Patron saint of investor protection passes away

That certain investor advocates referred to the unassuming, plain-spoken Stromberg as the “patron saint of retail investors” and as the “Mother Teresa of mutual funds” underscores the foundational significance of her work.

The creation of the Mutual Fund Dealers Association of Canada, the introduction of mutual fund sales practices rules, the client relationship model’s efforts to boost transparency to investors, the client-focused reforms’ attempt to enhance industry conduct, and the Canadian Securities Administrators’ curbs on trailer fees all have their roots in Stromberg’s recommendations.

These incremental efforts to ratchet up investor protection reflect that policymakers never managed to implement the comprehensive vision for regulating the fund industry that Stromberg set down in her initial report.

Regulators have attempted to grapple with the array of investor protection concerns that her review exposed, such as questionable sales practices, fund governance issues, conflicts of interest, and the failings of rep proficiency and the registration process.

While she was an early advocate for educating investors, Stromberg also recognized that the inherent power and knowledge imbalance between the industry and investors could never be fully overcome — which rendered unacceptable the traditional “caveat emptor” attitude to retail investors that prevailed at the time.

While she was uncompromising in calling out the failures of both the industry and her regulatory colleagues, Stromberg was no advocate of stifling regulation. Rather, she relentlessly championed regulation that was smart, effective and streamlined.

“There is a need for better regulation rather than more regulation,” she wrote in her 1995 report, adding that the strategy she favoured “should be to allow competitive forces to operate with minimal intervention.”

Stromberg saw strong investor protection as a prerequisite for industry growth, and the industry has indeed flourished amid the increased regulation stemming from her recommendations.

When then-OSC chairman Ed Waitzer tapped Stromberg to carry out her review of the fund industry, the project was partly initiated in response to surging fund assets — at the time, industry assets under management had reached about $130 billion, up from $67.3 billion at the end of 1992.

Since then, as regulation evolved in response to her work, industry assets have exploded, with combined mutual fund and ETF assets currently approaching $2.2 trillion.

Stromberg followed her seminal 1995 review with a 1998 report for Industry Canada. That report addressed the industry’s response to her initial report, policymakers’ progress on its recommendations and her vision for the future of investor protection.

Soon after, Stromberg stepped down from the OSC, but never retreated from her strong views on investor protection, industry conduct or the shortcomings of the regulators.

Prior to her rise to prominence at the OSC, Stromberg was a pioneering securities lawyer and a partner at Cassels, Brock & Blackwell LLP — at a time when Bay Street was more hostile to women than it is now.

Stromberg was born in Montreal and grew up in Saskatchewan, where she continued to return in the summer. She graduated from McGill University with a BA in philosophy in 1959, and embarked on her legal career in 1964 after earning an LLB from Osgoode Hall Law School.

In 2005, she was appointed a member of the Public Accountants Council for Ontario, which was created to oversee standards for the accounting industry.

Stromberg’s family indicated in her obituary that, in lieu of flowers, memorial donations can be made to the Sunnybrook Hospital Foundation.