Monday, September 29, 2008

Investor-rights foundation launched

A Canadian investor-rights organization was launched Monday with a multimillion-dollar budget largely funded by fines imposed on rule breakers in the investment industry.

The Foundation for the Advancement of Investor Rights (FAIR) bills itself as a non-profit, independent national organization that will represent the interests of Canadian investors in securities regulation.

It will be chaired by former Ontario Securities Commission chair Stanley Beck.

Its executive director and moving spirit is Ermanno Pascutto, a lawyer and former executive director of the OSC who later served as deputy chairman of the Hong Kong Securities and Futures Commission.

In recent years, he has been an international consultant and investor.

The foundation is receiving $3.75 million in startup funding from the Investment Industry Regulatory Organization of Canada — the combined Market Regulation Services and regulatory arm of the Investment Dealers Association.

The money comes from IIROC's discretionary and restricted funds, derived largely from fines imposed on rule breakers.

"While regulators and government policy-makers receive input from industry, listed issuers, financial institutions and their legal and other advisers, too often they have limited input from investors, particularly retail investors who lack the necessary legal, accounting and financial resources that are available to other stakeholders to advance their interests," Pascutto stated.

FAIR aims to make submissions to securities regulators, governments and others, identify emerging issues, and track bad conduct by public companies and market players.

In addition to Beck and Pascutto, FAIR's board includes:

Ed Waitzer, another former OSC chair and a partner in law firm Stikeman Elliott.Stephen Jarislowsky of Montreal investment firm Jarislowsky Fraser.Claude Lamoureux, recently retired head of the Ontario Teachers' Pension Plan.Neil de Gelder, a Vancouver corporate lawyer, and investment executive and former executive director of the B.C. Securities Commission.Whipple Steinkrauss, a former assistant deputy minister in the Ontario Ministry of Consumer and Commercial Relations, and director of the Consumer Council of Canada.

Pascutto said he envisages a staff of half a dozen — eventually including a full-time executive director to replace him — initially focusing on issues such as investor approval of major corporate transactions and earlier disclosure of takeover negotiations.

With files from the Canadian Press

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