A good article from David Baines of the Vancouver Sun (hat tip Ken Kivenko) about how lightly a mutual fund salesman got off from his regulators for what appeared to be inappropriate and excessive use of leverage in his clients’ accounts.
What was more important was that the article pointed out that the regulators and the firm in question appeared not to have advised other clients that they may likewise have been exposed to inappropriate practises. This is relevant at a time when the Financial Services Ombudsman in Canada is proposing that it remove its obligation to address systemic issues from its mandate.
Clearly, the ability to address systemic issues needs to be upgraded not eviscerated! And, from the article in question:
“Last Saturday, I expressed chagrin at the relatively light penalties that regulators handed former mutual fund salesman Sy Mytting for encouraging five clients to borrow inordinate amounts of money to invest in mutual funds.
For his sins, the Investment Industry Regulatory Organization of Canada banned Mytting from the securities industry for five years and ordered him to pay $70,000 in fines and costs. In my view, this is not nearly enough considering the financial and emotional distress he caused these clients.
But I am more concerned that neither IIROC nor Mytting’s firm, Berkshire Securities Inc. (which has since been acquired by Manulife Securities Inc.), advised Mytting’s other clients that they, too, might have been victimized by his aggressive leveraging strategies.”
I would also refer any investors to Ken Kivenko’s website for his monthly Fund Observer which provides a detailed and comprehensive summary of similar and other relevant issues.