one can successfully argue that HSBC CEO Stuart Gulliver and top HSBC bankers enabled many more murders than even Escobar. The Mexican drug cartels, whose money HSBC laundered, have murdered an estimated 80,000 people since 2006 (10,000 murders between 2008 and 2012 by the Sinaloa drug cartel alone), far more murders than Escobar’s empire ever carried out. Even though Banco Ambrosiano and HSBC Bank CEOs were not directly giving the orders to murder people, you must connect the dots between the Bank CEOs that launder drug cartel money and the crimes committed by these drug cartels because the dots can NOT be separated. Both actions are inextricably linked to one another, and without the services of money laundering willingly provided by the bank CEOs, the 80,000 murders committed by the Mexican drug cartel criminals would not occur.
Here is a list of complaints Woods filed with the UK House of Commons, including accusations that the very regulatory agency that was supposed to aid his investigations to uncover truth, the UK Financial Services Authority (FSA), worked more against him than with him to clean up the crimes of the banking industry.The only redeeming excuse that HSBC, Citigroup, Wachovia, and other Bank CEOs may have (that have collectively laundered billions upon billions of drug cartel blood money) is a proven ignorance of these activities occurring within their banking operations. However, as I previously stated, this excuse as a legitimate one is extremely unlikely. An abundance of journalists and law enforcement agencies that have studied internal bank documents to understand the complexity of drug laundering operations of big global banks always reach the same conclusion. US Customs Agent Robert Mazur and Mexican journalist Anabel Hernández, after years of meticulous research, both concluded that bankers at the highest levels of the drug-laundering bank – the CEOs, COOs, and CFOs – all know about these operations beyond any reasonable doubt and that ignorance of these immoral and illegal activities is nearly impossible.
When I worked as a Private Banker for a large global banking firm many years ago, the top policy that was always stressed for all accounts, but in particular, any account that involved a steady stream of large and frequent cash deposits, was KYC, or Know Your Client. It was absolutely incumbent upon the banker to visit the operations, and “kick the tires” per se, of any account that generated large cash deposits to confirm the legitimacy of the cash flow. If the source of these large cash deposits could not be determined, then all such accounts were to be immediately terminated. Thus when men like HSBC CEO Stuart Gulliver profess complete ignorance of laundering billions of cash for drug cartels, I have to concur with Mazur and Hernández’s assessment, as the top experts in money laundering schemes, that it would have been nearly impossible for Gulliver not to know.In conclusion, I would place Escobar in the category of “violence inflicted upon society”, just slightly above global Bank CEOs because the drug lords are the ones giving the direct orders to murder tens of thousands while Bank CEOs are only enabling these murders through their drug laundering operations. However, banks must receive a black mark for willingly participating in extremely profitable, criminal drug laundering operations that leave a trail of tears and misery, as people like Martin Woods, Robert Mazur and Anabel Hernánde have all made it crystal clear through their work that it is near impossible for a Bank CEO not to willingly approve these types of extremely profitable operations that create tens of thousands of homicides.
Furthermore, the comparison between Bank Lords and Drug Lords is made even more apropos when we examine some of the “turf wars” Bank Lords engage in when committing their crimes. Drugs never leave a drug-infested neighborhood when a corner dealer or even a regional distributor is murdered. Rather, a competing Drug Lord will fill the void left by a competitor’s demise and opportunistically expand his criminal empire by providing product distribution in regions where a void may develop. Likewise, when Deutsche Bank was recently forced to vacate one of the 12 seats in the gold & silver rigging game in London, Citigroup swooped in and took control over Deutsche Bank’s vacated turf. Quality of Life/Social Contributions: Drug Cartels v. Global BanksCocaine cartel Drug Lord Pablo Escobar, at the height of his cartel, was believed to have supplied an astounding 75% of the entire world’s cocaine, as strong a monopoly on cocaine as is the US military-protected Afghan poppy fields that recently supplied between 95% to 98% of all heroin distribution today. Pablo’s cocaine empire was so far reaching that Roberto Escobar, one of Pablo’s closest brothers, estimated Pablo’s annual profits to be in the range of $20 billion a year. According to the United Nations Commission on Narcotic Drugs, in 1982, cocaine usage peaked in the United States at about 10.5 million users. Historically, the US has accounted for roughly 40% of all global cocaine users. Using these figures, we can roughly estimate total global recreational cocaine use at 26.25 million users at the height of cocaine’s popularity in the early 1980s. Now let’s factor in the worst possible case scenario for every single one of these 26.25 million cocaine users. Let’s assume, in the worst possible case scenario, that not a single one of them was a functional recreational cocaine user and that every single one of these global cocaine users caused stress and trouble for at least 10 other family members and friends, so that 26.25 million X 10, or 262 million people were adversely affected in some social manner by cocaine users. Since Escobar supplied 75% of all cocaine users at the peak of his operations, in a worst possible case scenario with ludicrous worst possible case assumptions, one would conclude that Escobar had a negative social impact on 75% of 262 million, or 196 million people, in this world. Now you may think to yourself, “Wow, that is a lot of people for one cartel to negatively affect” and you would be correct.But yet, if we compare the negative social value of Pablo Escobar’s drug cartel versus that of the criminal Central Bank cartel, it simply pales in both magnitude and lasting effect. In 1982, during the peak years of Escobar’s operations, the global population was about 4.6 billion people. The decisions that the Central Banking cartel made back then negatively affected not 196 million people as did Pablo’s empire under a worst-case scenario, but exceeded this worst-case scenario by 4,404,000,000 people. Why does the negative reach of the Central Banking cartel extend so much further than that of a drug cartel? To begin, the Central Banking cartel’s fractional reserve banking policies drain the purchasing power from the savings of every single person on on the planet – fathers, mothers, sons, and daughters, aunts, uncles, grandmothers, and grandfathers.
