ASL Direct (anyone have any experiences?)

[Shakespeare]

Greyowl, you posted the same message in several different places.

Please avoid doing so again or one of the moderators might tell you off.

[greyowl]

Yes, they already did. Just wanting to warn as many people as possible with the problems with ASL Direct.
Sorry.

[costdomatter]

Efficient Wealth Management who offer a similar service of rebating trailer fees

More correctly

EWM who can direct you to a similar service at one of their customers

Efficient Wealth Management is in the business of finding you the lowest cost solution for management of your assets. We work with outside mutual fund reps, broker advisors and discretionary managers who pay attention to your costs and offer full disclosure of their earnings stream.

[DanH]

OSC Issues Temporary Cease Trade Order Against ASL Direct Inc.

TORONTO, May 2 /CNW/ - On May 1, 2008, the Ontario Securities Commission (OSC) issued a Temporary Cease Trade Order against ASL Direct Inc. (ASL). ASL is registered with the Commission as a Mutual Fund Dealer and a Limited Market Dealer, and is a member of the Mutual Fund Dealers Association of Canada (MFDA).

Staff of the Commission are investigating the conduct of ASL and are concerned that it may have participated in the distribution of securities in the Future Growth Group of Funds without a prospectus and without an exemption to the requirement for a prospectus. In addition, ASL may have failed to comply with its obligations as a registrant contrary to Ontario securities law.

On April 22, 2008, the OSC also issued a Temporary Cease Trade Order respecting the principal of ASL, Adrian Leemhuis (Leemhuis), and the Future Growth Group of Funds. The orders were obtained in the course of investigations conducted by staff of the OSC, the Autorité des marchés financiers (Québec) and the MFDA.

Clients of ASL who may have questions concerning their investments through ASL should direct their enquiries to the MFDA at 1-888-466-6332. Copies of the Temporary Cease Trade Order dated May 1, 2008 respecting ASL and the Temporary Cease Trade Order respecting Leemhuis are available on the OSC's website (www.osc.gov.on.ca).

The MFDA issued a corresponding notice. I don't know for sure, but this looks like the website for the Future Growth Funds. I don't know what this means for ASL and its clients but I can say that I've noticed a few odd things about ASL Direct over the years.

One of them has been well publicized on this and other forums - i.e. late trailer fee rebates. That is never a good sign.

Second is the firm's promotion of their monthly fee as a tax deductible "advice" fee. There is some debate on this but I saw that as risky.

Third, and I could never mention this item publicly because I worked for a competitor at the time (and hence had a conflict of interest) but ASL Direct shows a recommended list of funds, something they call Fund Recommender. Back in 2002/03, all of the Orbit Mutual Funds were highlighted in this Fund Recommender. What was never disclosed anywhere on the site that I could find was that Adrian's father - Feico Leemhuis - founded and owned Orbit Mutual Funds. (Click here and scroll to the bottom.) At that time, I mentioned this to one or two journalists who had previously endorsed ASL but they chose to sit on this information.

So, while ASL was being praised as an investor-friendly option, it was in a clear conflict of interest in a few of its top recommendations, for which it charged a fee.

Fourth, and finally, ASL has licensed a small number of 'full service' financial advisors. I personally knew three of them and all three of them were trouble as far as I was concerned. Yet this firm seemed to have no trouble signing these folks up or had no standards when it came to signing up advisors.

[parvus]

And fifth:

ADRIAN SAMUEL LEEMHUIS, FUTURE GROWTH GROUP INC.,
FUTURE GROWTH FUND LIMITED,
FUTURE GROWTH GLOBAL FUND LIMITED,
FUTURE GROWTH MARKET NEUTRAL FUND LIMITED, and
FUTURE GROWTH WORLD FUND
<snip>
WHEREAS it appears to the Ontario Securities Commission (the “Commission”) that:
Adrian Samuel Leemhuis is a Canadian resident;

The corporate respondents and Future Growth World Fund, the “Non-individual Respondents”, are neither reporting issuers nor registrants in Ontario;

The respondents have traded in investments which appear to be “securities” as defined in section 1(1) of the Securities Act, R.S.O., 1990 c.S.5, as amended (the “Act”);

Staff are conducting an investigation of the respondents. Based on Staff’s investigation to date, it appears that:

the respondents have traded in securities and participated in unlawful distributions of securities, contrary to sections 25 and 53 of the Act; and

The Commission is of the opinion that it is in the public interest to make this order and that the time required to conclude a hearing could be prejudicial to the public interest.

