The "smell ya later" subject line, other than being juvenile, is merely wishful thinking. Szeven seems to have the best grasp of what is happening in this case. It's actually looking like this "routine investigation" by the OSC into the workings of Swift Trade means that Swift is going nowhere anytime soon. The OSC is one of the strictest security commissions on the planet, and if you'll notice, it's what the press release doesn't say that is telling. You don't see anything at all about the business model of Swift Trade being a concern for the OSC. That is because after spending the better part of a year looking into Swift Trade, the OSC has signed off on the business model. This means more branches coming your way soon i would guess, rather than the (oft predicted) demise of the company. However, depending on how the OSC hearing with Peter Beck plays out, he may personally be run out of the company he co-founded, or at least be a little lighter in the pocket book. This is all about Barka and Swift's connection to Barka. Other than that, clearly the model of a prop trading firm is OK with the OSC, which by proxy means it's OK with every other security commission in Canada. I'd say this is also good news for Swift's competitors as well.
The reason is this....as explained to us by Swifttrade's Headoffice....... all of swifttrade's traders are considered "Independant Contractors" and not employees of swifttrade. This is so that swifttrade does not have to pay CCP, emplyment insurance or spend time and money taking money for canadian income tax off of every traders cheques. However...you cannot be deemed an independant contractor if you do 100% of your work for one company. Example.....a home renovating contractor that does 100% of his business with Home Depot cannot claim that he is an independant contractor. Revenue Canada deems him to be an employee of Home Depot and so Home depot would have to pay CPP, EI and colect income tax from this contactor. However....if this contractor does 80% of his work for home depot and 20% for other companies than he can be called an independant contractor and Home Depot would not be responsible for paying the ccp, EI or taking off deducitons.......Peter Beck and Swifttrade are trying to make it appear like all their traders work for two different companies Swifttrade and Barka.....and so by doing that they can avoid paying CCP, EI and collecting income tax from their traders......and therefor saving themselves thousands if not millions of dollars each year. Beck is accused of not informing the Ontario Commission that he actually has control over Barka becauise he is trying to hide the fact that his traders do in fact do 100% of their trading for Swifttrade because he doesnt want to get dinged by Revenue Canada for 10 years of back CCP and EI contributions or get fined for not collecting income tax from his traders. He was trying/doing a legal run-around Revue Canada to save himself millions of dollars.
You might as well have started by saying 'I'm with SwiftTrade management'. The OSC is one of the most notoriously ineffective organizations of its kind. In fact there was a front page story in the Globe and Mail business section last week about precisely this problem. The examples of its failure to either successfully prosecute or even initiate fraud cases are too numerous to mention. The most it ever gives out is a slap on the hand and a fine. You'll have to do a bit better around here, junior. Oh, by the way... welcome to ET.
Thanks for the "welcome" powerfade. No I'm not with SwiftTrade management, I am a trader, with no desire to be management at Swift or anywhere else. Not sure if you are in Ontario or even Canada, but it is widely known that the OSC is a strict security commission. By strict I am speaking more of them allowing or not allowing companies to do business in the province. The last place you would go to set up a shady company in Canada is Ontario. For example, if you want to find stock boilers rooms in abundance, go to Quebec, where the security commission is super lax compared to Ontario. I would in no way defend the OSC, they have a litany of things for people to take issue with. I was merely stating a well known fact, if you can get licensed by the OSC, then you are good anywhere else in Canada. Europe for example has very few security commissions as stringent as the OSC. Not sure what you do for a living but this is hardly new information.
The reason the securities commission is lax in Quebec is because they don't care about equities. Remember the deal the MX and TSX signed? MX got full control of options, TSX would stay out until next year, and the TSX was the regulator for equities. The merger will now combine the two. It doesn't help that canada has regulators for every province who can't agree on national standards because they're all a bunch of retards. Hurry up and merge already and have one set of rules for everyone. You think Quebec is bad, look at vancouver. Anyone with a million can get listed easily with little oversight...
The OSC is a joke. The entire Canadian securities regulatory body is a joke. This is not a criminal investigation. He is'nt going to jail anytime soon. However, if you are being criminally "investigated" elsewhere in the world, open up a subsidiary in Canada and you can require the Canadian investigative entities to share whatever information they have on you. The Canadian securities industry is operated by a small group of crooked insiders. Beck must have stepped on the wrong toes, or someone large is trying to muscle into his business.
This is a non-event. The article was based on a press release issued by the OSC. It conveniently failed to mention that the OSC concluded a 1.5 year investigation into Swift's corporate structure that failed to find a single inappropriate issue. CCRA has ruled in the past regarding the independent contractor status and found it to be legit. Say whatever you want about Swift, the OSC, etc., but this is just an extension of the OSC's witchhunt against prop trading in Canada. Swift just happens to be the biggest, and under the biggest spotlight. There is NO chance that Swift would be affected by any kind of ruling in this latest investigation. Besides, all the Swift offices are simply under contract themselves. They could switch providers in a heartbeat if Swift went dark. -Stuckie
I agree with Stuckie. In no way will this ruling affect traders who trade with Swift. The article seems to be about the owner and not the firm. Even if something were to happen, each office is independent and can trade with anyone else they choose. If you are a trader, this is almost a non issue.