Ever since their existence, Central Bankers have created massive amounts of new money through a process called fractional reserve banking that has created annual inflation rates that far exceed any annual cost of living adjustments (COLA) that any nation’s citizens receive from their employers.
Thus every year, the Central Banking cartel robs the wealth of every single man, woman and child on earth and deliberately makes every single human being’s life on this planet less enjoyable and more difficult.
To compare apples to apples, we simply use the 4.6 billion global population figure that existed at the height of Escobar’s drug empire to estimate the negative-reach of the Central Banking cartel. Fractional reserve banking policies employed by every global commercial banker on earth makes it impossible for large percentages of people that dwell in poverty to ever move out of poverty, and these policies adopted systemically by Bank CEOs in the global banking system cause millions of people worldwide to lose homes, jobs, and emotional stability.Most people don’t understand the above facts about fractional reserve banking policies because governments release bogus “official” inflation statistics through the banker-owned press and media. For example, in the US, the official government rate of inflation in September 2013 was 1.5% and was reported by the US government to be 1.6% for the entire 2013 fiscal year. However, the inflation rate in the US is only so low because, as ludicrous as this sounds, bankers literally have stripped out the largest components of inflation from the equation they use to calculate inflation. A comparable lie would be if you stripped out all components of heat from a heat index and reported that it was -30 Celsius at noon in the Saharan dessert during the hottest month of the year. If you take an honest equation for inflation, as others like John Williams of shadowstats.com have done, then we know inflation rates were more than 9%, or more than 6 times higher than the “official” US government inflation rate of 1.5%. In 2002, none other than the Chairman of the US Central Bank, Alan Greenspan, stated, “The price level in 1929 was not much different, on net, from what it had been in 1800. But in the two decades following the abandonment of the gold standard in 1933, the consumer price index in the United States nearly doubled. And in the four decades after that, prices quintupled. Monetary policy, unleashed from the constraint of domestic gold convertibility, had allowed a persistent over issuance of money.” In essence, Greenspan stated that in just 60 years, prices had increased by 10 times due to fraud committed by Central Bankers and their deliberate “persistent over issuance of money” - fraud that negatively affected every human being on Planet Earth.If you were a 20-year-old young adult that had just graduated college with a starting $30,000 a year salary in 1933, by 1993, just 60 years later, you would have to be earning an annual salary of $300,000 just for your salary to have the SAME purchasing power as your 1933 salary. In other words, you would have had no better a quality of life in terms of purchasing power, earning $300,000 a year in 1993 than you would have had earning just $30,000 a year in 1933 due to the Central Bank cartel’s destruction of currencies. Furthermore, since Alan Greenspan was using the bogus US government “official” rates of inflation to make his calculations, the above example I’ve provided actually UNDER-ESTIMATES the reality of the negative social impact of the Central Banking cartel as $300,000 1993 dollars would actually have LESS purchasing power than $30,000 1933 dollars. Of course, other tangibles such as better technology in 1993 versus 1933 would grant one a better overall quality of life, but technological advances that create improvements in quality of life are certainly not attributable to bankers.If you’re old enough to remember growing up in a time where your father was the sole breadwinner of your household, your mother stayed at home and raised you, you had 2, 3, or even 4 other siblings, and no one was ever without food or clothes and you were considered middle class, that “middle class” life today has all but vanished and has become extinct thanks to the global scam of fractional reserve banking. And we can all thank the criminal Central Bank cartel, as well as their shills and misinformation agents such as Warren Buffet, Charlie Munger, Bill Gates, Jamie Dimon, etc. for this new, much more miserable reality. It amazes me that even when ex-bankers like Greenspan make admissions of their criminal negative impact upon society, that those working within the banking industry still refuse to process the inherently immoral nature of the crime syndicate for whom they work, such is the utter success of bankers’ centuries-old propaganda campaigns. Economic/GDP Contributions, Drug Cartels v. Global BanksLet’s assume that the creation of debt has a net negative overall affect on society (as debt creation drains the wealth of individuals) while the creation of GDP has a net positive affect on society. In the past 15 years, G7 Central Bankers created $7 of debt for every $1 of GDP that they contributed to society, resulting in a net negative [-$6] contribution. In the late 1980s through the early 1990s, drug lord Pablo Escobar “came to control 75 percent of the global [cocaine] market, with [drug] revenues from trafficking equivalent to [a positive] +5 percent share of the country’s GDP.” (Source: Garcio -Bario, Constance. “U.S. War on Drugs in Colombia is Ravaging Farmers and Land”, 2 March 2004. Common Dreams Newscenter). In fact, Pablo Escobar always declared, at every opportunity afforded him, his belief that he was helping Colombia’s economy more than he was hurting it: “The entire economy benefits from drug money; those who traffic and those who do not. If a drug trafficker builds a house, the peasant who cuts the wood for it benefits from that.” Unfortunately, it is exactly this flawed belief of Escobar’s that valued money over all other factors, including morality, that the vast majority of today’s global Bank CEOs have embraced. Though there is no honor in the above statement, whether you agree with it or not, in regards to economic contributions to society, it is obvious that Escobar’s drug cartel produced far more value in terms of GDP for society than bank cartels. Goodwill, Drug Cartels V. Global BanksPablo Escobar, during the height of his drug cartel’s success, was credited with being directly responsible for pulling thousands of his countrymen out of poverty and providing them with jobs. With his billions of drug cartel money, Escobar built schools, hospitals, fútbol fields, and churches and even sponsored many little-league community fútbol teams. Escobar even built housing developments with his blood money and gave thousands of units to poor people rent-free. Of course, these actions were not all altruistic by any means as Pablo’s dealers also were known for widely distributing cocaine in the same housing developments that Escobar built for the poor. Thus, by giving away these apartments, Escobar was ensuring himself of a steady supply of customers.
Despite these obvious contradictions, for all the goodwill that Pablo generated in Colombia, he was revered by thousands in his country as a saint during the height of his empire and still is today. However, to many others, he was and still is a monster.While I am sure that Jamie Dimon, Lloyd Blankfein, Brian Moynihan, Stuart Gulliver, Michael Corbat, Hank Paulson, Ben Bernanke, Peter Zöllner, Christine Lagarde, Mario Draghi, and Mark Carney have all made sizeable donations in their communities at some point and to civic-minded organizations like hospitals and schools and the arts, their more prominent donations seem to be to the police state that can ensure that their rule of corruption will continue. JP MorganChase CEO Jamie Dimon’s well–publicized 2011 $4.6 million payoff to the New York Police Department coincided with a violent police crackdown on Occupy Wall Street protests of Wall Street’s biggest and most corrupt banks, including JP Morgan. Never in a thousand years would hundreds of thousands of the poorest people in any community anywhere in the world call Bernanke, Saint Ben, Blankfein, Saint Lloyd, Moynihan ,Saint Brian, or Dimon, Saint Jamie.
Exploring this topic exposes the ludicrous nature of the inseparable relationship between Drug Lords and Bank Lords. If Bank CEOs did not launder Pablo’s money, Pablo would not have been able to build his schools, churches, medical facilities, homes and community recreational centers. Thus, are Bank CEOs contributing to society because they enable Drug Lords to provide thousands of jobs in their communities? Global Wars: Drug Cartels v. Global BanksIn the category of war and war crimes, who inflicts more harm upon humanity – Drug Lords or Bank CEOs? Though we know that Drug Cartels are drains on the financial resources and budgets of many governments worldwide due to the “War on Drugs” that governments wage upon them, these wars are limited in scope and finances, and are just a drop of water in the ocean when compared to the wars that are financed by Central Banks. Furthermore, the “War on Drugs” is a false war whose true purpose is not to eradicate drugs from neighborhoods but to enrich various parties involved in executing the War on Drugs, namely the military industrial complex, government officials and bankers. Criminal bank cartels are the first enablers of every major war in world history, and other than defense contractors, the largest war profiteers of any global industry.
