RSP's-Getting Killed on US$ Exchange...
Scott, Thanks for your post.
Look what was posted today to misc.invest.canadian and misc.invest.stocks newsgroups.
Subject: Green Line's Policies. Was It Rip Off?
Date: Sun, 21 Jun 1998 15:22:39 -0400
Newsgroups: misc.invest.stocks
This post is about how my wife and I were ripped off by Green Line Investor Services (GL) from Toronto Dominion Bank. It might be of interest to those Canadian investors who buy and sell foreign (U.S. stocks on their RSP accounts.
My wife and I have Self Directed RSP accounts with GL. I handle both mine and my wife's accounts as well. On both accounts I buy and sell U.S. stocks exclusively, except for the first few trades a while ago. Every time when I was selling U.S. stock, GL left us no choice, but to convert all the proceeds of the sale in $US to $CDN. Every time when I was buying another U.S. stock, I had to convert $CDN back to $US. Every "round trip" would cost us a substantial amount of money on conversions, and that money would go to GL.
When I was selling U.S. stocks for the very first time and several times after that, I kept asking Green Line representatives (Richmond Hill office) what could have been done to avoid those expensive "round trips". Every time I was given the same answer: "Nothing can be done. This is the law. All $US On RSP account must be converted to $CDN at the end of the trading day the latest." Later I learned that "round trips" could have been easily avoided by buying U.S. money market funds.
It was quite a shocking discovery! By that time we had lost several thousands dollars on conversions, and all the money, of course, went to GL.
I have written several letters to GL and have received responses from GL. All responses from GL were signed by Mr. K. Dunseath, Manager of Customer Support Group.
I sent my first letter of complain to GL on Dec.21, 1997. In its response of Jan.26, 1998 GL repeated wrong information: "As you know, Revenue Canada requires that RSP accounts hold Canadian dollars only. Therefore, proceeds from a sale of US securities must be converted to Canadian dollars."
I responded: "The rule, mentioned by you, probably, applies only to the currency held on RSP account, but I am not limited to holding currency only on my account. I can use proceeds from a sale of US stocks to buy other financial products."
GL's letter also said: "Our Investment Representatives are not able to provide investment advice of any sort, nor are they able to solicit trades. In this regard soliciting includes the purchase or sale of US Money Market funds."
I explained my position Regarding Investment Representatives:
1. if Representatives are not able/allowed to give any advice, they are supposed to clearly state it. They had never done it.
2. In fact, every time they would force us to convert $US to $CDN to profit on conversions. Whatever that was, advice or soliciting, it was wrong. As a result of that wrongdoings, my wife and I lost money and GL got it all.
In its response of May 6, 1998 GL admitted giving me wrong information: "You are correct in stating that you are not limited to holding currency only in your RSP accounts. . You are able to hold any RSP eligible security in your accounts, as well as Canadian dollars".
Despite the clear proof of wrongdoings, GL refused to return us our
money.
I will, probably, have to go to Small Claims Court with my case, but I thought that other fellow investors might be interested in this story. Perhaps, thousands of other investors were swindled out of their hard earned money by GL. In my opinion, this is an example of outrageous abuse of customer trust.
One more thought.
Several clerks at GL and even the Manager of Customer Support Group, asked separately at different times, gave me the identical wrong answer. As a result of that answer my wife and I lost our money got all of it. Is it just coincidence? I do not think so. IMHO, they were instructed to do so. How long have they been doing it? How many more people have been fooled out of their money? What other tricks GL and, perhaps, some other brokerage houses are playing with unsuspecting investors? Why do they feel themselves so invincible? CAN WE STOP THEM?
I think, at least, we should try. A good lawsuit would make them think twice before they pull another trick next time. I hope that someone more knowledgeable than I, is reading this post. Is there a chance to start a class action lawsuit? What needs to be done?
Regards.
P.S. I am posting this message to several newsgroups. I will do my best to read all the responses, but I do not want to miss a single one. When you reply, please, make sure that a copy of your response gets e-mailed to me. It is not difficult. Your browser will do it automatically, just click on the right button. <G>
Thanks in advance.
I wonder, how many people actually paid attention to this type of losses. "Round trip" costs somewhere 1.3-1.5%. 6-7 trades a year, and it is not unusual, will eat away 10% of lifetime pension savings. Green Line is making many times more money by fooling customers than on commissions. Talk about discount broker.
Regards
Just curious, what everybody thinks of possibility of class action lawsuit. If it was south of the border, I'd bet on it. |
