Angry in the Great White North

Last month I was contacted by Brian Mallard, mutual fund dealer and chief of Brian Mallard and Associates, and we had a long phone conversation about his dealings with Kent Shirley and with regulators and investigators. I'm telling you this in the interests of full disclosure. I found Brian to be friendly and quite open about his experience. As in the story, he was obviously conflicted about whistleblower-wannabe Kent Shirley -- Brian really wanted his former employee to get help and was willing to help with that, but at the same time Brian was unwavering in his insistence that confidentiality of his client's information be respected.

In fact, if Brian had not gone the extra mile to help Kent against the advice of his own staff and lawyers, this nightmare would never have happened. But even if Brian regrets the chain of events that took place after taking Kent back and giving him a last chance to sort out his life while maintaining gainful employment, Brian doesn't come off as bitter. Regretful, yes. But his underlying decency seems to have been left intact.

Protecting his client's information was a theme Brian kept returning to. Whether it was with Kent or investor advocate Joe Killoran or the media and most significantly, the regulatory bodies, every appeal to them to return the stolen files because of the potential damage clients could suffer was ignored, on the basis that the documents would reveal wrongdoings by Brian and his company. What wrongdoings? In the end, none was ever established, certainly not on the basis of the content of those files.

So who cared? Besides Brian Mallard, only the courts seemed to care that not one investor provided permission for their files to be pawed over by all these people. Regulators seemed only interested in collecting a scalp, and I find that interesting. In my Ontario Securities Commission series, this is a recurring element. Recall my story about Bill 151? How the Canadian Public Accountability Board is going to get the power to gain access to privileged client information without seeking a court order? Or the story about Frank Dunn, and how the OSC seemed more fearful of court oversight than of losing the case itself? In those stories and in this one, regulators seem to assume that the advisors and traders are all cheats. They are all criminals with something to hide, and it's not a fishing expedition when you know you are going to find evidence of a criminal act -- even if you don't know specifically what you are going to find. Of course, a court would never grant a search warrant under those conditions, and that is why we hear over and over and over again a call for more court involvement in the realm of securities regulation, investigation, and enforcement.

So who are Brian Mallard and Kent Shirley and Joe Killoran, you ask? What are these files? I haven't given you any context, because I could never do as good a job as Doug Watt and Matthew MacLearn of Canadian Business. Brian sent me a copy of the story. It's a long tale, but well worth the read.