Briefly:

(January 20, 2006) A pair of deposit notes that allow investors the choice to receive or reinvest distributions have been launched by CIBC and CI Investments.

The CIBC CI M.A.X. Deposit Notes, Series 2 and Series 2total, will be on sale until March 10 at a price of $100 each with a minimum investment of $5,000.

The notes will be linked to the performance of CI’s Signature Income & Growth Fund, which is a diversified mix of income-generating securities, including equities, income trusts and high-yield debt bonds. The fund has a five-year annualized rate of return of 9.5% and currently offers an annual distribution of approximately 6.5%, paid monthly.

The Series 2 “coupon option” will pay out a monthly amount equivalent to 75% of all ordinary distributions of the underlying fund unit. The remaining distributions will be reinvested in the notes.

In the case of the Series 2total “reinvestment option,” all distributions will be reinvested in the notes, which will provide investors with the opportunity for tax-deferred growth and enhanced returns through additional exposure to the underlying fund, CI says.

“With the flexible options and the dynamic allocation strategy, the CIBC CI M.A.X. Deposit Notes aim to maximize potential returns for investors while limiting their downside risk,” said David R. McBain, senior vice-president of CI Investments and president and Chief Executive Officer of Skylon Advisors, which is marketing the notes in cooperation with CI.

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RCMP lays charges in alleged fraud scam

(January 20, 2006) The RCMP has laid charges against an Ontario man in connection with an alleged Nigerian fraud scam.

In this case, the victims, all members of the same church, were asked to pay fees to release an inheritance fund. The fees were paid, but the victims never received the inheritance funds.

Sanford Champion of Penetanguishene has been charged with four counts of fraud over $5,000.

“Although frauds of this type have been in existence for many years, tragically there continue to be victims who, in many cases, have had their lives altered by the financial hardship which has resulted,” said Inspector Brian Verheul, of the GTA Commercial Crime Section.

“The old adage ‘If it seems to good to be true it probably is,’ is as applicable today as it ever was,” he added, “Avoiding impulsive decisions, relying on your own good instincts and when in doubt, taking time to obtain independent objective advice from known and trusted friends would in most cases prevent these frauds from ever taking place.”

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Metal rally still has legs, economist says

(January 20, 2006) Metal prices and stocks should continue to perform well in 2006, says BMO Nesbitt Burns economist Bart Melek.

Zinc and copper are near their all-time peaks and gold is at a 24-year high, adding to speculation that a correction is coming, Melek said in an online commentary. “With base metal equities at record highs and gold stocks nearing a 10-year high, investors fear a similar fate for mining stocks.”

“Investors are concerned that prices may again follow the traditional boom-bust cycle,” he adds.

Melek says although those fears are not baseless, BMO doesn’t seen a major correction in the near future. “We expect that demand will stay strong, supply growth will be modest and inventories will remain stressed well into next year keeping metal prices firm.”

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C.D. Howe calls on bank to raise interest rates

(January 20, 2006) A panel of economists say the Bank of Canada should raise its benchmark interest rate to 3.5%, up from 3.25%, when the central bank meets on January 24.

Nine of the 11 members of the C.D. Howe committee favoured the increase. Those supporting the hike felt that “short-term interest rates are below the levels compatible with a sustained 2% inflation rate,” the central bank’s inflation target.

Most of the economists expect continued demand at or above growth in Canada’s productive capacity, due to bottlenecks forming as a result of regional and sectoral shifts in the economy.

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Perimeter Financial takes over subsidiaries

(January 20, 2006) Perimeter Financial has acquired complete control of its three principal operating businesses, including CBID Markets, Market Securities and Investment Administration Sciences.

The consolidation, which has been approved by the IDA, took place in two steps. First, the three firms were amalgamated with their parent to continue as one corporation. Then, the parent merged the two dealer subsidiaries, CBID and Market Securities, to form Perimeter Markets, combining the electronic marketplace for fixed income securities with an electronic marketplace used to trade securities.

