Weizhen Tang Corporation

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Who is Protecting the Public Interest?

Author:ÌÆì¿Õé Date:2010-07-16 08:11:47 Readers:111 reads

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OSC VS Weizhen Tang:

Sept , 2009

Who is protecting the public interest? This is a simple and straightforward question, but I have spent more than a decade thinking about it and trying to get an answer. As a matter of fact, this question deserves profound consideration from all of us. It is generally held that the securities commission as government appointed body to supervise financial activities in society is a protector of financial investors and their interest. As a matter of fact, this is a big misunderstanding, because the securities commission protects only a small handful of people at the expense of hundreds and thousands of others. In essence, the financial market is no different from a casino, in that it seeks benefits for only a few wealthy people by sacrificing the interest of the majority. In that sense, the securities commission only plays a role of misleading the public and providing shelter for a small number of people, as is fully evidenced by all the happenings after the financial tsunami broke out in 2008. Unfortunately, some investors are still muddleheaded about this issue, and that is a true reflection of sadness on the part of investors and the public.

Last year, banks, insurance companies, financial firms and other corporations in the United States including the three auto giants all sustained enormous loss in both their fund and asset value, which amounted to trillions of dollars. However, no one was held responsible, investigated or charged for the loss. Instead, they got rescue from the U.S. government, who poured in tons of taxpayers’ money and even state treasury. Even though these companies were in serious trouble and many even faced bankruptcy, their senior management still pocketed huge sums of money for themselves; for the simple reason that they are under protection of the securities commission, which keeps them free from public interrogation and accusation. In the light of the securities commission’s regulatory policies and rules pertaining to such failures in operations, losses are just a normal part of business operation; there is no need for the management to take liability for public losses, let alone the losses of general investors. They do not have to say a single word of apology or to make any effort to compensate anyone. The same is true for Canada, where, according to the Toronto Star of May 29, 2009, poor operation of the Canadian pension fund resulted in a loss of 24 billion dollars, yet none of those managers appointed by the government to take charge of it was held responsible. On the contrary, they shared a bonus of seven million dollars amongst themselves for that year. Those people are good for nothing except that they have a good education, good connections and the right chance. It is the protection of the securities commission that allowed them not to take any responsibility or to face any penalty for the poor job they did.

As the securities laws are made by the wealthy, they serve the purpose of protecting the wealthy only, but not the general investors, let alone personal investors. If our investors count on the securities laws to recover losses, they are not going to see the result they want. Currently, our investors face various problems, such as not having a clear idea about their status, not knowing who is there to protect their interest or who shares the same interests with them. Because my interests are fully in line with those of the investors, attacking me is no different from attacking our investors, which would benefit no one but the securities commission.

What I have been running is nothing fraudulent but a normal business. The current investigations of the Ontario Securities Commission are not going to bring back a single cent to the investors, and their cease trade order placed on me, particularly the freezing of our investors’ accounts, will only further damage the interest of our investors and add to their loss. This is almost like another disaster to investors after their loss in market, which will eventually shatter all their dreams of loss recovery. At a time when the impact of the market hit us hard, the OSC only made things worse for us rather than rendering any useful help.

If the OSC was really to protect the investors, it should have done everything within its power to prevent the occurring of loss for investors and to help them recover in the event of loss occurrence. At least, it should give the investors hope and offer solutions to them. Unfortunately the OSC has done nothing helpful for us. It is only concerned with maintaining its own public image, for the simple reason that the OSC has no market competence to do anything – everything it does is for show only. A few days ago, I came across an article on the Canadian Business News Network, entitled “Whose interest is the OSC protecting after all”. I thought it contained a few very good points that deserve serious thinking from us.

Regarding the role and importance of the securities commission in terms of supervising financial activities, I have formed an understanding of my own. From the beginning of my career in the financial industry, I did not believe in it and tried to bypass it wherever I could, knowing that I was not in a position to defy it. Though never intending to harm investors, I did not think the securities commission could provide effective protection for investors either. Were it not for the status as a government regulatory and supervising body, the securities commission would not be able to protect even itself. I believe in my competence, my conscience, and sense of responsibility. Without the securities commission, personal investors like me would have been more successful. The securities commission only works for big banks, major financial firms or government bodies by eliminating competition and menace for them from personal investors. It sets up all kinds of obstacles and difficulties for general investors, particularly, personal investors, as the success of individual investors means defeat on their part. The securities commission has always been an invisible lackey of the interest groups and a stumbling block for individual investors’ property. Only a fool would believe that that is a free lunch and there is absolute freedom in the world. Interest is the dominating factor above all.
Without the involvement of the securities commission, I would have made an enormous fortune ten years ago, perhaps no less than that of Warren Buffett. Starting with just four thousand dollars at that time, I achieved remarkable success within a short period of time, my clientele growing from 2 to over 100 in the first year; and my fund soaring to as high as 4 million dollars at the annual rate of 50~60%. I could have maintained an annual profit of over 30% for the mutual fund trading at any time and any place. However, the regulatory obstacles set up by the securities commission eventually blocked my way to further success. That is why I say that the financial market is just not a free and pure arena as people might think.
From the perspective of human right, freedom, business and investor’s interest, I am full of hatred for the securities commission and its lackeys for their ignorance and abuse of power. With absolute power to supervise others, they can do anything they want, and even if they make a mistake, no one can do anything about them. As the above-mentioned article says, “with the removal of Wang Yi, Vice Chairman of China’s Securities Regulatory Commission, and several others from post, the Chinese securities market seems to have regained a source of purity. Bernie Madoff, under the cloak of lawfulness, cheated the investment sector of the whole world for tens of years, but not a single agency has ever questioned the securities regulatory commission for its responsibility. The Ontario Securities Commission is just no different from the securities commission of China and that of the United States in this sense at all.

