Our Checks and Balances

Fall 2009

By Kostas Andrikopoulos, President and CEO, T.E. Wealth

High profile fraudsters such as Bernie Madoff and, more closer to home, Earl Jones, have shaken the confidence of investors everywhere. Here at T.E. Wealth, we work hard to earn our clients’ trust and not just through our financial planning advice and investment recommendations. Built into our processes are the kind of checks and balances that were conspicuously absent in the offices of Bernie Madoff and Earl Jones.

Separation of assets

Client assets are not held directly by T.E. Investment Counsel (TEIC) or the portfolio managers but are held separately within a custodial account by a third-party custodian. Bernie Madoff never invested his clients’ money and only deposited it in his business bank account. Earl Jones put clients’ money into his corporation’s trust account, only to withdraw it for personal use.

Third-party custodians

Our third-party custodians, including RBC Dexia and National Bank’s Correspondent Network (NBCN), are well recognized and are among the biggest in the business. RBC Dexia provides custodial services for our individual separately managed accounts. NBCN acts as custodian for client assets held in pooled mutual funds. With our own Prosperity Funds, TEIC, as portfolio manager, outsources the recordkeeping and fund accounting, and the assets of the funds are segregated with RBC Dexia acting as custodian.

Arms-length handling of client zolpidemsleep.com deposits

When clients give money to their TEIC investment counselor to invest, the cheques are made out to the custodian and not to TEIC or T.E. Wealth. In Earl Jones case, client deposit cheques were made out to him or his company, in trust. In addition, at TEIC we have separated the functions of executing trades and handling client requests for withdrawals. No one person can make funds available and then disburse them and we don’t disburse funds to anyone but the account holder.

Reputable auditors

Bernie Madoff operated his asset management firm with the help of a three-person accounting firm, which only had one full-time employee. KPMG, a leading international audit firm, audits TEIC’s records annually, verifying ownership of assets, examining transactions and comparing quarterly statements with custodians’ statements. In addition, TEIC, as an investment counselling firm, is subject to audit by provincial securities commissions at any time. Earl Jones was not registered as a financial planner and did not belong to any regulatory body so he was not subject to compliance checks nor did he have to adhere to any professional standards.

Long-tenured consultants

The top positions, including those relating to compliance, at Bernie Madoff’s firm were often held by family members. Earl Jones had a family member working for him too. The average length of time our consultants have been with us is 15 years and in our more than 35 years of operation, we have never had any reports of fraudulent activity.

At T.E. Wealth we encourage our clients get answers to their concerns and welcome their questions. Compare this to dealing with Bernie Madoff. If you asked too many questions, you were no longer a client.

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These articles are for general informational purposes only. Please obtain professional advice before taking any action based on this information. No endorsement or approval of any third parties or their advice, information, products or services should be implied by any references to third parties contained in any article. Trademarks cited in these articles are the respective properties of their owners.

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