In some instances, the Central Bankers are even alleged to have instigated and encouraged wars to fulfill their own political agendas.In Tragedy and Hope: A History of the World in Our Time (1966), Dr. Carroll Quigley, a Professor of History at Georgetown University, and US President Bill Clinton’s mentor, wrote:“[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the Central Banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations.”Dr. Quigley stated that the key to the Banking Cartel’s success was to control and manipulate the currency supply of a nation while lying to and informing the public that their government was in control of the currency supply. Thus it is no coincidence that five countries the US has invaded in the last decade – Lebanon, Iraq, Libya, Somalia and Sudan – all are not member states of the Bank for International Settlements (BIS), the Central Bank of Central Banks – while a sixth the US attempted to invade before being rebuffed by Russia’s Putin, Syria, is also NOT a member state of the BIS.Although many American children have falsely been taught in schools that the Revolutionary War started with a protest against prohibitive taxes on tea and stamps known as the Boston Tea Party, Benjamin Franklin correctly explained that it was the inability of the Colonists to get the power to issue their own money, permanently out of the hands of King George III and the international bankers, that was the prime reason for the Revolutionary War.
President Lincoln was murdered on April 14, 1865, less than two months before the Civil War ended.35th US President John F. Kennedy was intent on shutting down the US Federal Reserve and the IRS due to the same realizations of his predecessors that the Central Banking cartel was nothing more than a crime syndicate posing as a legitimate entity and signed Executive Order 1110 on June 4, 1963 that stopped the creation of US Federal Reserve Notes, removed the power of the Rockefellers, JP Morgan, Rothschilds, Warburgs, et al from creating currency in the United States, and returned the power of coining currency to the US Treasury, with the intent of forever retiring criminal fractional reserve currency from use inside the United States. Just five months later, JFK was murdered and his successor, Lyndon B. Johnson, immediately cancelled Executive Order 1110 and reinstated criminal fractional reserve banking in the United States.
To this day, the private banking families that own the US Federal Reserve are the principal financiers of all modern wars, including wars in Libya, Somalia, Iraq, Afghanistan, etc. , providing the war appropriation funding to governments for which governments must pay these bankers interest. When estimates of the US-Iraq War alone have been in the $2 trillion range, it is self-evident that bankers are making out like bandits from funding such wars. Furthermore, as Central Bankers create massive amounts of money (debt) out of thin air to fund major wars, it is self-evident that the creation of 2 trillion new dollars just to fund the Iraqi War has a hugely negative impact upon world citizens as it destroys the purchasing power of all existing dollars in circulation. In other words, every major war leaves the citizens of the nations involved in that war, as well as all global holders of the two currencies used in the warring nations, poorer and in a worse economic state.
Though it is beyond the scope of this article, if you research current global geopolitical tensions between Russia, China and the US by following the trail of money, you will discover that this too has originated from disputes over the desire of Federal Reserve bankers to maintain US dollar hegemony and to prevent the petro-Yuan from replacing the petro-dollar in international trade.
Furthermore though we have informed you earlier in this article that Pablo Escobar was believed to have been responsible for over 4,000 murders whereas El Chapo Guzman was believed to have been responsible for over 80,000 murders, these despicable inhumane statistics still pale in comparison to the more than 4,486 US soldiers killed, more than 1 million Iraqis killed, 3.5 to 5 million refugees, and 15 million Iraqis living in poverty, created from the singular US-Iraq War (Source: http://web.mit.edu/humancostiraq/).
Since Drug Wars to bring down Pablo Escobar don’t come anywhere close to creating the massive level of debt from just one war that Central Banks fund, nor do they come close to the numbers of murders that intense political wars cause, it is apparent that not even Drug Lords can compete with Bank Lords when it comes to spreading misery through the vehicle of global war.Just a hundred years ago, it was common knowledge among the people that any war in which their leaders entangled them was going to cheapen the currency held in their savings, and consequently, the majority of people always fiercely contested every war and insisted on diplomacy over war whenever possible.
Today, it is a sad state of affairs when bankers, through the vehicle of nationalism, have been able to convince people to cheer for their own economic demise, as state announcements of war against other nations are often met with zombie-conditioned, nationalistic chants of “[insert country name here]” versus the thoughtful intelligent protests over currency devaluations that used to meet every single build-up to war just a couple of generations ago.
