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The Canadian Foundation for Advancement of Investor Rights (FAIR Canada) announced last week the receipt of significant new funding from both the Ontario Securities Commission (OSC) and the Investment Industry Regulatory Organization of Canada (IIROC).
The OSC has provided a $2.5 million contribution toward FAIR Canada's fundraising campaign. The OSC's contribution comes from funds collected from monetary sanctions and settlements.
"We are thrilled that the OSC has again demonstrated its strong support of FAIR Canada's work through a substantial funding contribution," said Neil Gross, Executive Director of FAIR Canada. "FAIR Canada has developed an ambitious fundraising plan and we are grateful to lead donors like the OSC and Stephen Jarislowsky for getting our campaign off to a terrific start."
Earlier this year, FAIR Canada announced that one of its long-standing directors, Stephen Jarislowsky, had made a $2 million contribution which challenged FAIR Canada to raise at least an additional $4 million to provide a $6 million endowment fund.
"The OSC's contribution will go a long way to meeting this challenge and will help to provide a sustainable basis of funding for the organization going forward. FAIR Canada encourages like-minded individuals and organizations to contribute to our campaign," said Gross.
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Robo-advisors might prompt shift to best interests standard
For decades, financial advisors have had access to advanced software that can use know-your-client data to categorize investors and prepare model portfolios for them. Some of these programs also use more sophisticated algorithms designed to help formulate recommendations for specific reinvestment of dividends, rebalancing of client portfolios and tax-loss harvesting on an ongoing basis. What's new, however, are service delivery models in which these powerful tools are made available directly to clients online.
These are the so-called "robo-advisors" that are designed to be used primarily with portfolios of exchange-traded funds, dialed to set-it-and-forget-it automatic mode, and wrapped in a very low monthly subscription price. They're quickly gaining popularity, especially among the key demographic of investors aged 20 to 40 years old - a digitally astute cohort very comfortable with online services.
This story originally appeared as an Inside track op-ed in the online version of Investment Executive. To read the rest of the article on our website, click here.
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FAIR Canada in the News
FAIR Canada's funding announcement garnered some media coverage, including the following:
Earlier in August, FAIR Canada released a research report entitled "A Canadian Strategy to Combat Investment Fraud". The report provides an overview of the types of securities fraud that affect retail investors and attempts to evaluate the Canadian system in place to protect investors from such fraud. This report has received a significant amount of media attention, including the news coverage below:
- Canadian anti-fraud measures too fragmented, report finds (CBC News) - Lindsay Speed, FAIR Canada's Legal Counsel and Corporate Secretary, appeared on a television interview on The Lang & O'Leary Exchange, suggesting that Canada needs a better system for combating investment fraud and that more information would help to inform such a system.
- B.C. Securities Commission finds Victoria adviser committed fraud costing investors at least $40 million (updated) (The Vancouver Sun) - Marian Passmore, FAIR Canada's Director of Policy and COO, commented in The Vancouver Sun on the need to revoke the Northwest Exemption, an exemption which allows non-registrants to operate in the exempt market.
- 'Fraud does not respect geographical boundaries' (Financial Post) - Lindsay Speed suggested that a centralized national fraud agency would allow for more efficiencies and better use of enforcement budgets in an article by Barbara Shecter.
- Financial fraud regulation lacks national strategy, group argues (Globe and Mail) - In an article by Janet McFarland, Lindsay Speed commented on the lack of information relating to investment fraud in Canada and noted the need for more information to help better allocate fraud-fighting resources. She also noted the need for more awareness among investors of the prevalence of fraud and of the need to check registration.
- Investment fraud warning signs to heed: Roseman (The Toronto Star) - Lindsay Speed is quoted in an article by Ellen Roseman that emphasizes the need for investment fraud prevention.
- Protecting Canadians from investment fraud (Investment Executive) - FAIR Canada's fraud report was extensively quoted in an article by James Langton, including comments by Lindsay Speed indicating FAIR Canada's surprise at the lack of available information relating to investment fraud.
- La fraude financière largement sous-estimée (Argent) - Lindsay Speed also commented on the lack of a full picture of the amount of fraud perpetrated in Canada in a French-language article in Argent.
FAIR Canada works to bring important investor issues to the attention of media, the Canadian investing public, regulators, government, and industry participants. Other recent FAIR Canada news coverage this month included:
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Neil Gross on Crowdfunding ( BNN Business Day) - Neil Gross, FAIR Canada's executive director, provided insight on the potential risks crowdfunding poses to investors in a television interview on BNN Business Day. He notes that crowdfunding investments will be highly risky, illiquid, and vulnerable to dilution. Mr. Gross notes that FAIR Canada opposes crowdfunding entirely, but that if it is to go forward, among other things, the investment limits for retail investors should be reduced in order to expose Canadians to less risk. In June, FAIR Canada provided written comments relating to crowdfunding on proposals by by certain participating Canadian Securities Administrators' jurisdictions, the British Columbia Securities Commission, and the Ontario Securities Commission.
- Borrowing against home to invest: pros and cons (Winnipeg Free Press) - Marian Passmore is quoted in an article by Joel Schlesinger on leveraged investing strategies, noting that encouraging investors to borrow to invest is a systemic or widespread problem and there should be a presumption that borrowing to invest is not suitable.
For more media coverage, please click here.
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CSA Continues to Propose Changes that Would Reduce Venture Issuer Governance and Disclosure
FAIR Canada has provided comments to the Canadian Securities Administrators (CSA) in response to the fourth iteration of their consultation on venture issuer governance and disclosure. FAIR Canada continues its warning that regulators should be careful not to reduce the level of disclosure or reduce governance standards. We note that this will result in informational gaps for investors and increase the risks of investing in an already risky venture issuer market. FAIR Canada notes that reduced disclosure and governance will not help improve confidence in the venture capital market. FAIR Canada accordingly does not support the proposed reduction in executive compensation disclosure, changes in the requirements to disclose business acquisition reports or the requirement to disclose quarterly management discussion and analysis. We do support the proposed enhanced requirements for impartiality by venture issuer audit committees and suggest enhancements to this proposed change.
To read the rest of the story, please click here.
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