Divide and
Conquor – How the BCSC pits investors against entrepreneurs while
robbing them both blind:
One
of the common themes among Canadian regulators is a mass campaign to
supposedly educate investors on the dangers of Fraud and how to be
aware of those selling fraudulent stocks. In BC the BC Securities
Commission 'educates' the public with its InvestRight (TM) and Be
Fraud Aware programs designed in the words of the Commission to
'Fraud Proof' the BC public. The entire media campaign is simply
lipstick on a pig, its designed to make the BCSC look tough on crime
and put a mistrust in the public of entrepreneurs and the risk takers
looking for capital.
Before
we go any further I would like you to consider this analogy to
understand how the Government plays the public while it robs them
blind. The regulatory regime in Canada does not act in the public
interest as it maintains. The gambling and casino industry is
considered to be much akin to the investment industry by many and
there are many comparisons to be made, both are highly regulated due
to the money involved in addition both can offer potential for
lucrative rewards.
The
investment industry however has, or should have assets of some type
behind it which should mean that although risky it would make more
sense as far as a model of sound economic governance to let people
take a 'chance' if you will on something with tangible value behind
it then throw their money away on a game with no intrinsic value.
Instead our current Regulatory Regime in Financial Securities, Real
Estate, Mining/Energy stifles local small investors and makes it hard
for them to invest in local small industries that could grow up to be
national or global players while colluding with many large
Multi-National firms to commit the very crimes they pretend they are
preventing.
The
Financial Regulatory Regime claims that these Regulations and its
measure for 'Compliance' are there to protect the population from
fraud and bad corporate actors. So in essence on one hand our
Government allows anyone 19 and over to go to a Casino and blow
$50,000 no questions asked yet if that person wants to invest $500
dollars in a friends company they cannot unless that company has
spent an average of $50K on a prospectus which does nothing to
actually prevent fraud. A 19 year old can get offered a $50,000
credit card with its high interest debt payments attached without
anyone in the Financial Regulatory Regime blinking an eye however if
that same person were to choose to invest $1000 in, lets say their
Fathers best friends viable and credible business they would not be
allowed unless that company had paid the 'cost of compliance' of
course. To do so could allow the BCSC to Cease Trade and destroy that
business regardless of whether it was a legitimate business with a
clear viable plan.
The
BCSC as with the rest of the Financial Regulators has the power to
look at bank accounts and peoples financial lives without a warrant
due to the nature of the industry, it also has the power to look at
the corporate side and follow the money. Why does the BCSC spend all
its time squeezing the citizens and entrepreneurs who are risking
capital on ventures that actually have value to our population when
it could simply follow the money and ensure bad actors pay the
consequences?
I
would also like to state that although I attack the Prospectus and
the Offering Memorandum in this section as being useless ploys used
by the Regulators to mislead the public into believing their
investments are secure both the Offering Memorandum and the
Prospectus have important uses and I do not completely discredit
them. The purpose of this section is to show how they are misused by
the regulators and how the completion of a Prospectus or Offering
Memorandum does not do much to deter fraud, it simply gives the BCSC
a reason to charge a company with an offence and go after their
assets.
In
the meantime the BCSC likes to paint individuals who are not
'compliant' as bad people who are simply after your money. Many who
are not compliant on simple paper work (Not complicated cases of real
fraud) problems are often mislead into regulatory offences by their
lawyers, many of whom in BC are from what we experienced in collusion
with the BCSC to wring their client for as much fees as possible and
bury them in the end. Now maybe if the BCSC acted with integrity
this system would work (although not optimal) however the BCSC like
most of the nations regulators is self-funded and must create
regulations that need to be broken in order for it to get paid.
Compliance costs money.
This
is a clear conflict of interest that is dangerous for the integrity
and well-being of the Financial Marketplace.
This
is a large reason why there are many individuals who have come to us
in the past few weeks with the same problems, one individual who will
at this time remain anonymous paid all the costs of 'compliance'
including the costs of an Offering Memorandum that was properly
completed.
The
BCSC and its staff in lieu of having any real offence to charge this
individual with since the OM was properly completed decided the best
course of action in order to ensure market 'integrity' and weed out
the bad guys would be to copy and paste new evidence over the
original OM that would allow them to charge this individual with an
offence against the Securities Act.
Simply
put what most of the investing public does not know is that the BCSC
is almost never telling the truth, when such orders and judgments are
rendered by the Commissions Tribunals the public automaticly thinks
ill of the reciepients of said judgments. Even close friends and
family often doubt the individuals targeted by the Commission. Those
who speak the truth to the press and the public in regards to the
criminal actions of the Commission, whether shareholders or the
entrepreneurs in question are threatened with law-suites or even
physical violence in my case in order to intimidate them into
silence.
Now
consider this according the BCSC, if a member of the BC public would
like to buy $500 dollars worth of shares in a private company in BC
they would not be able to unless the private company selling its
shares had completed a Prospectus which is supposed to answer key
questions that would enable the purchaser to make the right decision
in regards to the purchase of these private equities.
Certainly I am not against measures to ensure that the
proper information is communicated with integrity to potential buyers
regarding the private securities in question however the market
regulators are simply operating a shell game that makes them look
good and tough on crime as they go after companies who are not
'compliant' while real fraudsters pay the cost of compliance.
