<< The issue is the lacl of people to answer the phone, approve your order on line due to the KYC rule. >>
There was actually an article about the KYC rule in the paper (Financial Post section of the National Post), on January 5th called "Investor, know thyself" by Peter Foster. It started by telling about a small investment bank that started up on Wall Street and got clients that included members of the Gambino family. They basically ignored the wishes of the Gambino family members to have conservative investments and started making penny stock trades. Obviously the Gambino family sued them, but the firm went belly up and the owner transferred the remaining funds offshore and disappeared. (I'd disappear too if I'd pissed off the Gambino family!!!) The rest of the article goes into the issue of the KYC rule and mentions the differences between Canada and the US.
Here are some nice quotes from the article:
"Surely the key principle should not be KYC but Know Your Client Only As Much As Your Client Wants To Be Known."
"The assumption behind this requirement is that people are fundamentally stupid and can't look out for their own interests. It also places a burden on the brokerage industry that might be considered parallel to requiring Laura Secord to force a dental check-up on its customers." (I like that part... <gggg>)
"In August 1998, a group of discount brokers applied to the Canadian Securities Administrators for exemption from KYC on the basis that the requirement's cost impaired their ability to compete with their U.S. counterparts. In response, the Investment Dealers Association and Canadian stock exchanges set up a working group to make recommendations. The working group's main conclusion, in a report released in November, was that the "suitability obligations" should be waived where trades are made without advice, although only in a special account set up for that purpose." (WHERE CAN I SIGN UP FOR ONE OF THESE ACCOUNTS???? <GGGGGGGG>)
The rest of the article goes into the remaining issue of "just what constitutes advice". If the brokerage firm sends out a newsletter saying that "gold looks strong", and I were to then call up to buy a gold stock..... they would be worried about covering their arses because they had given out "advice" related to that industry, etc.... They also mention another "what if" along the lines of the broker doing some data mining and sending a list of stocks to an investor based on their past trades (ie. stocks that are in the same area that the investor appears to be interested in).
Ok, here is the end of the article...
"These are the kinds of issues securities regulators are currently pondering, and which will form part fo their own discussion paper, expected to be issued toward the end of February. Perhaps the bigger issue is the mentality that makes them fret over such fine points in the first place. People should be allowed to take as mcuh or as little advice as they want, and then to do what they like with their own money."
All quotes above are by Peter Foster of the Financial Post. If I made typing errors.... too bad! <gggg> |