AND WHEREAS by Commission Order made By Authorization Order made April 1, 2008, pursuant to subsection 3.5(3) of the Act, each of W. David Wilson, James E. A. Turner, Lawrence E. Ritchie, Paul K. Bates and David L. Knight, acting alone, is authorized to make orders under section 127(5) of the Act.;

IT IS ORDERED pursuant to section 127(5) of the Act that:
Under paragraph 2 of section 127(1), all trading in securities of the Non-individual Respondents shall cease;

Under paragraph 2 of section 127(1), trading in any securities by the respondents shall cease; and

Under paragraph 3 of section 127(1), any exemptions contained in Ontario securities law do not apply to the respondents.

[NormR]

The MFDA issued a corresponding notice. I don't know for sure, but this looks like the website for the Future Growth Funds. I don't know what this means for ASL and its clients but I can say that I've noticed a few odd things about ASL Direct over the years.

These funds seem to provide 'monthly reports' but the last one was as of Dec 31. Recent monthly prices are also lacking. Perhaps a straight up con?

[DanH]

Further, the Future Growth Market Neutral Equity seems to invest in a SciVest Offshore fund, which is run by SciVest of Toronto. SciVest is also one of two hedge funds currently highlighted as recommended by ASL. Coincidence?

[parvus]

Hmm.

SciVest, Manager of the Future Growth Market Neutral Equity Fund, are once again noted at HedgeFund.net as one of the top Market Neutral Equity managers globally. Below is a press release:

Hmm2.

Ark Financial Holdings Ltd. Announces the successful acquisition of Scivest Alternative Strategies Inc.
Toronto, ON - Ark Financial Holdings Limited (“Ark Financial”) a Toronto-based investment company is pleased to announce its entry into the investment fund industry with the purchase of SciVest Alternative Strategies Inc.

“The acquisition of SciVest’s distribution company provides us an excellent platform to execute our long-term growth strategy in the Canadian asset management industry,” said Peter Shippen, President and CEO of Ark Financial. “Our goal is to launch unique investment products that provide significant diversification benefits to investors.”

“We are very excited with the opportunities ahead of us and look forward to introducing some exciting new products to the Canadian market this fall.”

Hmm3. (Since the Adobe is acting up, you'll actually have to click.)

[greyowl]

Dan,

What impact will this have on clients who have an account with ASL Direct if their accounts are in client name with the mutual fund company?

[DanH]

Dan,

What impact will this have on clients who have an account with ASL Direct if their accounts are in client name with the mutual fund company?

I can't say for sure. you are best to phone the OSC, the MFDA, or ASL itself. The following is now listed on the OSC website under ASL's terms and conditions of its license as a mutual fund dealer.

1. ASL and all its directors, officers and employees are restricted to non-trading under the Securities Act.

2. ASL must not open any new accounts.

3. ASL must inform its clients of the terms and conditions placed on the firm.

So, at a minimum all clients should be notified very soon (I would think early this week). But the cease trade order may prevent ASL clients from making changes to, adding money to, or taking money out of their accounts (since each of those is a "trade"). This may be the most serious impact on clients. Then again, a transfer in-kind to another dealer may be permitted (but I'm not sure).

[squash500]

Third, and I could never mention this item publicly because I worked for a competitor at the time (and hence had a conflict of interest) but ASL Direct shows a recommended list of funds, something they call Fund Recommender. Back in 2002/03, all of the Orbit Mutual Funds were highlighted in this Fund Recommender. What was never disclosed anywhere on the site that I could find was that Adrian's father - Feico Leemhuis - founded and owned Orbit Mutual Funds. (Click here and scroll to the bottom.) At that time, I mentioned this to one or two journalists who had previously endorsed ASL but they chose to sit on this information.

Dan, Orbit doesn't seem like such a popular fund anyway. Only 21.3 million in assets for all the orbit funds combined. I love the financial services industry as it seems to be more controversial than Howard Stern

[squash500]

Fourth, and finally, ASL has licensed a small number of 'full service' financial advisors. I personally knew three of them and all three of them were trouble as far as I was concerned. Yet this firm seemed to have no trouble signing these folks up or had no standards when it came to signing up advisors.

