OSCs Top Enforcer Signs On as Chief Regulator for Fund Distributors

Lairy Waite, the Ontario Securities Commissions (OSC) head of enforcement for close to a decade has been named to the top post of the newly formed Mutual Fund Dealers Association of Canada (MFDA). While Waite brings more than 20 years of regulatory experience to the job, many in the industry are also suggesting that he bring a rather large supply of aspIrin as well.I admire Larrys willingness to step

Lairy Waite, the Ontario Securities Commissions (OSC) head of enforcement for close to a decade has been named to the top post of the newly formed Mutual Fund Dealers Association of Canada (MFDA). While Waite brings more than 20 years of regulatory experience to the job, many in the industry are also suggesting that he bring a rather large supply of aspIrin as well.

I admire Larrys willingness to step up and take on this job. I wish him lots of luck because hes going to need it, says one member of the OSCs legal staff.

The MFDA is a newly created organization of Canadian fund distributors--small sales organizations that often operate with little capital and minimal supervision. Thousands of these shops have proliferated in Canada with the explosion of mutual fund investing. Yet they have remained outside existing regulatory jurisdictions, not falling under the purview of provincial regulators, the Investment Dealers Association of Canada (IDA) or the Investment Funds Institute of Canada (IFIC).

The OSC, which is Canadas largest regulator, has been pushing the fund industry for years to get these mutual fund shops under control. The key impetus was a report prepared by an OSC commissioner in 1995 criticizing many industry sales practices. But despite several promising starts, progress has been slow. Although plans for a mutual fund group have been in the works for more than a year now, political obstacles have cropped up. The IDA, for example, has refused the OSCs request that it take on the regulatory burden of these firms, while the IFIC has chafed at the OSCs refusal to accept it as the sole regulator for the fund industry.

The new MFDA, under joint IFIC and IDA auspices, still faces opposition. According to Laird Elliot, head of an independent group known as the Independent Mutual Fund Dealers Committee, the MFDA simply wont work. The problem is its an organization that is being imposed by the OSC, instead of being willed by industry members, he says.

Under the MFDAs charter, fund distributors must join by the year 2000. The organization will be funded by membership dues. That fact led to a month-long delay in announcing Waites appointment since funds had to be found to pay him. Funding, Waite says, is coming from the OSC and various SROs. He begins the job this month. This is going to be a wonderful challenge, he says.

A challenge yes, agrees one former OSC official. Wonderful? Thats another thing altogether.

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