The deal is expected to streamline the company’s operations and enhance services. Clients shouldn’t notice any immediate change.

Market Securities will surrender its membership in the IDA in accordance with association bylaws.

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One-third of Canadians pass CFA exam

(January 19, 2006) The results are in from the latest sitting of the Level 1 CFA exam and the marks aren’t good. More people took the December exam but the overall pass-rate fell to 34% from 36% a year earlier, according to the CFA Institute.

The pass rate is down substantially from its historical average of 48% for the Level I exam.

Canadians who took the exam fared slightly better than the average, with 35% of the 1,690 people earning a passing grade.

CFA candidates in Mainland China had the best results, with 54% of their 1,298 test takers making the cut. This is a dramatic change considering there were only 24 candidates for the CFA exam when it was first offered in that country 10 years ago. Candidates in the Middle East seemed to struggle the most with the exam with just 23% of 862 people passing.

The institute adds that CFA charter holders tend to earn 24% more than their peers without the charter, with a median annual salary of $248,000 US. The list of the largest employers of CFAs includes two Canadian-based firms. They are Barclays Group, CIBC, Deutsche Bank, Fidelity Investments, The Goldman Sachs Group, Merrill Lynch, Royal Bank of Canada and UBS.

On average, CFA candidates take four years to pass the three required exams. To earn the charter CFA candidates must sequentially pass three six-hour exams that are widely considered to be the most rigorous in the investment industry.

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Foreign investors see value in Canada

(January 19, 2006) Foreign investment in Canadian securities reached its highest level in 2005 with non-residents buying $5.4 billion worth in November. But the majority of those funds weren’t chasing Canada’s red hot energy sector; most of it went into bonds.

More than two-thirds of November’s foreign purchases, or roughly $3.5 billion, were in Canadian bonds, with U.S investors accounting for $1.4 billion of that sum. This marked the third consecutive month that foreigners have been buying bonds, bringing the total for that period to $7.3 billion.

That’s not to say foreign investors shunned Canadian stocks, they increased their holdings there as well by purchasing $1.7 billion in Canadian equities, up from $1.6 billion in October. Much of that investment poured into the natural resource sector.

Canadians, meanwhile, acquired $2.3 billion in foreign securities, mostly split between foreign stocks and money markets, while selling off $729 million in foreign bonds. Much of the increase in foreign shares was in the U.S. ($1.9 billion) as Canadians sold off some of $637 million in overseas equities.

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BMO announces executive shuffle

(January 19, 2006) BMO has announced three changes to its senior management at two of its divisions, including the appointment of a new chief operating officer for BMO Financial Group and a new chief executive officer for its investment banking arm.

William Downe was tapped as the new COO at BMO Financial Group. Downe moves to the position after serving as both deputy chair of BMO Financial and CEO of BMO Nesbitt Burns.

In his new role, Downe will be responsible for all the operating units of the group, including personal and commercial client solutions. He will also continue to oversee corporate marketing.

Yvan Bourdeau will fill the vacancy left by Downe at BMO Nesbitt Burns. He will also serve as head of the Investment Banking Group. In the same release, the bank said it has appointed Karen Maidment as the new chief financial officer and administrative officer for BMO Financial Group.

The appointments take effect February 1.

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DBRS sees stabilization of credit in 2006

The Dominion Bond Rating Service expects credit ratings will stabilize in 2006, particularly for those companies that saw their ratings improve last year.

The ratings agency predicts strong rates of earnings growth will abate somewhat and sees companies focusing on increasing distributions to shareholders by dividends and/or share buybacks as opposed to debt reduction. Still, DBRS warns against an over emphasis on return to shareholders or pursuing aggressive expansion plans.

DBRS says its major concern in 2006 is “a sharp economic slowdown caused by inflationary pressure resulting from continued increases in commodity prices, possibly in combination with rising interest rates, which in turn would affect consumer strength via employment and asset valuations.”