I wonder why? Could money have something to do with it .

[greyowl]

If your account is held in client name directly with the mutual fund company such as Trimark, and ASL is the dealer of record, could you send in an authorization to the Trimark and change the dealer of record.

Also, how about PACs that are currently running--could they still keep running?

[greyowl]

I am also wondering what will happen with all the trailer fees that are suppose to be rebated to clients. ASL has not paid out rebates since Q2/06.

Any idea how this will be dealt with.

[parvus]

More detail today from the OSC:

AND WHEREAS it appears to the Ontario Securities Commission (the “Commission”) that:
Adrian Samuel Leemhuis (“Leemhuis”) is a Canadian resident.

ASL Direct Inc. (“ASL”) is a corporate entity whose President, sole shareholder and director, is Leemhuis;

ASL is registered with the Commission as a Mutual Fund Dealer and a Limited Market Dealer, with its head office located in Toronto, Canada;

Leemhuis is the directing mind of ASL and the Respondents;

Staff are conducting an investigation of the Respondents and ASL. Based on Staff’s investigation to date, it appears that:

ASL and the Respondents have traded in securities and participated in unlawful distributions of securities contrary to sections 25 and 53 of the Act;

ASL has, directly or indirectly, facilitated this unlawful activity by actively assisting the Future Growth Group of Funds dealing with investors;

ASL has conducted activity in breach of OSC Rule 31-505 – Conditions of Registration, Part 2 – the duty to deal fairly and honestly and in good faith with its clients by not paying certain amounts promised and owed to such clients for 18 months;

Leemhuis and ASL have failed to disclose their involvement in the Future Growth Group and related securities activities in their filings with the Commission;

Leemhuis and ASL have misrepresented to the Mutual Fund Dealers Association (“MFDA”) staff during compliance reviews as to the members involvement in other securities related activities and entities such as their involvement in the Future Growth Group;

MFDA staff have noted inadequate record keeping and supervision based on compliance reviews by MFDA staff that noted serious concerns in respect of trade supervision and trade records, including lack of evidence of client trade instructions; and

ASL is not financially viable or solvent based on its lack of profits to date and its inability to resolve a capital deficiency of approximately $42,562, which was identified in the independent audit for the year ended December 31, 2007.

Does not look good for the trailer fee rebate.

BTW, Dan, congrats on posts 1000 and 1001.

[NormR]

More detail today from the OSC:

AND WHEREAS it appears to the Ontario Securities Commission (the “Commission”) that:
Adrian Samuel Leemhuis (“Leemhuis”) is a Canadian resident.

ASL Direct Inc. (“ASL”) is a corporate entity whose President, sole shareholder and director, is Leemhuis;

ASL is registered with the Commission as a Mutual Fund Dealer and a Limited Market Dealer, with its head office located in Toronto, Canada;

Leemhuis is the directing mind of ASL and the Respondents;

Staff are conducting an investigation of the Respondents and ASL. Based on Staff’s investigation to date, it appears that:

ASL and the Respondents have traded in securities and participated in unlawful distributions of securities contrary to sections 25 and 53 of the Act;

ASL has, directly or indirectly, facilitated this unlawful activity by actively assisting the Future Growth Group of Funds dealing with investors;

ASL has conducted activity in breach of OSC Rule 31-505 – Conditions of Registration, Part 2 – the duty to deal fairly and honestly and in good faith with its clients by not paying certain amounts promised and owed to such clients for 18 months;

Leemhuis and ASL have failed to disclose their involvement in the Future Growth Group and related securities activities in their filings with the Commission;

Leemhuis and ASL have misrepresented to the Mutual Fund Dealers Association (“MFDA”) staff during compliance reviews as to the members involvement in other securities related activities and entities such as their involvement in the Future Growth Group;

MFDA staff have noted inadequate record keeping and supervision based on compliance reviews by MFDA staff that noted serious concerns in respect of trade supervision and trade records, including lack of evidence of client trade instructions; and

ASL is not financially viable or solvent based on its lack of profits to date and its inability to resolve a capital deficiency of approximately $42,562, which was identified in the independent audit for the year ended December 31, 2007.

