PrefBlog

As mentioned briefly yesterday, Toronto Life has a cover story on the David Berry Affair [Link updated 2013-1-16], which has been the topic of many posts on PrefBlog, the most recent dedicated post being David Berry Wins a Round.

There are many details of his personal life, but some information that is new to me.

For instance, it would appear that Cecilia Williams, head of Scotia Capital’s compliance department is somewhat unfamiliar with institutional trading.

She wanted to know why he’d sold the stock to the client at a price that was about a dollar more than the closing price the day before.

The article does not indicate Berry’s reply. However, all Assiduous Readers of PrefBlog will know that the correct answer is: “Because I could.” Berry was not a retail stockbroker, buying 100 shares for Granny Oakum with a fiduciary obligation to get the client the best price. Berry was an institutional trader, trading with institutions as principal, with the objective of sweeping every available penny off the table and into his own P&L.

There’s more about Ms. Williams – apparently she purported to be upset about Berry’s referring to himself in the third person when explaining why his price was so awful, and was surprised to learn that this is standard industry practice.

Now, this is interesting, but not really too surprising. Regulation has nothing to do with protecting anybody; the purpose of regulation is to ensure that everybody is guilty of something.

Of more interest is that one of the former bosses is willing to testify on Berry’s behalf:

One is Andrew Cumming, who, until 2002, was Berry’s direct supervisor under Jim Mountain in his role as managing director and head of equity-related products at Scotia, and today is a consultant to a money management firm. Last summer, Cumming swore an affidavit in support of Berry’s lawsuit, claiming that he saw nothing wrong with how Berry was ticketing new issue shares.

Cumming is willing to testify that senior executives at Scotia had divulged the bank’s desire to catch Berry in “something like a securities violation so Scotia could use it against him”, to either severely reduce his compensation package or fire him.

Update, 2008-5-29: According to her Scotia Capital biography:

Cecilia holds an LL.B. from Osgoode Hall Law School and has spent most of her career in various aspects of compliance and regulation in the financial services industry. She joined Scotia Capital from CIBC where she was Vice-President of Business Controls for the Imperial Service and Private Wealth Management businesses. Prior to that, Cecilia was Executive Director, Head of Legal and Compliance for UBS Bank/UBS Trust (Canada). Cecilia also previously held the positions of Director of Regulatory and Market Policy for The Toronto Stock Exchange and Senior Counsel, Derivatives with the Ontario Securities Commission.

Dates are a little hard to come by, but on 1999-2-26, she was Director of Regulatory and Market Policy at the TSX. On March 1, 2002, the Regulatory and Market Policy division was transferred holus-bolus to Regulation Services.

By 2005-4-22 she was with Scotia.

She currently sits on the RS Rules Advisory Committee.

I will emphasize that, in the incestuous world of finance (and I assume that the world of finance regulation is even more incestuous: David Berry’s lawyer, Linda Fuerst (who has also acted for me), got her start with the OSC) mere previous employment with an organization does not imply any conflict of interest or special influence afterwards; and mere conflict of interest or special influence does not imply any material conflict of interest or special influence. But this sort of thing doesn’t look good – particularly if Ms. Williams is in a position to influence hiring and compensation decisions. Revolving Door Regulation!

Update, 2008-6-5: An Assiduous Reader sends me a link to the on-line story.

This entry was posted on Tuesday, May 27th, 2008 at 11:57 am and is filed under Miscellaneous News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.