“Such an outlook may temper the recent positive trend for rating activity; however, it should not have a negative impact on credit profiles going forward as corporations have used improved earnings and cash flow of the past few years to strengthen their financial profiles (balance sheets) as well as replenish capital assets,” says Anil Passi, a senior vice-president with DBRS.

Last year ratings upgrades outnumbered downgrades for the first time in recent history, although those gains were overshadowed by the credit rating activity in the North American autosector. DBRS expects automakers will remain under pressure in 2006.

Oil and gas is the only sector singled out by the ratings agency as having a stable outlook in 2006. Telelecommunication and cable companies, forestry and mining could all be under pressure this year, which could have a negative impact on the credit outlook for these sectors.

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Sentry Select launches new notes

(January 19, 2006) Sentry Select Capital has announced the launch of two new deposit notes in conjunction with the Bank of Montreal.

The two new notes are the Bank of Montreal Sentry Select Canadian Income Deposit Note Series 1 and the Bank of Montreal Sentry Select R.O.C Canadian Income Deposit Notes Series 1. The performance of these notes will be link to the appreciation of a basket comprised of an income trust portfolio and national bond portfolio.

The income portfolio, which will be managed by Sandy McIntyre, will replicate the performance of Sentry Select Canadian Income Fund. Within 10 days of the end of each month, investors will receive a payout equal to 75% of all distributions received on this portion of the portfolio. The remaining 25% will be reinvested.

The payout made on the R.O.C. notes should be considered a return of capital while the income portfolio should be considered interest.

The issue price of both notes will be $100 with a minimum investment of $2,000. The notes will be on sale until March 10 and will mature in 2015.

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IPC acquires Ontario fund dealer

(January 18, 2006) Investment Planning Counsel has entered into an asset purchase agreement with Odyssey Capital Corporation, a mutual fund dealership and limited market dealer, based in St. Catharines, Ontario.

Under the agreement, IPC Investment Corporation will acquire Odyssey’s approximately $170 million assets under management. The firm’s advisors will join IPC Investments.

“We’re continuing our aggressive growth strategy by partnering with quality, independent dealerships like Odyssey,” says Chris Reynolds, president of Investment Planning Counsel. “IPC remains a top choice for independent financial professionals who want to build a better business and share our philosophy of providing top-notch client service.”

The terms of the agreement were not disclosed. Subject to regulatory approval, the transaction is expected to close on January 31. On completion of the transaction, Odyssey will resign from the Mutual fund Dealers Association of Canada and surrender its mutual fund and limited market dealer registrations.

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CRA issues lottery scam warning

(January 18, 2006) The Canada Revenue Agency is warning of an e-mail scam that tries to convince people to pay a portion of tax owed on a phantom prize.

According to the CRA the scam works like this: The victim receives an unsolicited e-mail or regular mail from a legitimate-sounding financial institution, possibly even dressed up to look like it originated from the CRA itself, claiming it has a bank draft from a foreign sweepstakes company that is payable to him or her. The e-mail states that, to receive the prize, the “winner” must first pay part of the taxes allegedly owed on the amount.

The agency wants to remind people that no taxes or fees have to be paid on lottery winnings in Canada.

Generally, these sorts of scam e-mails are contain noticeable typos and grammatical errors. Some also ask for money to be deposited into a bank account registered to an individual. In the case of the CRA, all debts are payable exclusively to the Receiver General of Canada.

For more information about this and other fraud schemes, or to report deceptive telemarketing activity, visit www.phonebusters.com, send an email to info@phonebusters.com, or call 1-888-495-8501.

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BCSC settles with New Jersey foreign exchange firm

(January 18, 2006) The British Columbia Securities Commissions (BCSC) has settled with a U.S. foreign exchange trading firm over unregistered trading in the province.

FX Solutions, a New Jersey based firm specializing in services that allow clients to speculate on changes in the exchange rates between currencies, admitted to breaching securities laws through its unregistered trading practices in B.C. The firm has agreed to pay $57,500 Canadian to the commission for opening and servicing accounts for 264 B.C. residents since September 2002 without being registered.

