Kenneth Rijock

Kenneth Rijock

Monday, January 2, 2017


Compliance officers at international financial institutions, and the investing public, are at a serious disadvantage, when it comes to knowing which Canadian banks, and broker-dealers, have been subject to regulatory civil penalties, fines, and sanctions, because, generally, the identity of the corporate offenders are not released to the media, and often even the circumstances of the offenses are kept confidential. This means that legitimate business is deliberately kept in the dark, about activity regarded in most countries as criminal, which increases risk; We all lose when crime is knowingly concealed, for political or economic purposes.

If you are not familiar with the practices of Canadian regulators, perhaps a few specific cases will convince you that there are risks involved, in dealing with Canadian banks, broker-dealers, and wealth management firms:

(1) The most outrageous case of 2016 involves the Financial Transactions and Reports Analysis Centre,  more commonly known as FinTRAC, which imposed serious sanctions upon a Canadian bank, including a major fine, but refused, and continues to refuse, to disclose the identity of the bank. The circumstances of the case, which appeared in the mainstream media, included the fact that the bank knew, or should have known, that their client was a career criminal; the details were common knowledge, and had appeared in the media, but the bank continued to service the client, and his money laundering activities. Wouldn't you want to know about this matter, lest you unwittingly do business there, extend credit to the bank's money laundering client, or accept checks from his companies ?

(2) We only learned that the Ontario Securities Commission (OSC) had fined former Leon Frazer & Associates Managing Director Lyle A. Stein, the sum of CAD$500,000, when Leon Frazer Chairman William Tynkaluk disclosed that such a penalty had been imposed; otherwise all OSC fines & sanctions are kept confidential, which places the investing public at a severe handicap. Are investors to assume that the fine was imposed, because of some misconduct that Stein engaged in, over that Leon Frazer, or did it occur at his present company, Vestcap Investment Management, Inc. ? We would also want to know precisely what Stein did, to draw such a large fine. Alas, the OSC always hides its penalties, ostensibly to protect the ongoing business of the offenders; should it not be protecting the public, instead ?

Lyle A. Stein

(3) The $450m Cayman Gang of Four scandal, whereby retired Canadian pensioners lost all their retirement assets, stolen, after Toronto wealth managers breached their fiduciary responsibilities, and placed the money with a known fraudster, has, 18 months after it became public, not resulted in any bona fide investigation, by a Canadian regulator, let alone charges having been filed, and three of those career fraudsters are Canadians.  It may be the largest theft in Canadian history, and Leon Frazer, and Northland Wealth Management, Inc. are implicated, and nobody has yet gone to prison.

Ryan Bateman, Sharon Lamb, Derek Buntain

Many experienced Canadian businessmen suspect that the real reason the country's regulators conceal the names of those financial institutions, and broker-dealers, that run afoul of the law, or knowingly break it, is fear of scandal, and the resultant loss of clients, and business, by the offenders. There remain, still, an unhealthy close relationship, in Canada, between the regulators, and the companies who are supposed to be regulated. Until real reforms are instituted, you would do well to raise Country Risk for Canada.

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