Protecting Your Wealth

An overview of the safeguards in place at ScotiaMcLeod

 

 

The financial crisis gripping global markets has created a great deal of uncertainty for all of us. However, it is important to understand the depth and breadth of protection you and your money have at ScotiaMcLeod.

 

In recent months, financial institutions, primarily in the U.S. and Europe, have faced significant difficulties. However, governments in these markets are now implementing various plans to stabilize the situation. At the same time, financial markets around the globe have been experiencing high levels of volatility. In today’s global and interconnected marketplace, no one is immune from these difficulties.

 

To help ease your mind, the following describes the various regulatory and business safeguards that are in place to protect you and your wealth.

 

Is Scotiabank at risk of suffering a fate similar to its peers in the United States and abroad?

 

At Scotiabank, we have strong capital that provides a prudent cushion in periods such as this and positions us to take advantage of opportunities as they arise. We also have very strong diversification by business and by geography, and a tremendous risk management culture. All of these factors combined put us in a position of relative strength and give us confidence in the future, as markets will recover and stability will return to the global financial sector.

 

Overall, our clients can rest assured that Scotiabank is in a solid position to weather this period of uncertainty.

 

What level of investment protection do I have?

There are many safeguards in place to protect investors; however, none of these insulate clients from the inherent market risk associated with investing.

 

Our firm is regulated by the Investment Industry Regulatory Organization of Canada (IIROC). IIROC sets high quality regulatory and investment standards, protects investors and strengthens market integrity while maintaining efficient and competitive capital markets.

 

As a member of IIROC, we are members of the Canadian Investor Protection Fund (CIPF). Its purpose is to protect clients of member firms against losses resulting from the insolvency of a member. The CIPF provides coverage equal to $1 million for losses of securities, commodity and futures contracts, segregated insurance funds and cash. 

 

Accounts covered under CIPF include:

• Registered Retirement Plans
• Registered Education Savings Plans
• Testamentary Trusts
• Inter-vivos Trusts and Trusts Imposed by Law
• Guardians, Custodians, Conservators, Committees etc.
• Personal Holding Corporations
• Partnerships
• Unincorporated Associations or Organizations

 

The CIPF does not provide coverage for securities you may have purchased, where the issuing company has gone bankrupt.  If you own a GIC or a Mutual Fund that is being held with a CIPF member (ScotiaMcLeod), you have coverage equal to $1,000,000.  In addition, investments in accounts of CIPF members that are fully paid for are segregated and held in trust for the client. Therefore, the member cannot use them in the conduct of its business without the express consent of the customer.

 

As a division of Scotia Capital Inc., ScotiaMcLeod is a registered dealer with all the provincial securities regulatory bodies. These entities provide protection to investors from unfair, improper or fraudulent practices and work to foster fair and efficient capital markets and confidence in capital markets. For more information on CIPF coverage, visit www.cipf.ca

 

I own mutual funds – Do these investments carry protection too?

When you invest in securities through a pooled investment, such as a mutual fund, you actually own a portion of the fund’s investments. Therefore, unlike a bank deposit (essentially a loan to the bank for which you are paid interest), there is no repayment obligation that needs to be insured with a mutual fund investment. However, there are protections in place in case of insolvency.

 

Mutual fund distributors must be members of a self-regulatory organization. While ScotiaMcLeod is not a member, the Mutual Fund Dealers Association of Canada (the MFDA) has investor protection funds in place to protect customers in the event of an insolvency or bankruptcy of a member firm.

 

The MFDA’s Investor Protection Corporation (IPC) was approved in May 2005 by the securities commissions in Alberta, British Columbia, Nova Scotia and Ontario and by the Financial Services Commission in Saskatchewan as a protection plan for customers of mutual fund dealers that are members of the MFDA.

 

The MFDA IPC offers coverage to a maximum of $1 million per customer account and extends to all client assets held by the member in the event of insolvency resulting from business failure. Further information is available on the MFDA website at www.mfda.ca. (click on ”For Investors” and then “MFDA Investor Protection Corporation”).

 

If you invest in mutual funds and do not see “CIPF” on advertising literature, then the MFDA’s IPC may be protecting you in the event of insolvency of a salesperson or mutual fund distributor.

 

Please note that Quebec has a slightly different contingency fund that protects clients of firms and representatives distributing financial products and services. Please visit www.lautorite.qc.ca to find out more about this fund.