The fine includes fees that FX would have had to pay to operate in B.C. if it had been properly registered, along with $5,000 in investigation costs.

FX Solutions and its Canadian subsidiary have agreed to register with the BCSC or the Investment Dealers Association of Canada (IDA) by April 28 or transfer all existing B.C. client accounts to a B.C. registrant.

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Private college adds financial services program to curriculum

(January 18, 2006) The Institute of Canadian Bankers (ICB) has joined up with LaSalle College in Montreal to offer a program intended to prepare students for work in the financial services industry.

The private school’s curriculum additions “will enable our students to acquire specific knowledge to be come a financial services professional and earn the much-recognized AICB accreditation,” says Jacques Marchand, LaSalle College director general.

The seven ICB courses will be delivered in LaSalle’s classroom with the ICB administering all exams. Upon completing the semester, students earn the Associate, Institute of Canadian Bankers (AICB) designation. The course covers organizational and consumer behaviour, financial products and services, accounting, business finance and economics.

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Russell completes takeover of First Asset

(January 18, 2006) Frank Russell Canada has completed the takeover of First Asset Advisory Services.

The Ontario District Council of the Investment Dealers Association approved the change in control on January 16. Russell, a unit of U.S.-based Russell Investment Group, first announced the deal to purchase First Asset in December 2005.

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Clarington launches 3 new funds, new brand

(January 17, 2006) ClaringtonFunds has announced the filing of a preliminary prospectus for three new funds with its new Industrial Alliance owners. The new funds include the IA Clarington Canadian Conservative Equity Fund, the IA Clarington Dividend Income Fund, and the IA Clarington Dividend Growth Fund, with each of the funds investing directly in an existing Industrial Alliance fund.

“We are excited to add three of Industrial Alliance’s top products to our fund family,” said Terence Stone, Vice Chairman of IA Clarington. “This gives our investors and their advisors greater selection and the ability to easily purchase or exchange into one of these funds.”

Upon regulatory approval, units of the funds will be available on a front end, low load, or deferred sales charge basis.

The “IA Clarington” brand will soon be extended to include all joint sales and marketing initiatives and will be part of the legal name of the combined organization.

“The new name reflects Industrial Alliance’s commitment to build on Clarington’s strong platform and brand — a commitment backed by the full strength and resources of one of Canada’s leading financial services providers,” said David Scandiffio, President of IA Clarington.

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BMO launches U.S. structured product firm

(January 17, 2006) BMO Financial Group has established a U.S.-based investment management firm which will construct and managed AAA-rated structured products. Pallium Investment Management was established in conjunction with Flavio Bartmann and Conrad Voldstad.

“We are pleased to be working with two of the top professionals in the global structured product company market as we continue to build our structured credit asset management business,” said Ellen Costello, vice chair and global head of securitization and credit investment management of BMO’s Investment Banking Group. “Conrad and Flavio created and managed the very first derivative products company internationally, and are very well known to us.”

The initial activities of this company will be heavily focused on credit derivatives, and will develop other product lines where a Triple-A rating will be beneficial.

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Canaccord appoints new CFO

(January 17, 2006) Canaccord Capital has named Brad Kotush new CFO effective January 17, 2006, replacing the retiring Dennis Burdett.

“Dennis joined us when we were a small private company and now hands over the reins after Canaccord has become Canada’s largest independent investment dealer and a large and diverse public company,” said Peter Brown, Canaccord chairman and CEO. “Dennis is staying with the firm and will be assisting us on various development projects.”

“We are excited to have Brad Kotush take the reins in a key leadership position in our firm, as he brings a strong tool kit of experiences and skills that suit our diverse and growing international company very well,” said Brown.

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Laurentian offers step-up bond in-branch

(January 17, 2006) Laurentian Bank of Canada has launched a term note, commonly referred to as a step-up bond, to be offered in-branch. These notes are typically only available through brokers, making Laurentian’s offering the first to be offered in-branch.

