Swindlers: Cons and Cheats and How To Protect Your Investments From Them [Hardcover]

Rossa O'Reilly, CFA in The Analyst, March 2011

No one on the investment scene in Canada today is pursuing these vitally important issues with the same vigor and experience as Al and Mark Rosen. In the process they are doing the Canadian investing public a significant service. Investors, analysts and all other users of financial statements should do themselves a service and read $windler$. Whether they agree with the authors on each issue or not, their perspectives on financial statements, securities regulation and investing in Canada are almost certain to undergo some significant changes.

A LAND FIT FOR HUSTLERS

By David Baines, Vancouver Sun, November 15, 2010

Toronto-based forensic accountant Al Rosen is 75 years old, but he hasn’t lost any of his capacity for indignation. “Canada seems like such a nice, conservative, risk-averse market, he states in his just-released book, Swindlers, which he co-authored with his son Mark. ”Our abysmally lax laws and weak enforcement of financial reporting principles erode corporate accountability and offer ample opportunities for gravely misleading manoeuvres” I agree entirely. … Over his lengthy career, he has had a street-level view of many epic Canadian financial scandals, including Confederation Life and Livent… Rosen says swindlers and flimflam artists are attracted to Canada because they know there is a slim chance of getting caught, and if they do get caught, the consequences will be minor.”

CHILLING BOOK SOUNDS WARNING ABOUT CONS AND CHEATS

James Daw, Toronto Star, November 12, 2010

Al Rosen is the angry man of Canadian accounting. He is ferocious in his defence of investor interests, a harsh critic of complacency and fearless in his use of free speech. Now he and son Mark Rosen, founders of Accountability Research Inc., have jammed their collected wisdom into a concise and controversial book …   [They] rang alarm bells about Bombardier, Nortel and sordid business income trusts while Bay Street analysts and brokers were still leading sheep to slaughter.”

NEW ACCOUNTING STANDARDS BRING WARNINGS OF MURKY REPORTING

Simon Avery, The Globe and Mail, January 21, 2011

New financial reporting standards for Canadian businesses this year aim to improve companies’ standing in global capital markets, but they could also make it harder for investors to assess and compare corporate performances.

 … some forensic accountants warn that discarding Canadian Generally Accepted Accounting Principals (GAAP) for a customized version of the new International Financial Reporting Standards (IFRS) will create long-term problems, including opening the door for unscrupulous executives to cook the books.

 “We expect IFRS will make life miserable for investors,” say forensic accountants Al Rosen and Mark Rosen, authors of Swindlers: Cons & Cheats and How to Protect Your Investments from Them. The father and son team, founders of Accountability Research Corp. in Toronto, are outspoken critics of what they consider a lack of oversight by Canada’s accounting industry. And they say the cozy nature of the sector has allowed the introduction of new reporting standards that serve the interests of auditors over investors.

 … Mr. Rosen says the comparability factor is just one of several myths put out by the accounting industry to justify new standards that have already delivered extensive consulting fees to the industry and at the same time off-loaded some of auditors’ liability to the boards of companies.

 “It’s just ludicrous to think that if you loosen up all the rules, that will increase comparability,” he says. “All you have to do is look at two companies in the same industry in Canada and you can see immediately they are not compatible because of the choices allowed in IFRS.”

COME 2011, SWINDLERS WILL HAVE AN EVEN EASIER TIME CONNING CANADIAN INVESTORS

Jonathan Chevreau, National Post, November 30, 2010

 …it’s already clear to me that serious investors need to read this book. In the introduction, Rosen & Rosen note that Canadians sit back and let American regulators do the work on blowing the whistle on Canadian investment cons.  They note it was the US that moved on Hollinger, Livent and Nortel.

Swindlers, scam artists, flim-flams and Ponzi schemes are attracted to Canada because they know they can get away with their shenanigans. Even if they get caught, they know they’ll receive only a slap on the wrist. And chances are good that they won’t get caught at all.

Canada is a soft touch for the dishonest for at least three reasons. First is the lack of a national securities regulator. Second, our accountants and auditors regulate themselves. And third, “auditors have washed their hands of responsibility to individual investors in Canada, and the nation’s highest court has supported them in doing it.”

Swindlers love Canada’s boomers and retirees.

The … book, published by Madison Press Books of Toronto — has 30 chapters covering everything from the income trust “scam” [the authors' words] to the Crocus labor fund to Nortel Networks to leveraged ETFs… The others? They include Corel Corp., Cinar, Norshield and Norbourg, YBM Magnex, FMF Capital and — an oldie but goodie — Investors Overseas Syndicates.

Boomers and retirees are especially vulnerable because they “can be their own worst enemies” and “swindlers love them.”