Does not look good for the trailer fee rebate.

ASL appears to be toast. Hopefully, they haven't absconded with client funds. (Apart, it seems, from the trailer fees.) The inadequate record keeping might be a big problem if client trades weren't recorded properly.

[cheapskate]

Here are my impressions from conversations with both OSC and MFDA.

A letter is coming from MFDA to ASLDirect clients - mailed on Monday 5 May 2008.

Rebates might NOT be toast. MFDA enforcement personnel are working to verify accounts and rebate calculations. My impression is that if calculations are found to be reasonable / correct, and funds have not vanished, ASL will be instructed to distribute the rebates.

Otherwise, rebates could be part of MFDA Investor Protection Corporation coverage, since rebates are prominently promised on ASLDirect website and are acknowledged in the OSC paragraph quoted above - "not paying certain amounts promised".

The OSC has delegated mutual fund regulation to the MFDA.

Clients can obtain a redemption by contacting the mutual fund management company directly. You may have to call the "dealers only" line and say you are an ASLDirect client and have been instructed by MFDA to contact management. This is for redemptions only. If any problem, get the contact's name and extension, and suggest they call MFDA. Or call MFDA yourself with contact name.

Clients can initiate transfer to another dealer if so wish - non-RRSP funds held in client name should be straightforward.

HTH

[DanH]

ASL cease trade order extended

TORONTO, May 7 /CNW/ - Following a hearing held in the above noted matter, on May 6, 2008 the Commission issued an Order that the Temporary Orders issued on April 22, 2008 and May 1, 2008, are continued until May 16, 2008 and that this matter is adjourned until May 16, 2008 at 9:00 a.m. A copy of the Order is available at www.osc.gov.on.ca

OFFICE OF THE SECRETARY
JOHN P. STEVENSON
SECRETARY



For further information: For media inquiries: Wendy Dey, Director, Communications & Public Affairs, (416) 593-8120; Laurie Gillett, Manager, Public Affairs, (416) 595-8913; Carolyn Shaw-Rimmington, Assistant Manager, Public Affairs, (416) 593-2361; For investor inquiries: OSC Contact Centre, (416) 593-8314, 1-877-785-1555 (Toll Free)

[cheapskate]

Just got my letter from MFDA, and an e-mail from ASLDirect.

It looks to me like ASLDirect is claimng that MFDA approval is required for distribution of the rebates and that approval has not been given, even though rebates have been ready since December 2007.

Quote: "ASL Direct has been prepared to pay and requesting approval
to pay trailer fee rebates to its clients for some time but has been
prohibited from doing so by the MFDA."

Meanwhile it's us clients who are left in limbo.

Isn't the MFDA supposed to be acting in the clients' interest?

[The Captain]

So ASL Direct says they have been trying to pay out rebates since December 2007. And you believe them? The warning signs have been there for some 3 years, just go through this thread. After one broken promise after another, I asked myself this question...why should I trust these guys with my money??? I threw away my application forms soon thereafter, and no I do not regret it.

[greyowl]

When I last spoke with Adrian a few weeks ago, the software for calculating rebates was not completely operational so I don't think it is the MFDA that is holding up things. They are requiring that ASL be precise and responsible in their dealings with clients.

It is the MFDA that is trying to make some sense of a grossly inaccurate system at ASL in terms of record keeping and calculations. They want to be assured that the money that is there is distributed accurately and fairly to the clients.

The MFDA is acting in the best interest of the clients.

[greyowl]

Cheapescape,

Thanks for investigating the situation and posting the information.

Greyowl

[greyowl]

The ASL monthly fee was recently applied to my credit card a couple of days ago.

I do not think they should be continuing to charge fees when they cannot provide any service.

I am wondering if anyone has an idea of whether ASL will be able to continue their business after this or if it is likely that their license will be suspended.

[hock]

I spoke to Adrian 2 weeks ago and he said the same thing, that the software is holding him up and he needs to get it right for all the clients. That's a lot different than the email I got form ASL Direct saying that MFDA is holding him up. Why didn't he say that before? Obviously, ASL's credibility is poor right now. As much as ASL's idea was a great one, they did not own up to their end of the bargain.

[Diagoras]

Has anyone actually sccessfully transferred Mutual funds from ASL Direct to another dealer since the cease order has been in effect?