Over
ten years ago over %90 of the province was eligible to invest in your
average private equity investment, today that number is down to less
then %5 due to new regulations which stipulate that only accredited
investors may now invest in private equity unless the investors are
exempt under the friends and families act. See the following exert
from the (now defunct?) Venture Capital Markets Association VCMA on
the state of regulation in BC,
"Our sector has
created tens of thousands of well paying Canadian jobs and hundreds
of millions in economic benefits in resource communities across
Canada over the years," said Joe Martin, Chairman of Cambridge
House International Inc., and founding Chairman of the Association.
Martin added, "Governments and regulators need to understand
that the avalanche of new and costly regulations is having a very
damaging impact to the venture capital sector at the very time that
Canada desperately needs to recover from the current recession."
"The venture market
used to be called a public market but it has now become elitist
with only 2.1% of the Canadian public deemed to be 'qualified
investors', by the many regulatory bodies," said Don Mosher,
President of B&D Capital Inc., and founding President of the
VCMA.
These
regulations are supposed to protect the public from fraud but they
simply limit opportunity and strangle the flow of venture capital to
British Columbians that need it to build a prosperous economy that is
not dependant on foreign corporations for jobs.
To
go back to Gambling industry I will outline why the mantra from the
Government regarding protecting the public from fraud is a joke, if
the BC Govt was so worried about stopping its citizens from losing
money then certainly we would see similar measures in place in our
casinos to ensure citizens were not losing large amounts of money.
Does the BCLC care if an elderly man walks into a pub and drops $50K
as I have seen happen many times? The answer is it only cares on
commercials to protect its public image, but it makes a fortune in
profits so why would they ever prevent this man from gambling his
fortune. Think about it, the Govt is okay with a 19 year old kid
getting a credit card and maxing it out on worthless things, seniors
are allowed to gamble their fortunes away with little concern from
Regulatory authorities.
However your investment of $500 in a legitimately run
profitable private company that did not do its prospectus is now
considered an offence so flagerant if you are not a “qualified
investor” (read rich), that it is worthy of shutting down entire
small companies which can employ up to 100 people for
'non-compliance' and Cease Trading the company out of existence. This
also usually incurs the loss money for many British Columbians and
Canadians who may have owned shares in said company.
Meanwhile foreign corporate giants can act with near
impunity for real fraudulent practices and get a slap in the wrist
fine at the most from our regulators while they continue their
unethical practices.
I
am not advocating that a business plan that cannot be independantly
verified by qualified individuals should not presented to potential
investors in the private equity market but the current set-up does
nothing for either the investor or the entrepreneur it is supposedly
serving.
Before
I explain how all of this equates to a 'divide and conquer strategy
let me propose something bold in our Western Financial world today.
Currently our regulators put the onus on the public to
be “Fraud Aware” while they stiffle worthy investment capital
and build mounds of costly and useless paper work for the businesses
fill out that do nothing to prevent fraud and other real misconduct.
They call it 'Compliance'. While I do believe an educated public is a
good thing maybe its time we actually put the onus on the corporate
actors to act with integrity as was the original intent of a market
regulator.
Maybe
we should look at actually holding the Corporations accountable for
where the money goes after all the paperwork is done. Certainly you
cannot legislate corporate success however since the regulators have
the ability to follow the money after its invested does it not make
sense that they could simply verify whether a business is being run
legitimately by doing so. I understand it is not nessacarily quite
that simple however the answer is certianly not the current regime or
anything resembling it.
All
the above regulatory red-tape does is create an atmosphere where
shareholders no longer trust the corporations they invested in. In my
case one we have been fined for Distributing Securities Without a
Prospectus, the fine is a total of $3 Million dollars. We know they
are very unlikely to go after us for the money due to the phony
nature of our case however some of the public simply read the paper
and see that we have been fined $3 Million with significant market
bans and assume we are guilty of Fraud and therefore bad people. The
regulators will publicly announce that individuals have been found
guilty by a Commission Tribunal of Offences against the Securities
Act thus certain fines have been levied and market bans enacted for
the public good, problem is half the time they are flat out lying in
regards to whomever they have prosecuted simply in the hopes of
intimidating these individuals into giving up assets to pay the
fines.
They
divide the investor against the entrepreneur, they make the investor
ashamed to speak out for fear of looking foolish like they fell to a
scam artist. The reality is in our case and at least several others I
know of that many of these entrepreneurs have fought hard for their
money. Money that belonged to their friends and family and was lost
not due to the standard risks of operating in the world of start-ups
such as competition or real Fraud, but due to the criminal nature of
the very regulatory regime which is supposed to maintain market
integrity.
While
I certainly understand that there are real fraudsters operating out
there and that the history of the Vancouver Financial markets is
riddled fraud one has to fully understand the scope of the issue
before in order to properly address it. What the BCSC does is simply
turn off the flow of capital to most entrepreneurs who are attempting
to raise private capital for a start-up project by imposing a
regulatory structure whereby 'Regulatory Compliance' costs money.
Often the cost to produce an Offering Memorandum and/or Prospectus is
the same as it would be for a fledgling company to produce a whole
run of a product, legal fees can be up to half the cost of a
start-up. This might be acceptable of these legal fees were paid for
products that properly did the job of ensuring market integrity and
regulation as was the original purpose of such financial instruments,
however they have simply become nothing more then highway robbers who
no longer operate according to their fiduciary duties.
As always more to come..
) to do and instead you took the opportunity not only to rob us but kick us when we are down with a black-ops campaign AFTER you ruled against us and while you know damn well I am grieving the loss of my only 7 year old daughter. How despicable are you?
