Briefly:

(February 10, 2006) The elimination of the foreign property limits on registered accounts has turned into a boon for foreign debt issuers, according to RBC Capital Markets.

“Issuers are looking to Canada to get international bond deals done,” said Larry Bates, RBC Capital Markets’ head of debt capital markets in Canada. “For the first time in more than thirty years, large pools of domestic funds can look offshore for investment opportunities. And this is a very healthy turn of events for issuers.”

In the first five weeks of 2006 alone, the Canadian bond market has seen $3.5 billion in new issues by U.S. and European issuers, more than double the $1.5 billion issued over the same period in 2005./p>

“The global search for diversification has meant that foreign issuers see real advantages in issuing debt in Canada,” Bates said. “The cost of funds in Canada is comparable to what can be achieved in other markets plus borrowers are able to access a new investor base.”

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Ministers re-affirm passport support

(February 10, 2006) Provincial ministers responsible for securities regulation have re-affirmed their commitment to establishing the passport model of regulatory reform.

Meeting in Victoria on February 7 and 8, the Council of Ministers of Securities Regulation heard from Purdy Crawford, who chairs a panel developing a model for a common securities regulator on behalf of Ontario and Dawn Russell, a panel member.

The passport system, implemented in September 2005, allows issuers and registrants to deal only with the regulator in their principal jurisdiction, providing a single window of access to capital markets in 12 Canadian provinces and territories, with the notable absence of Ontario, which is holding out for a single national regulator.

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IDA to hear Jory Capital appeal

(February 10, 2006) An IDA disciplinary panel will hear an appeal from Jory Capital and Patrick Michael Cooney, challenging the decisions dated July 28, 2005 and January 5, 2006 against the firm and Cooney.

A date for the hearing has yet to be set. Earlier this year, Cooney was handed a five-year suspension from acting as a manager or supervisor and fined $25,000. The company was also fined $25,000. Pending the determination of the appeal, sanctions imposed against Jory and Cooney are suspended. Merthyn Jones, who was also disciplined, has not delivered a notice of appeal.

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Dundee hires Harrington Lane founders

(February 10, 2006) Dundee Wealth Management has appointed James P. McClocklin and Daniel W. Brintnell, co-founders of Harrington Lane, as the new co-heads of Dundee’s Retail Division for both Dundee Securities and Dundee Private Investors.

“We are very excited to welcome Jim and Dan to Dundee,” said Kym Anthony, president and CEO of Dundee Securities. “The addition of such experienced, high-calibre leadership to Dundee’s executive team will play a key role in further developing Dundee as Canada’s premiere, independent wealth management company.”

The appointments stem from Dundee’s acquisition of Harrington Lane, a wealth management firm aimed targeting HNW executives, which McClocklin and Brintnell formed in 2002. The acquisition is expected to be completed on or before February 28, 2006 and is subject to customary conditions of closing, including regulatory approvals. The consideration for the acquisition will be $2 million cash and a maximum of 350,000 common shares of Dundee Wealth.

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No end in sight to regional economic disparities, says RBC

(February 10, 2006) High energy prices will continue to create major economic disparities among Canada’s provinces, says RBC Capital Markets in a new report.

RBC senior economist Warren Lovely predicts these differences will remain for years to come, with brisk growth in energy-rich Alberta, contrasting with more muted expansion in Canada’s traditional industrial heartland.

“Home to the lion’s share of Canada’s oil and gas resources, Alberta is the poster child for what a red-hot economy looks like,” says Lovely. CIBC expects that Alberta’s 7% rate of expansion during 2006 will end up being nearly four times faster than growth in Ontario and Quebec.

Another key energy producer, Newfoundland & Labrador, could challenge Alberta for the 2006 provincial growth title, the report predicts, while B.C. should enjoy a non-residential building boom, with healthy domestic demand leading to strong economic expansion.

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Mavrix to offer F class versions of funds

(February 9, 2006) Mavrix Fund Management is introducing F class versions of nine funds, available for approved participants in a fee-for-service or wrap account program sponsored by registered dealers.

“The launch of F Class recognizes the demand we have received for this type of fund product for fee-based accounts. It’s part of the continuing growth progression of our mutual fund line-up to expand into this sales channel”, said Mavrix vice president David Balsdon.

