25 July 2022
By Ellen BessnerConsider a common allegation against advisors: clients sue alleging they lost money in unsuitable investments. So, I ask you — as I do at many speaking engagements — what is the item on the know-your-client (KYC) form that advisors gloss over but that judges spend a ton of time digging into when determining whether the client should win?
6 June 2022
By Ellen BessnerAdvisors are caught between a rock and a hard place with the client-focused reforms’ know your client (KYC) obligations. On the one hand, regulators will audit for sufficient detail to support each item on the KYC form; on the other, advisors are met with clients’ resistance, asserting their right to privacy. How much information is enough to support KYC, and how do you get clients to give you information without asking for it directly?
21 April 2022
By Aaron Gold, Ellen BessnerRegistered advisors are mistaken if they believe that, after committing a regulatory breach, they can avoid penalties by leaving the securities industry. In fact, the penalties will invariably be worse.
7 April 2022
By Aaron Gold, Ellen BessnerProvincial securities regulators are given broad powers to review the decisions of self-regulatory organizations (“SROs”), such as the Mutual Fund Dealers Association of Canada (“MFDA”) or the Investment Industry Regulatory Organization of Canada (“IIROC”).1 Until recently, regulators across Canada have taken a restrained view of these powers. Not only have they chosen to limit the circumstances under which they will interfere with the SRO’s decision,2 but the power to substitute their own order has traditionally been reserved for exceptional cases.
5 April 2022
By Ellen BessnerServing clients can be like baking: to bake a small cake or a big one takes the same number of ingredients and similar effort; likewise, smaller accounts need the same amount of care and attention as larger ones. With the enhanced requirements in the client-focused reforms and the expectation of audits to ensure compliance, many advisors complain to me that there aren’t enough hours in the day to service all their clients. I tell them that, to protect their licence, they need to reduce the number of clients in their book of business and instead focus on their target market to grow the assets of those clients.
7 February 2022
By Ellen BessnerAdvisors are entrepreneurs trying to build their businesses and surpass client expectations. Equity markets over the last decade have provided an ideal backdrop to do that. Recently, however, the market has been less predictable, precisely as the client-focused reforms (CFRs) have come into force. Is this a double whammy or, as I suggest, a potential opportunity?
15 November 2021
By Ellen BessnerI joke that my next book will be called But That’s What the Client Wanted because this is a common response by advisors faced with clients complaining about unsuitable investments. Certainly, the analysis of circumstances and advisor’s obligations when a client demands potentially unsuitable products could fill an entire book. Since I’m not writing another book, I will address the issues in this article and direct you to additional resources.
17 September 2021
By Aaron Gold, Ellen BessnerWhen an advisor retains us because they are the subject of a client complaint, they are usually so anxious that they just want us to make the matter go away. However, as defence lawyers, we know better than most that even a single client complaint causes prolonged pain, potentially leading to protracted regulatory, civil and occasionally criminal proceedings. Our job is to move the regulatory matter along toward its conclusion, many by settlement, but also to ensure advisors are informed of the implications on potential parallel proceedings.
9 July 2021
By Ellen BessnerDid you know that clients, regulators, judges, dealers and criminal prosecutors are watching you for non-compliance with new regulations? Are you someone who thinks “I will just continue doing what I am doing and it will be fine,” comfortable in knowing you have never been in trouble in the past, so it won’t happen to you now?
28 May 2021
By Ellen BessnerAlmost every client who retains me for a regulatory matter is surprised. This is typically their first encounter with the enforcement department of their regulator — something they thought would never happen to them. They are upset and scared. And now, with many people working from home, a regulatory matter can feel even worse as you are isolated from your dealer.