Re: “OBSI running a quiet reign of tyranny,” by Joel Wiesenfeld (IE, July 2007).

The article by Torys LLP lawyer Joel Wiesenfeld, whose practice focuses on stockbroker/investment dealer litigation, castigates the industry-funded Ombudsman for Banking Services and Investments for using the stick of bad publicity to deal with firms that don’t accept its recommendations. Presumably, the Big Banks, fund dealers and giant insurers are cowering in OBSI’s presence. He questions the basic processes used by OBSI, the very processes OBSI’s industry founders defined as their modus operandi. Quite a sob story.

In May, the first and only time since its 2002 inception, OBSI publicly disclosed that a midget mutual fund dealer had refused to accept its settlement recommendation.

For years, investor advocates have been decrying the same processes for being biased against complainants. For years, OBSI publicly and proudly asserted that not one of its recommendations had ever been rejected by an industry participant. In 2006, only about a third of complainants received even a nickel back. The investor must have first made an effort to resolve the case with the firm, a long convoluted, frustrating process. (There is no defined time period wherein OBSI will automatically take on a case; as long as the firm insists it’s still working the case, it maintains control.)

In 2006, the number of investment cases completed was a minuscule 67 — a shockingly low number, given Canada’s investing population probably numbers well over 10 million. OBSI does note in its thin 16-page 2006 annual report that even of the people who did use its services, fully 40% had to find out on their own that OBSI even exists.

While in OBSI’s hands, it’s not clear whether the limitation clock stops running. If a complainant accepts the recommendations, they cannot go on to file a civil action. The firm also requires complainants to sign a confidentiality agreement — a.k.a. a gag order — if they agree with the recommendations. If a complainant rejects the proposed settlement, it is removed from the table and the investor is back at Square 1. There is no appeal process for OBSI recommendations. Once OBSI has opined, complainants are told that none of the documents can be used in court and OBSI cannot be asked to testify in any subsequent proceedings, legal or otherwise.

With all due respect to Wiesenfeld, the truly oppressed are small retail investors, seniors and immigrants.

Ken Kivenko
Chairman, Advisory Committee
Small Investor Protection Association
Toronto



Joel Wiesenfeld responds:

What Ken Kivenko’s letter highlights is the lack of choices investors, or, at least, investor advocates, feel they realistically have to seek compensation for investment losses.

One would think that recourse to the courts (Small Claims Court for smaller claims, the simplified procedure in Ontario’s Superior Court for claims up to $50,000, and regular actions for larger claims), to the Investment Dealers Association of Canada’s arbitration program (for claims up to $100,000), to the OBSI and to the dealers themselves (noting IDA and Mutual Fund Dealers Association of Canada complaint-handling requirements for dealers) represent sufficient choice. However, both IDA arbitrations and legal proceedings before the courts have access costs and the risk of adverse cost awards if the claim is unsuccessful.

OBSI is not “the” answer; although, with changes to its processes, it could become a more viable and respected option. Analysing various redress options should not be based on which party is disadvantaged or “oppressed” to a greater extent by deficiencies in the process and results.

Further, any process should involve all parties to the relationships — meaning investors, individual advisors and dealers.

Accountability, transparency, timeliness, competence and, yes, free access and no cost ramifications are all necessary parts of a fair process that will lead to respected results, regardless of who wins and who loses. Processes that result in an adjudicated judgment or in a consensus-driven mediated settlement have built-in fairness components. Even Ken Kivenko doesn’t dispute that the OBSI process, which allows one party to reject the recommendation without penalty but not the other, is not fair. Arguing that any party doesn’t deserve fairness is not an answer.

Joel Wiesenfeld
Torys LLP
Toronto



No guns, please

Re: cover photo of former NHL players in Afghanistan (IE, June 2007).

When the June issue of Investment Executive arrived on my desk, I thought that somehow I had received a copy of the National Enquirer. The picture on the front page showing two smiling NHLers holding weapons was inappropriate for your newspaper.

@page_break@I fail to understand the relevance of this picture. Are you trying to make light of the war? Are you trying to show how two grown men (and I use that term lightly) have fun holding weapons that are used to kill people? Or are you spokespersons for the National Rifle Association, and promoting the use of guns? People are being killed by guns too frequently in Canada, particularly in Toronto. Your newspaper should not make light of their use.

I was very disappointed by your choice of photograph.

Dale P. Martin, CFP
Dundee Insurance Agency Ltd.
Toronto
Editor’s response: We were intending to show our support for the Canadian troops, not of the war or guns. Certainly, our intention was not to offend.