The Canadian Foundation for Investor Rights or “FAIR
Canada” www.faircanada.ca is a non-profit organization that
holds itself out as being a voice of investors across Canada.
They are a prominent voice in the industry and garner
significant media attention, and for some reason they seem to
have quarrels with just about everyone these days. Whether its
telling securities regulators they are not doing a good enough job,
to telling us the exempt market is “loosely regulated” and should
be curtailed, they don’t hesitate to cast dispersions on others.
The difficulty with FAIR Canada is matching their rhetoric
to the lack of evidence of an informed investor voice behind the
strident positions they trumpet. For an ‘investor advocate’ one
would expect to see a number of investor surveys, roundtables,
meetings, social media or other public dialogue that gathers
investor input - but that doesn’t appear to be the case. As an
organization staffed and overseen by lawyers and other securities
professionals it’s not evident that they have the requisite insight
to represent the complex needs of investors across Canada. I
wonder if there really is an investor voice behind Fair Canada’s
comment letters, submissions and press releases, or are they
simply a cleverly named industry lobby group?
Here’s one example to consider: in a recent posting on FAIR
Canada’s website, they criticize the Ontario Securities Commission
(OSC) for holding an Investor Roundtable this past summer and
they claim it was primarily attended by “industry representatives,
including those involved in running or servicing SMEs, who stand
to benefit from a potential crowdfunding exemption.” I find that an
odd statement from FAIR Canada who themselves are the self-appointed ‘voice of investors’ yet appear to have taken no action
themselves to find out what investors really want or care about.
The EMDA is pleased that the OSC under the leadership of its
Chair, Howard Wetston, has taken the initiative to provide many
opportunities for investor and industry voices to be heard including
the Investor Roundtables. It would be wise for FAIR Canada to
also take the time to receive public input from investors across
Canada; the voices they claim to represent. Perhaps what FAIR
Canada really represents are simply its own views – and that’s a
perfectly acceptable thing – but the suggestion that they speak for
the masses of investors is certainly a stretch.
If FAIR Canada really spoke for investors perhaps they would
have stumbled upon the widespread concern that existing prospectus
exemptions, like the accredited investor exemption, effectively
lock out 96% of Ontario’s investors from the exempt market.
I would expect, that FAIR Canada would strongly support Ontario
broadening its prospectus exemptions including an Offering
Memorandum exemption to open accessibility to the exempt
market for all eligible Ontario investors. Speaking up for investor
rights should also include speaking up for their right to participate
in markets currently restricted to only the wealthy and institutional
clients. This is about fairness and the right to invest - topics we
would expect FAIR Canada to support.
The EMDA believes that constructive dialogue and criticism
of securities regulations, or the industry, is needed and welcome,
but criticism should be meaningful, respectful and constructive, a
standard FAIR Canada does not always achieve.
FAIR Canada enjoys ‘following the money’ when it criticizes the
mutual fund industry and others so let’s try applying that approach
back at FAIR Canada. How do they afford such sensationalistic
advocacy? FAIR Canada draws its operating funding from
IIROC and the OSC – two regulators - which together contribute
$850,000 (over two years) to paying the salaries and expenses of
FAIR Canada. These operating grants are its entire income – so to
be clear, they do not receive a dime from ‘investors’ but instead
have a comfortable living thanks to our regulators and therefore
our industry. Curious.
I wonder if being accountable to the investors they purport to
represent for some, or all, of their funding might help FAIR Canada
be accountable for its advocacy and actually establish its credibility
as an investor voice. Let’s hope the OSC and IIROC reconsider
this propping up of FAIR Canada and next year decide to allocate
their limited resources differently. Perhaps the OSC enforcement
divisions could use some more resources? And hey, it might even
encourage FAIR Canada to get out and seek the support of the
people it claims to be the voice of.
For more information contact:
By Geoffrey Ritchie, Editor, Exempt Market Update, EMDA Executive Director
Whose Voice does FAIR Canada represent?