UNITY | The Exempt Market comes together for the greater good
By: Cora Pettipas
When one man stands alone and shouts about the merits of his industry and profession, it is self-serving, when a collective does the same thing, it is altruistic. There is power in numbers, strength in the collective. Everyone wants to feel that they have a purpose, a calling. That they are a part of something greater than themselves and their legacy goes beyond meeting their monthly mortgage payment.
Writer Elbert Hubbard once said, “The world is moving so fast these days that the man who says it can’t be done is generally interrupted by someone doing it.” That was over one hundred years ago, imagine what he would think today. The National Exempt Market Association (NEMA) was a response to industry criticism, disorganization, and a general lack of understanding of private investments, as they are just that: private.
It is easy to be critical of the unknown, especially since the Exempt Market has had its share of investor blow-ups from the pre-31-103 days. Like pike and shot tactics, the pairing of best practises being developed by industry with continuing technological innovation will continue to increase industry effectiveness. The result will be increasing transparency and accuracy in due diligence and the statistics of this market, ultimately increasing the product quality for the investor.
When NEMA was first contemplated; many said it could not be done. Do not try this, it was said, you will just embarrass yourselves. Or, if nothing else, waste your time. Things would not change. Industry could not be unified. Practises could not get better. Regulators would not listen. Securities laws would not be harmonized. Frauds would keep happening consistently. Industry would always be dictated by non industry. Nothing would change. Why even try?
Our association was pioneered by the stubborn few who envisioned the future of the Exempt Market, and thus turned a deaf ear to critics. “Change is very hard to accomplish on your own and standing up for an industry in the face of criticism and regulatory scrutiny can be pretty intimidating. The only way that we can continue to improve this space in a meaningful way is by working together and when you get right down to it that is why NEMA was formed,” explains President and founder Craig Skauge.
The key to NEMA’s success is our members. Our members give us strength, purpose and direction. Barely past the two year mark, NEMA has amassed an industry participation of almost 300 members nationwide. Our association is very proud of what we have accomplished, far exceeding our initial strategic objectives. Our membership base will continue to drive our directives, and their advice and feedback have been invaluable.
With our member’s support and efforts, we have realized on a number of strategic initiatives including our quarterly magazine, Exempt Edge, an Exempt market education website (www.exempteducation.ca), best practise sharing through our committees and a more pragmatic communication channel with regulators and other stake holders.
Our industry is filled with brilliant independent minded individuals who have a thirst for entrepreneurship and a drive for productivity. Creating a collective to represent the Exempt Market was a challenge compared by some to ‘herding stray cats.’ As amusing of a visual as this is, it misses the mark, in my opinion.
Our association is not meant to ‘herd’ anything, we play a supportive role in keeping our industry running at its peak through knowledge sharing, best practise development, education initiatives, an advocacy role to regulators and anything else that is required by a collective as the need comes up. The power of an organized collective is that it unifies industry and helps create a strong, vital force to facilitate growth for all members without fear of persecution.
NEMA’s recently elected Board of Directors represents our membership strength, as they come from different factions of the Exempt Market industry. The board includes President Craig Skauge, and the writer, as well as the titans in our industry. Nick Fournier, Darvin Zurfluh, Nadine Wellwood, Drew Adams, Eric Cardinal and Stephen Freedman are all leaders of Canada’s Largest Exempt Market Dealerships. It is heartening to see solidary amongst competitors, a focus on the big picture, the greater good; in their collective efforts of ‘gathering of the clans.’
Other board members have diverse backgrounds. Two of our newly elected board members, Richard Korble and Andrew Rhee, are compliance specialists and we look forward to their insights in the coming year. Richard has a vast IIROC background and Andrew has regulatory and accounting specializations. Craig Bentham and Darren Smits are two of the top legal minds in the country in private securities, and have a breath of knowledge in product structuring. Jay Modi and Stephen Johnston represent product manufactures (Issuers) and know how to build and maintain quality Exempt Market products for investors. Marcin Drozdz is a well-known communicator, and has a strong background as a Dealing Representative and in distribution.
The Exempt Market is essential to the Canadian capital markets, which is probably why it is the fastest growing area. Some of the brightest Canadian minds work in this space. In fact, it is a well-known industry ‘secret’ that new regulations NI 31-103 brought forward in 2010 should have had a lethal effect on product manufacturers. But our market evolved with the new regulations in 2010 and has grown stronger and more organized in response to the changes.
“In the 38 years that I have been registered with the Ontario Securities Commission it goes without saying that I have seen significant changes and tremendous growth within the Canadian financial industry.” adds NEMA Director Stephen Freedman of Toronto. “Over time investors become the main benefactors as the regulators cautiously introduce new legislation allowing for both greater, and improved, investment choices. I am encouraged by the fact that the leaders of almost all of Canada’s largest EMD’s are working together on the NEMA Board to continually improve education and access for Canadian investors.”
Originally Western focused, NEMA is expanding its roles in other regions of the country, such as Quebec and Eastern Canada. “As an Exempt Market Dealer based in Quebec, NEMA has been my window into the market for the rest of Canada. Thanks to events, introductions and inquiries from members, Alternative Capital Group has forged some meaningful relationships and we have concluded mandates with some partners in the West. I am honored to be a member of the Board of Directors of NEMA and I look forward to further expanding the association’s reach into the eastern part of the country” stated Eric Cardinal.
All these working parts of our industry, from the Dealing Representatives, Exempt Market Dealers, Product Manufacturers, legal and service support providers all have one common goal; the satisfaction of the end user: the investor. Without a happy investor, our market would cease to exist with the growth and variety we enjoy today. Investors are looking for non-traditional investments that are not so beholden to monetary and fiscal policies of governments, which can generate income and returns in a historical low interest rate environment. Our industry is delivering those options, but, like most things, there is still room for improvement.
NEMA members are excited about the future, and excited about fulfilling the full potential of what private investing has to offer as a wealth creation tool for investors. In two short years, NEMA has come a long way in shaping the Exempt Market and building its integrity. We look forward to a bright future. The strength in an association is its individual members and the strength of the members is the association.
Unity is power, fragmentation is failure. Criticism – well that is inevitable.