The note is redeemable annually at the bank and will offer an averaged return of 4.17% over five years. First year interest starts at 3.60%, climbing to 3.75% in the second year and 4.00% in the third. The fourth year sees a 50 bp increase with the rate hitting 5.00% in the fifth year.

The notes are available from January 16 to February 10, 2006, with a 2,500 minimum investment required if held in a registered accounts, or $5,000 for non-registered accounts.

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SIO polls federal parties about pensions and SRI

(January 17, 2006) The Social Investment Organization (SIO) recently sent questionnaires to the five major parties in Canada to get their take on policies related to pension plans and their accountability in social and environmental investing.

SIO issued its ranking of the federal parties based on their responses about transparency and accountability in the investment and voting policies of Canada’s national pension plans. The group says investors are demanding information on the social and environmental policies of their investments, but there are no provincial or federal regulations requiring pension funds to disclose information on these issues.

“SIO urges its members, as well as concerned investors and pension plan member, to make candidates aware of these issues,” says executive director, Eugene Ellmen. “Voters should also think about these issues as they cast their ballot on January 23.”

Of the five parties, SIO says the Green party has the clearest policies, supports legislation for transparency on social and environment policies and mandatory disclosure of proxy voting policies and records. The Bloc “shows great understanding of the issue of social and environmental transparency,” and in the questionnaire, reiterated it’s support for a Bloc-sponsored private members bill to require policy disclosure from federal pension funds. In the survey however, the SIO penalized the Bloc for failing to address the issue of mandatory disclosure of proxy voting policies and records.

The NDP gained marks for its support of transparency and accountability, but lost marks for opposing the recently-announced Responsible Investment Policy of the Canada Pension Plan Investment Board (CPPIB). The NDP criticized the CPPIB for failing to screen companies based on ethical guidelines. The SIO, which takes a more moderate stance on the matter, welcomed the policy because it extends the pension plan’s activities in the area of research, corporate engagement and shareholder advocacy on corporate responsibility issues.

Conservatives say the CPPIB policy can be held up as a best practices model, which sits well with the SIO, but the organization docked marks in their survey for the party’s failure to say whether they support changes to require mandatory disclosure. The Liberals were given the lowest grade for focusing their response entirely on the new CPPIB policy and failing to address other questions raised.

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IDA imposes five year suspension, levies fine on Jory Capital executives

(January 17, 2006) A hearing panel of the Investment Dealers Association of Canada (IDA) announced it will impose penalties on Jory Capital and the company’s chief executive and chief financial officers.

At a hearing last year the panel found that Patrick Michael Cooney received a $10,000 payment from the company, in violation of IDA Early Warning Restrictions. The Early Warning System measures an IDA member’s “risk adjusted capital” against benchmark tests to detect the risk of insolvency. The panel imposed a five-year suspension that prevents Cooney from acting in any capacity where he might exercise influence on or responsibility for financial compliance, including all managerial and supervisory functions. Cooney was also fined $25,000 and $7,000 in costs. The company was fined $25,000 and $4,000 in costs. Rees Merthyn Jones, Jory’s chief financial officer, was reprimanded by the IDA and fined $5,000 plus $1,000 in costs.

Cooney’s suspension begins on February 5, 2006. Jones is suspended as CFO for six months and must re-write a CFO examination.

In its decision, the IDA panel said “the circumstances of the violations, considered together with Mr. Cooney’s disciplinary history demonstrate that he is practically ungovernable in relation to financial compliance matters.” Cooney was fined $45,000 and suspended for 18 months back in June 2004 for similar compliance violations. “Even though the improper payment in this case was small, posed no significant risk to the public, and has since been repaid, fines were necessary as a further general deterrent and to signal the importance of financial compliance and intolerance of repeated violations.

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Altamira raises interest rates

(January 16, 2006) Altamira has raised the interest rate on its popular High-Interest CashPerformer accounts. The Canadian version now pays 3.15%, while the $U.S. High-Interest CashPerformer pays 3.75%.