The nine funds now available in F class are: Mavrix Dividend & Income Fund, Mavrix Diversified Fund, Mavrix Canada Fund, Mavrix Strategic Bond Fund, Mavrix Sierra Equity Fund, Mavrix Global Fund, Mavrix Explorer Fund, Mavrix Canadian Income Trust Fund, and Mavrix Small Companies Fund.

Mavrix is also raising the low load DSC commission to 3% from 2%, with the applicable trailing service fee now payable beginning on the first anniversary of the purchase, a change to match the needs of advisors, Balsdon said.

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National Bank wins discount brokerage award

(February 9, 2006) Financial services research firm Dalbar has named Montreal-based National Bank Direct Brokerage as the winner of the 2005 Direct Brokerage Service Award for the second consecutive year.

National Bank received the award based on the quality of service provided by its telephone representatives and of its responses to customers’ e-mail inquiries throughout the year, Dalbar said.

“Our congratulations go out to National Bank Direct Brokerage for the high level of customer service that they continued to provide in 2005. It is clear that they consider this concept central to their business model and to their overall success,” said Sandy Ghantous, client relationship manager at Dalbar.

TD Waterhouse placed second and CIBC Investor’s Edge was third. TD Waterhouse had the shortest wait times to reach a representative while Investor’s Edge provided the fastest responses to customer e-mails.

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Sun Life, Manulife post strong earnings

(February 9, 2006) Canada’s two largest insurance companies have released their latest earnings reports, although a distribution gaffe forced one to report ahead of schedule. Sun Life Financial accidentally distributed its report to industry analysts on Wednesday, without properly deleting the numerical data.

Including a $12 million after-tax charge, Sun Life earned $0.82 per share in the fourth quarter, with return on equity of 13.0%. Full year net income totaled $1.8 billion.

“The benefits of our investment in distribution are clear, with increased market share in individual life in Canada, record Group Life & Health sales in the U.S., and a significant increase in our distribution scale in each of our key growth markets of India, China and Hong Kong.” said Donald A. Stewart, Sun Life’s CEO.

Manulife Financial announced a record profit of $3.3 billion, up 29% from 2004. Fourth quarter earnings totaled $1.14 per share, with ROE of 15.5%.

“We are very pleased to report record top and bottom line results for the company in 2005,” said Dominic D’Alessandro, president and CEO of Manulife Financial. “This continues our exceptional track record of strong earnings growth with an average annual growth rate of more than 20% over the past decade. And with the successful integration of John Hancock now behind us, we look forward to building on the strengths of our combined operations.”

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Laurentian launches new GIC

(February 9, 2006) Laurentian Bank of Canada introduced a new RRSP-eligible GIC this week — the Canadian Growth ActionGIC. Its return is linked to the performance of a private portfolio composed mainly of the IA Canadian Conservative Equity Fund and bonds.

The proportion of the IA Canadian Conservative Equity Fund in the index calculation is not fixed and may vary throughout the GIC’s five-year term, the bank said in a release.

“This investment solution is particularly suitable for people who like the growth potential of the Canadian stock market but at the same time prefer to have their invested capital fully secured,” said Bianca Dupuis, senior manager, investment product development at Laurentian Bank of Canada.

The IA Canadian Conservative Equity Fund is managed by Leon Frazer & Associates.

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AIG to pay $1.6 billion to settle fraud case

(February 9, 2006) AIG has agreed to pay U.S. federal and state regulators more than $1.6 billion to settle allegations the U.S. insurance giant violated securities laws.

“The settlement is part of a global resolution of federal and state actions…related to improper accounting, bid rigging and practices involving workers’ compensation funds,” the U.S. Securities and Exchange Commission said in a statement.

The commission alleged that AIG’s reinsurance transactions with General Re Corporation were designed to inflate falsely AIG’s loss reserves by $500 million in order to quell analyst criticism that AIG’s reserves had been declining, the commission said. The complaint also identifies a number of other transactions in which AIG “materially misstated its financial results through sham transactions and entities created for the purpose of misleading the investing public.”

Under the terms of the settlement agreement with the SEC, AIG, while not admitting any wrongdoing, will pay disgorgements of $700 million, a penalty of $100 million, and undertake corporate reforms designed to prevent similar misconduct from occurring in the future. The funds will be distributed to investors who were affected by AIG’s actions.

