Securities Dealers organize to improve public image

At a time when institutions and individuals aren’t lining up to buy speculative stocks, the broker dealers who sell those stocks in Ontario have set up an organization to improve their public image.

The organization, called the Securities Dealers Society (SDS) of Ontario, is comprised of boutique-type operations that provide financing for ventures often considered too small by larger brokerage firms.

Nine of the 10 firms eligible to join have already been signed up and the 10th (A.C. MacPhearson & Co.) is expected to be included in the near future. “For far too long, the public has been utterly misled about what we do and how we do it and the time has come for us to speak up,” said Judith Manning, president of Toronto-based E.A. Manning and vice-president of the SDS. While she said broker dealers are perceived as people who sell high risk securities to little old ladies in bedroom slippers, the truth is that such firms have helped to raise funds for development in northern Ontario. “We represent a relatively expensive way — but often the only way — that entrepreneurs in the resource industry, as well as junior industrial and service companies can raise capital, she said.

Having named former Ontario Securities Commission chief investigator John Leybourne as president, the SDS has set out to achieve the following objectives:

— It wants to advance and improve the relations of member firms with the public and increase public confidence in and respect for those engaged in dealing securities;

— to gain recognition and support of government agencies, financial institutions, private investors and the business community in general; — to establish uniform standards to govern member companies for the protection of the public by establishing a code of ethics and a client bill of rights;

— and to promote the exchange of views between the members of the corporation by providing opportunities for discussion, correspondence and seminars.

“We are not a bunch of bandits,” said Manning. She said the Securities Dealers industry also wants to rid itself of the misconception that it is unregulated and that dealers can do as they please.

All of the SDS member firms are registered as Securities Dealers with the Ontario Securities Commission under the provincial Securities Act. Data provided by SDS members from “know your client forms” indicate that 51% of clients are in their thirties and forties. The annual income of almost 45% of clients exceeds $50,000 while 81% reported net worth of over $100,000. But Leybourne says it is important for dealer firms to recognize that clients may not be as sophisticated as the research suggests. “The future of the Securities Dealers industry and our ability to raise capital for entrepreneurs depends on our ability to earn the confidence of the investing public.”