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  • Canada’s Fossil-Fuelled Pensions June 22, 2018
    The British Columbia Investment Management Corporation is the steward of BC’s public pensions, but bankrolls companies whose current business models exceed the climate change targets agreed to in the Paris Agreement to which Canada is a signatory. The pensions of over 500,000 British Columbians and assets worth $135 billion are managed by the Corporation—-one of Canada's largest […]
    Canadian Centre for Policy Alternatives
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    Climate change; stagnant global economic growth; political polarization; growing inequality.  Our city finds itself dealing with all these issues, and more at once. The 2018 Alternative Municipal Budget (AMB) is a community response that shows how the city can deal with all these issues and balance the budget.
    Canadian Centre for Policy Alternatives
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    When we think of a “boomtown,” we often imagine a formerly sleepy rural town suddenly awash in wealth and economic expansion. It might surprise some to learn that for many municipalities in oil-producing regions in Saskatchewan, the costs of servicing the oil boom can outweigh the benefits. A Prairie Patchwork: Reliance on Oil Industry Philanthropy […]
    Canadian Centre for Policy Alternatives
  • What are Canada’s energy options in a carbon-constrained world? May 1, 2018
    Canada faces some very difficult choices in maintaining energy security while meeting emissions reduction targets.  A new study by veteran earth scientist David Hughes—published through the Corporate Mapping Project, the Canadian Centre for Policy Alternatives and the Parkland Institute—is a comprehensive assessment of Canada’s energy systems in light of the need to maintain energy security and […]
    Canadian Centre for Policy Alternatives
  • The 2018 Living Wage for Metro Vancouver April 25, 2018
    The cost of raising a family in British Columbia increased slightly from 2017 to 2018. A $20.91 hourly wage is needed to cover the costs of raising a family in Metro Vancouver, up from $20.61 per hour in 2017 due to soaring housing costs. This is the hourly wage that two working parents with two young children […]
    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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