We Said It...
Here are excerpts of some of the things our members wrote in to the ASC during WEMA’s Accredited Investor and minimum purchase exemption letter campaign in February, 2012.
Thomas Beyer President Prestigious Properties Group:
“Today any person can buy lottery tickets for thousands of dollars, or walk into a casino and gamble away $50,000 or $100,000 in one evening. Investors also can invest their entire net worth in penny stocks in an online brokerage account, and double it or lose it all. No restrictions to my knowledge exist today in those spaces. Responsible adults should be allowed to make their own life choices, based on as much facts as possible.”
Darren Smits, Partner for Miller Thomson LLP:
“Prospectuses and the financial statements relating to public companies are effectively too complicated and too lengthy for average investors to understand. Given the overwhelming volume and complexity of information, investors often forego reading the disclosure materials provided. We feel that the Western Jurisdictions have it right with the amount of discourse that is required in an OM.”
“There is a need to strike a balance between “investor protection” and “efficient capital raising”. From our experience, in our practice we have not run into issuer’s that are looking to defraud people, but rather the issuer’s are looking to access capital to develop and grow their businesses. In return, they are willing to share in the upside or profits from the growth of their business. It is a beneficial relationship for both the issuer and the investor and countless jobs have been created and revenue generated for the Canadian economy as a result.”
Nick Fournier, President of Raintree Financial Solutions:
“We believe that the recent work done by regulators to impart greater responsibility on the registrants who deal with investor clients has vastly improved the commercial exempt market distribution process by consolidating the “fundamentals” we referred to into a single concept of “suitability.” At Raintree, our processes (ie. “know your product”), paperwork (ie. “know your client”) and philosophies (ie. independence from investment products) are designed to facilitate a determination of suitability above and beyond whether or not our clients meet an exemption under National Instrument 45-106.”
Keith Fraser, Vice President & Director, Prosperity Development Ltd:
“Money in and of itself is and should not be an indicator of an individual’s ability to invest in any financial product. If it was then all of the major banks along with the major mutual fund companies would have to explain why they are allowed to provide investments that have devastated many Canadians families.”
Craig Burrows, President, Front Row Capital Inc:
“We also feel strongly that, unlike the United States, the pool of venture and start-up capital is not nearly as deep and broad and, as such, Canada needs to encourage all avenues of capital formation from as many participants as possible. Without access to individual investor capital through the exemption framework we fear impairment to our vital small and medium sized business’ ability to access capital which of course has detrimental effects to the Canadian economy on the whole.”
Stephen Freedman, President of Sloane Capital Corp:
“Please recognize that the numbers of complaints from retail investors are due to the fact that they invested far too much money in one investment due to the minimum amount exemption.
Stephanie A McManus for Compliance Support Services:
“While recent events require that a certain scrutiny be applied to existing investor protection, we feel it is critically important that the balancing interests of the health of the Canadian capital markets be given at least equal air time in the debate, particularly at this critical point in Canadian and world economic struggles. Regulatory action must not only be reactive (i.e. attempting to protect investors from past transgressions) but proactive and forward-looking. Stimulation of investment and growth must be a priority of governments and any of its delegates and initiatives designed to protect investors must be tempered with this in mind.”
Yvonne Martin-Morrison for Purpose Inspired Solutions:
“The minimum amount exemption and the accredited investor exemption do not seem to address the underlying spirit of the securities regulations. It is so valuable for investors to make informed investment choices. What investors use to draw upon to make an informed choice varies widely, and there is no one simple criteria of what makes a qualified investor. We start with an offering memorandum. It can be a useful tool to clearly communicate meaningful information about an opportunity to invest. As has been stated many times, investors may choose to use or not use the resources available to them when making investment decisions. The opportunity to become informed may be regulated, but whether or not they take advantage of the opportunity is their choice.”
Stuart McPhail, VP sales and Investor Relations of InvestPlus Properties:
“The creation of the prospectus exemptions allow small firms like us to access capital to grow our business and contribute to the economy by providing jobs, employing contractors, consuming resources, and providing decent accommodation for citizens who either choose to rent or are unable to afford to purchase their own home. The prospectus exemptions are critical to small firms and provide the average investor with many choices to which they can diversify their investable dollars.”
Darris Cameron for Financial Value Inc./Privest Wealth Management:
“The protection of investors must be viewed in an updated manner. We can no longer, we must no longer accept the ideals passed down to us from generations that did not have the ease of access to the kind of information we all have today.”
None of the Jurisdictions in the modern world have had any success in stopping the newsworthy adversaries of this industry, the Madoffs of the world, neither for instance will they have any blessing by raising the stakes on the public and making it harder for the average Canadian to invest suitably and pragmatically.
Instead, the focus should be turned to the quality of investment, the competition in the market place, and the education handed down to the public by the dealing Rep. The eligible investor status allows us to accomplish these things en mass and without the need to penalize the average, so that they may become above average.”