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  • Rental Wage in Canada July 18, 2019
    Our new report maps rental affordability in neighbourhoods across Canada by calculating the “rental wage,” which is the hourly wage needed to afford an average apartment without spending more than 30% of one’s earnings.  Across all of Canada, the average wage needed to afford a two-bedroom apartment is $22.40/h, or $20.20/h for an average one […]
    Canadian Centre for Policy Alternatives
  • Towards Justice: Tackling Indigenous Child Poverty in Canada July 9, 2019
    CCPA senior economist David Macdonald co-authored a new report, Towards Justice: Tackling Indigenous Child Poverty in Canada­—released by Upstream Institute in partnership with the Assembly of First Nations (AFN) and the Canadian Centre for Policy Alternatives (CCPA)—tracks child poverty rates using Census 2006, the 2011 National Household Survey and Census 2016. The report is available for […]
    Canadian Centre for Policy Alternatives
  • Fossil-Power Top 50 launched July 3, 2019
    What do Suncor, Encana, the Royal Bank of Canada, the Fraser Institute and 46 other companies and organizations have in common? They are among the entities that make up the most influential fossil fuel industry players in Canada. Today, the Corporate Mapping Project (CMP) is drawing attention to these powerful corporations and organizations with the […]
    Canadian Centre for Policy Alternatives
  • Tickets available for Errol Black Chair Fundraising Brunch 2019 June 26, 2019
    You are invited to CCPA-MB’s annual fundraising brunch in support of the Errol Black Chair in Labour Issues.  Please join us to honour: Honoured Guest: John Loxley is Professor of Economics at the University of Manitoba and a Fellow of the Royal Society of Canada. Guest Speaker:  Jim Stanford is Economist and Director of the Centre […]
    Canadian Centre for Policy Alternatives
  • The fight against ISDS in Romania June 24, 2019
    CCPA is proud to co-sponsor this terrific video from our colleagues at Corporate Europe Observatory. It chronicles grassroots resistance to efforts by Canadian mining company Gabriel Resources to build Europe’s largest open-pit gold mine in a culturally rich and environmentally sensitive region of Romania. After this unimaginably destructive project was refused by the Romanian public and courts, the […]
    Canadian Centre for Policy Alternatives
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Stock Market Swindles Galore

This past weekend (March 31st), Sino-Forest Corp. announced it was filing for bankruptcy protection. The Chinese-Canadian company, once the largest publicly-traded forestry firm on the TSX, collapsed under allegations it was nothing more than a sophisticated fraud and Ponzi scheme. Sino-Forest’s demise wiped out about $6-billion in shareholders’ value, making it a catastrophe on par with Bre-X Minerals back in the ’90s.

And yet the news of Sino-Forest’s bankruptcy was relegated to the inner pages of business sections, reflecting how the entire scandal is not being given its due, fading out of earshot. After the company was accused of being a fraud by the short-selling investment firm Muddy Waters LLC last summer, all hell broke loose. Sino-Forest’s top management resigned, its shares were halted from trading by the OSC,  and the RCMP opened a file. Sino-Forest condemned its critics and set up an internal committee to clear its name, only to concede it could not prove Muddy Waters was entirely mistaken in its allegations.

Yet there were no calls for inquiry to determine how did the company manage to raise so much money on the Canadian markets for more than 15 years. Where was the due diligence by its underwriters – the brokerage houses of our chartered banks? Is the OSC going to investigate them?

Sino-Forest is just the latest in a long line of stock market calamities that have plagued  Canada’s capital markets. Diane Urquhart, who spent 20 years working on Bay Street as a research analyst, and now works for investors’ groups, argues that Canadians lose as much as $20-billion a year to investment fraud. From Bre-X, Livent, Portus, Norshield, Crocus, Nortel, Norbourg, Sino-Forest, Conrad Black, ABCP and countless others, the scandals come thick and fast. And yet, year in and year out, there is little done to clean up the markets.

Canada is one of only two countries (the other being Bosnia-Hergovia) that belongs to the International Organization of Securities Commissions (IOSCO) that does not have a national securities regulator. Instead we have 13 provincial and territorial securities commissions. We prosecute stock market fraud cases at a rate of 10 times less than the US, and 20 times less in the case of insider trading violations. We levy smaller fines and have jailed only an estimated 20 investment fraud criminals over the past 25 years.

What it adds up is bad economics. As Utpal Bhattacharya, a well-regarded academic and expert on stock market regulation, has said, poor regulation means that corporations don’t invest in your country. Why would they when they don’t have any guarantee of getting their money back in the event they are robbed?

The Harper government has moved to set up a national securities regulator. But last year, the Supreme Court of Canada threw out the legislation the government had drafted to establish the agency, calling it unconstitutional. It was a terrible and blinkered decision by justices who clearly don’t understand our economy and markets.

And as long as this situation is allowed to fester, the Sino-Forest debacles will keep showing up.

(My  exposé of the crimes of Canada’s financial industry, “Thieves of Bay Street” is being published by Random House Canada and is now hitting bookstores and e-books.

My website for it is here:

http://thievesofbaystreet.ca/

You can read about it here:

http://www.randomhouse.ca/catalog/display.pperl?isbn=9780307359636

Or order it here:

http://www.amazon.ca/Thieves-Bay-Street-Brokerages-Canadians/dp/0307359638)

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