For years, I have been trying to jump out of the restrictions placed by the securities commission for a change of my status. What an irony it is now that my own investors have put me back in their hands again! What the majority of people don’t realize is that the securities commission is actually one of the biggest obstacles on our path to success - investors never sharing the same interest with the securities commission. The best investors can do is to stay away from the securities commission. People tend to think it is the protector of investors, but in actuality, it only offers protection to wealthy and powerful institutions and dealers, not general investors. It is the protection and sheltering of the securities commission that has led to the troubles of Wall Street and the arrival of financial storms.

The market is a savage, sinister and crazy arena, like a battlefield where the strong bully the weak. The role of the securities commission is to make the bullying process open and lawful. It helps the wealthy while making a show to the public, thus giving people a false impression that it is there to protect public interest. At its best, it functions like a security guard at a casino place: when he sees you winning money, he is sure to intervene, but if he sees you losing, he will step away and leave you alone.

In 1993, when my first investing endeavor made a profit, I realized that trading was a profitable occupation. In 1994, I passed exams on Canadian securities courses and code of ethics. While preparing for the exams, I realized that a license, though helpful for landing a job in the industry, may be an obstacle to success in running an investment business of my own, due to the many regulations and restrictions that come with it. I thought the best ways to protect the well-being of investors is, firstly, to have the real competence of creating profits in the market. If no profit is created for investors, there shouldn’t be any charge to them. Secondly, clients should be able to keep their fund in their own bank account for observation under their eyes so they don’t have to worry about fund safety. In 1995, I started to put these ideas in action. My independent mutual fund operation in affiliation to the Canadian Trust Bank was successful and well accepted by clients. However, as it brought tremendous competition and market menace to the securities commission and financial institutions, they intervened and revised regulations in 1996, so I was deprived the right to do trading again. Thus our dreams of wealth creation were shattered, and my clients left one after another. I thought of retaining a lawyer to fight against them, but the high retaining fees made me give up the idea in the end. Then I tried to strengthen my credentials by taking more of the qualification exams, including PDO (partner, director and officer) test, which is a high bar to keep most of the applicants out. After trying a few times in vain, I gave up. In 1998, I took the general exam and made my registration. However, just a few months after that, I decided to quit my job in the securities trading company, where I found myself being suffocated by the market, client and securities commission’s regulations. Because of the role of the Ontario Securities Commission and Canadian Investors’ Association, the number of investment management firms has plummeted in recent years, and the whole investment industry is shrinking fast.

Through more than a decade of hard struggle in the financial market, I have acquired a thorough understanding as to how easily personal investors can be hit by losses in market, and how easy it is to make huge profits from the position of a market dealer. Therefore, I changed my strategies and was determined to fight for the dealer’s position for myself. Based on my experience in the market and my abilities, I thought a weekly return of one percent was an easy target, so I promised one percent return to clients without hesitation. As there was no guarantee for achieving such return, I myself assumed all risks in relation to it. I planned to raise sufficient funds first before making investment endeavors in market. In recent years, I made great progress and achievement in this respect. Even during the 2008 financial storms, I successfully avoided losses, and in 2009 I was in a good position to make good earnings. However, many people, including the OSC, do not understand me. To them, not investing or losing money in market is a sin. They just do not see or know how hard I have been cudgeling my brain for the benefits of investors.

From late 2007, my situation started to improve. I started to prepare for registering my business with the supervising authority. Meanwhile, my operations continued under the names of those who had passed qualifying examinations but were unable to achieve good profits in practice. I registered the Weizhen Tang Financial Corporation with the OSC. I also planned to register ICMP so as to manage hedge funds and mutual fund. In the United States, I completed registration of the Win-win Hedge Fund. A financial firm with its own unique theories, practice, and thought was about to take off toward the target of becoming a world-class financial group. However, man proposes, God disposes.
The current accusations made by the Ontario Securities Commission against me and my company is in fact detrimental to the interest of the public. It destroys my company’s name, normal operation of business and hinders the process of wealth creation for investors. What benefits can the investors and public gain from the cease trade order on me? The OSC’s decision to ban me from operating a normal business is only their means of eliminating competitors in the market. In fact, if it had not been for my experience and wisdom, my investors would have sustained far worse loss in the financial storms of 2008. Who is the real protector of public interest? My answer to this question is as follows: only those who have common interest with the investors or those who the investors have hired to work for them are the real protectors of their interest.

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