In conclusion, we have summed up the societal value of a drug cartel like Pablo Escobar’s cocaine empire versus the societal value of Global Banking/ Central Banking Crime Syndicates in the below chart.do global bank CEOs do more harm to society than drug lords?In every category above, the Drug Lord causes less damage to humanity than Bank Lords. When the negative social value of a violent murderous Drug Lord can be successfully argued to be far less than the negative social value created by a sociopathic Bank Lord, we have truly reached the crossroads to determine our future. Either we all stand united and take action starting today to topple the current immoral and misanthropic global banking system, or we resign ourselves, our children and our grandchildren to another century of slavery and tyranny.
it is obvious that the only way to stop the crimes of the new Bank Lords is through grass-roots activism.
after listening to the secret tapes whistleblower Carmen Segarra made of her conversations with her bosses and between her colleagues and Goldman Sachs executives, there are surely a lot of people that will act on such knowledge to help these Bank CEOs become even more powerful and wealthy (i.e. buying their stock instead of divesting, closing deals with them, etc.).
In fact, today’s Bank Lords enjoy a level of special immunity from prosecution against their crimes that no Drug Lord in history ever was able to secure, and this makes the Bank Lords even more powerful than the Drug Lords they are replacing in the global crime syndicate. And this is why only we can really force significant change and stop the transformation of the big bank CEOs into the next Pablo Escobars and El Chapo Guzmans. Please participate in raising awareness about this extremely important issue and help us to light up the darkness by sending this article to every friend or acquaintance you know that works for a large global bank and ask them to follow their consciousness and morality.About the author: JS Kim is the Managing Director of SmartKnowledgeU, a fiercely independent investment research, consulting and education firm.
Learn how to combat banking corruption with targeted wealth preservation strategies and read our SmartWealth fact sheet to learn how you can win a free membership to our newest service, the SmartKnowledgeU SmartWealth Progra (an alternative educational program that breaks down how global capital markets really operate), coming soon. Follow us on Twitter, subscribe to ourYouTube Channel and join our LinkedIn group.
VANCOUVER—Despite a decline in the crime rate, crime cost Canadians $85 billion in 2009 (the latest year with comprehensive data) including $47 billion incurred by crime victims, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.
The study, The Cost of Crime in Canada: 2014 Report (link at end of this post), measures the overall costs of police, courts, prisons, rehabilitation and education. And the varied costs incurred by crime victims due to stolen or damaged property, crime prevention, lost health and productivity, and less tangible costs associated with anger, frustration and fear.
“Unfortunately crime is a fact of life, but to understand whether we spend too little or too much on fighting crime, we need to understand the full costs,” said Stephen Easton, Fraser Institute senior fellow, professor of economics at Simon Fraser University, and lead author of the study.
Although the Canadian crime rate fell 27 per cent between 2002 and 2012, crime costs increased dramatically.
For example, policing costs jumped 43 per cent from $8 billion in 2002 to $11.5 billion in 2012, while corrections costs (prison, parole, etc.) rose 32 per cent from $3.6 billion to $4.8 billion over the same period. Additionally, the cost of legal aid for people who can’t afford legal representation in criminal cases rose from $322.1 million (2012 dollars) in 2002 to $430.7 million in 2012.
The study also found that while the number of criminal cases completed in Canadian courts over the past 15 years has remained relatively stable, the proportion of cases taking more than a year to complete doubled from eight per cent to more than 16 per cent. For example, the proportion of homicide cases that took more than a year to complete rose from 10 per cent in 1994/95 to 49 per cent in 2009/10.
“The costs of crime are rising in part because the Supreme Court of Canada has imposed a set of evolving requirements on the police and prosecutors that make it more expensive to capture and prosecute criminals,” Easton said.
While the study examines the overall cost of crime in Canada, it pays special attention to crime victims, outlining victim profiles based on crime statistics.
For example, the average age of a violent crime victim is 32. Approximately 50 per cent of attempted murder and robbery victims are under the age of 24. Most other violent crimes and property crimes (i.e. vehicle theft) disproportionately affect Canadian males (for example, 64 per cent of assault victims are male), yet approximately 72 per cent of sexual assault victims are female.
“As Canadians, we must ensure that our criminal justice system works fairly and efficiently—crime victims deserve nothing less,” Easton said.
"10 ways Wall Street skims $100 billion of your money"

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