The Foundation for the Advance of Investor Rights (FAIR Canada), which advocates on behalf of retail investors, has returned $2.4 million to the Jarislowsky Foundation after failing to secure matching funds for its mission.
In a news release Friday, FAIR Canada said it had been seeking to fulfill a 200 per cent matching condition set by the Jarislowsky Foundation in 2012, but that “governments, securities regulators and self-regulatory organizations have been generally unwilling to provide adequate support.”
FAIR did note, however, that the Ontario Securities Commission had provided more than $3 million in past funding and operational support for the advocacy organization.
The news release also noted that predecessors of the Investment Industry Regulatory Organization of Canada (IIROC), a industry-backed self-regulatory agency, had provided past funding, dating back to the founding of FAIR in 2008. The most recent contribution from IIROC was $250,000 in operational funding, following a rejection of FAIR’s application for $2 million.
“The IIROC funding came from its restricted fund, which had in excess of $15 million, consisting of fines levied for regulatory breaches mostly involving harm to retail investors,” FAIR said.
In response, IIROC said the self-regulatory agency and its predecessors have committed nearly $5 million to FAIR since 2008, and noted that the restricted fund money comes from firms and individuals that have broken IIROC’s regulatory rules and is to be devoted primarily to funding the operation of the regulator’s disciplinary functions.
“We would also point to the more than $6 million IIROC has provided from this fund to a number of organizations that also support investor protection and education, as well as financial literacy,” Paul Howard, director of communications, said in an emailed statement.
“All of these organizations are doing valuable work on behalf of Canadian investors and IIROC is proud to support them.”
FAIR Canada, which has been led by lawyers including Neil Gross and founder Ermanno Pascutto — who returned as executive director earlier this year following the departure of Frank Allan — noted the investment industry is represented by more than a dozen associations while FAIR stood as the only national advocate for retail investors.
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Stephen Jarislowsky, the billionaire investor behind the foundation that bears his name and provided initial funds to FAIR Canada, said government should fund a professional organization that speaks for retail investors and financial consumers.
“If they don’t fund such an organization then governments are not truly committed to investor protection in substance,” Jarislowsky, 94, said in a statement released by FAIR. Instead, he said, “they are satisfied with the ‘appearance’ of investor protection.”
His statement noted that regulators have accumulated more than $100 million in fine money, collectively, and while they have kept FAIR alive to this point, they have not provided adequate support for it to actually realize its potential or be operationally sustainable.”
Jarislowsky stepped down from FAIR’s board of directors when the money was returned to his foundation at the end of last month, according to Friday’s statement.
A spokesperson for the Ontario Securities Commission declined to comment on why the OSC is no longer funding FAIR Canada.