Thank you, Mr. Chairman.
I was saying that I'm here to tell you how to commit the perfect crime, possibly with the help of Bill C-52. I mentioned the Criminal Code of Canada and the fact that if I were to rob a financial institution, the Criminal Code would probably apply to me, but in a financial institution in Canada governed by the Securities Act in 13 provinces and territories, there's any one of a thousand methods that I've witnessed of robbing the savings of Canadians and Canadian taxpayers, and they're often not subject to criminal sanctions of any kind. Maybe on the fingers of my hand, I could come up with the number of criminal penalties against actual subjects in the last 10 or 20 years.
Investment crime is more likely to fall under the protection of securities commissions. That word is terrible to say: that securities commissions are protecting investment crime. But that's what I saw over 20 years of working in finance. Most of the time, the independent police agencies are not involved and not even notified.
I worked for 20 years in the financial industry. I found it nearly impossible to discuss ethics and honest treatment of customers. The culture of sales commissions and bonuses was far too strong. Most Canadians, however, are of a mistaken impression that our financial institutions are so trustworthy as to be above examination. I mentioned that I'd like to challenge that dangerous piece of conventional wisdom and that I'd like to go so far as to call it collective insanity.
Most Canadians have also been sold a story that our Canadian financial institutions are the world's strongest. While that may in fact be true, it ignores the possibility that they may be strong because they are legally allowed to be predatory and are protected from real competition and real examination in Canada. It ignores millions of dollars that I watched being skimmed from your investment returns and your pension accounts by predatory sales practices dressed up in a disguise of “investment advice”, damage that cuts the retirement of the average Canadian investor by half.
Also ignored are billions of dollars in damages every year from a system designed to place the interests of financial institutions ahead of their customers'—a system we do not speak of, but which exists in actual practice. It ignores investment frauds that are penalized by authorities in the United States, while here in Canada the same abuses are considered standard industry practice, and they continue to harm Canadians each and every day. Regulators in Canada are allowed to turn a blind eye to all of these. It ignores hundreds of billions of dollars in damages by companies like Northern Telecom, Global Crossing, Enron, Eaton's, and a thousand others that are used in some way to fatten investment bankers, lawyers, or CEOs at the expense of your financial security.
Financial abuse by the institutions we trust is costing Canadians more money each year than the cost of every other crime in the country combined. I used Justice Canada's website for my figures. Yet we act like good Canadians and we praise our financial institutions for being among the strongest in the world. It's a little bit like praising the schoolyard bully for being so well fed, after he has stolen everyone's lunch.
Let me reveal four simple ingredients I found in our financial system that allow billions of dollars of financial abuse to take place each and every year.
The first ingredient in making financial crime pay is having the ability to self-regulate, to have our own in-house policing system, and to use this system to often bypass real criminal investigation and prosecution. Part of this includes securities commissions, and 13 of them across the country act more and more like the corrupt sheriff in every Smokey and the Bandit movie I've every seen. They seem to feel that they too are above examination.
The second ingredient is that the financial industry, rather than the taxpayer, pays the salaries of these regulatory agencies. That means that clever financiers get to choose who to hire to regulate financiers. Imagine if you were a criminal mind and you had the ability to choose who you wanted to police yourself.
The third ingredient in making financial crime pay is to pay them about triple what they would earn in the same job elsewhere. The salary of the head of the Securities and Exchange Commission in the United States is capped at $162,900 per year. The 13 securities commission heads in Canada are paid as much as four times this amount, each one of them. I'm told there were once 90 staff members at the Ontario commission alone who were each paid more than the top man in the United States.
Overpaying our regulators makes them highly compliant, conflicted, and more willing to say yes to the financial industry. The Canadian public, on the other hand, does not pay their salaries, and members of the public are not usually even allowed in the front door of any securities commission in Canada. Instead, they are sent to non-government industry groups where they are spun around by an industry-run kangaroo court process. The public will not be helped but simply abused a second time. Please don't take my word on this; ask any abused investor.
If you were shopping for a list of ingredients required to make financial crime pay, last but not least is the ability to buy permission to violate the laws of Canada. In fact, 13 securities commissions, acting in concert, will allow any financial institution in the country to violate our laws simply by filing an application to do so. I have in my hand a list of several thousand such legal permissions that have been granted without informing the public of a single, solitary one. This is the greatest gift you could possibly ask for as a criminally minded financier: to be able to break any law you wished in this country in pursuit of profits.
Finally, we come to the helpful effects of Bill C-52. I see nowhere in this bill where it applies to public market fraudsters. In fact, my reading of it shows that subsection 380(2) of the Criminal Code, relating to public market fraudsters, has been removed or is not present in this bill. That would be a fantastic gift from the writers of this bill to yet again the financial markets of Canada; we can continue to hide our crimes inside our own private regulatory system with no outside oversight or interference.
Thank you for your time.