“Investors are increasingly looking for secure savings options while deciding where to invest or waiting to make future purchases,” said Ian Dillon, chief investment strategist at Altamira Investment Services. “With High-Interest CashPerformer, Altamira offers a highly competitive savings account that is convenient, easy to access, and available for investor’s registered and non-registered investment needs.”

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CIBC announces fund changes

(January 16, 2006) CIBC Asset Management has announced changes to a handful of funds, including new sub-advisors, portfolio managers and fund names, effective February 1, 2006.

UBS Global Asset Management will take over as sub-advisor on the Renaissance U.S. Basic Value Fund and of the value portion of Frontiers U.S. Equity Pool. The Renaissance fund will be renamed Renaissance U.S. Equity Value Fund, while the Talvest version will undergo the same name change.

Bob Doll, president and chief investment officer of Merrill Lynch Investment Managers has been appointed portfolio manager of Renaissance U.S. Fundamental Growth Fund and of the growth portion of Frontiers U.S. Equity Pool. The Renaissance U.S. Fundamental Growth Fund will be renamed Renaissance U.S. Equity Growth Fund.

A corporate bond component is being added to Frontiers Canadian Fixed Income Pool, with Canso Investment Counsel managing that component, which will make up about 10% of the pool.

Lastly, NWQ has been appointed as portfolio sub-advisor of the foreign portion of Renaissance Canadian Core Value Fund.

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Desjardins announces fund changes

(January 16, 2006) Desjardins Funds has announced the appointment of Desjardins Global Asset Management as sub-advisor to the Desjardins Canadian Bond Fund.

Along with that change, the fund will begin using derivatives for hedging and non-hedging purposes after the expiry of a 60-day period following the date a written notice is sent to unitholders of the fund.

Desjardins also announced it is changing the name of the Desjardins CI Value Trust Sector Fund to Desjardins CI Value Trust Corporate Class Fund, reflecting changes to the underlying structure.

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Sarbit offers low-load option

(January 16, 2006) Sarbit Asset Management has announced a new low-load option for the Sarbit US Equity Trust, allowing investors access to the fund without paying a front end sales charge.

“We are very pleased we can offer advisors what we believe is one of the most competitive low load structures in Canada for the RRSP season,” says Larry Sarbit, president and CEO, Sarbit Asset Management.

The low load structure includes a 2% commission up front, an annual trailer of 1%, paid out monthly and a declining redemption schedule of 3%, 2%, 1% over 3 years .

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BluMont launches closed end trust, new note

(January 16, 2006) BluMont Capital has launched a new multi-manager, multi-strategy closed end trust. The BluMont Man Alternative Yield Fund will aim for a 6% per annum return.

“This product offers an exclusive opportunity to invest with one of the world’s largest alternative investment firms, Man Investments” says Steve Kangas, president of BluMont Capital. “With bond yields low, investors are looking for alternative forms of generating yield in their portfolios. The BluMont Man Alternative Yield Fund is a stable, lowly correlated alternative to non-traditional yield products”.

The new trust will offer exposure to investments previously not available in Canada, including Man Investment’s Glenwood Portfolio and the AHL Diversified Programme. Glenwood is a fund of hedge funds, while AHL Diversified is a managed futures investment.

The targeted monthly 5 cent distribution will be derived from exposure to a leveraged portfolio of alternative investments with the potential to deliver positive returns regardless of market direction. The Alternative Yield Fund is available to investors until February 14, 2006 for a minimum investment of $5,000.

BluMont has also announced the launch of a third series of the BluMont Man-IP 220 Note, which carries a 100% guarantee on the principal if held to maturity. The Series 3 Notes also provide access to the Man-Glenwood Portfolio and the Man-AHL Diversified Programme.

The Series 3 Notes are 100% RSP eligible as Canadian content and are available to investors until March 22, 2006 for a minimum investment of $5,000.

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