“This important settlement arose out of our industry wide investigation into the misuse of finite insurance and reinsurance,” said the SEC’s Linda Chatman Thomsen. “While this settlement concludes our investigation of AIG, our investigation continues with respect to others who may have participated in AIG’s securities laws violations.”

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CPP reserve fund assets increase

(February 8, 2006) Assets in the CPP reserve fund returned 2.4% in the last quarter of 2005, earning $2.2 billion, the CPP Investment Board (CPPIB) reported on Wednesday. The fund’s assets now total $92.5 billion.

Overall, the fund produced a fiscal year-to-date return of 10.9%, well above the 4% target that the chief actuary of Canada says the CPPIB needs to generate to sustain the plan over the long term.

At the end of 2005, more than half of the fund, 56.6% was invested in publicly-traded stocks, 29.7% was invested in government bonds, 8.4% in real return assets, 4.3% in private equity and 1% in cash and money market securities. In the past year, the fund has worked to diversify its holdings by investing in real estate and other real return assets.

“We are continuing to diversify the portfolio by investing in real estate, private equity and real return bonds,” says David Denison, CPPIB president and CEO. “One of our notable recent transactions is a $660 million investment in two major shopping centres that will compliment the Canadian office properties in the real estate portfolio. Overall, our real estate holdings now total $4 billion.”

It’s estimated that the reserve fund won’t be needed to help pay CPP benefits for at least 16 years.

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Tax advice for German pensioners

(February 8, 2006) Advisors with German clients should warn them about pending tax changes, says expert Evelyn Jacks. The Knowledge Bureau says beginning in the 2005 tax year, German pensions will be taxed at 50%, including those who are already receiving the pension.

Jacks, who heads the Knowledge Bureau, says “we have seen a lot of audit activity this year on German pension income receipts, so tax and financial advisors should be sure to ask whether this income source is being received by their senior German clients.”

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RRSP withdrawals “significant”: StatsCan

(February 8, 2006) Statistics Canada says a significant number of tax filers withdrew money from their RRSPs in 2004. Nearly 1.4 million RRSP holders between 25 and 64 cashed in all or part of their RRSP savings under the Home Buyers Plan to at least partially finance the purchase or building of a home. Close to 9% of all tax filers in this age group took advantage of the program in 2004, withdrawing a total $14.2 billion.

Overall, 5.6 million people, roughly 38% of all eligible tax filers, made contributions to their RRSPs during the year, totaling $25.2 billion. That’s just a two percentage point increase, compared to 1992. Not surprisingly, the biggest increase in the number of contributors occurred in older age groups — contributions by tax filers between 45 and 64 rose about 50%. The number of contributors between 25 and 34 rose just 3%. Those with incomes over $80,000 a year made the highest average contribution of $9,512 per person.

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Pro-Hedge launches deposit notes

(February 8, 2006) Pro-Hedge Funds alternative investments has added a new structured product to its lineup. The Pro-Performance Blue Chip Yield Deposit Notes, available for sale until March 31, 2006, invest in a portfolio of 30 stocks, picked from the Dow Jones Global Titans 50 Index.

The structured product offers 100% principal protection at maturity, guaranteed yields of 6% in the first year and 5% in the second year, then a variable yield of up to 10% annually, based on the portfolio’s average performance. The note also uses a locking in feature — once a share’s performance equals or exceed 5%, the performance of that share for current and all future coupon calculations will be locked in at 5%.

The company says it will facilitate a weekly secondary market for the notes after October 1, 2006 for clients who wish to redeem their notes. Early sales charges start at 5% of the principal investment, charged between October 1, 2006 and September 30, 2007, and decline 1% each year until September 30, 2011.

The notes are RRSP eligible, have no management fees and pay advisor commissions of 4%. Minimum investment is $2,500.

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Investors Group adds new manager to wrap program

(February 8, 2006) Investors Group has hired JPMorgan Asset Management (Canada) to oversee the large cap growth mandate within the iProfile International Equity Pool of the iProfile Managed Asset Program. The change will not affect the pool’s objective or investment strategies.

The wrap program’s International Equity Pool assets are divided equally and managed separately. The growth mandate, formerly managed by Fiduciary International, invests in growth-oriented, large cap equity securities in Europe, Australia, Asia and the Far East. JPMorgan takes over the growth mandate on February 28.

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NewLink appoints consultants

(February 7, 2006) Financial services consulting firm NewLink Group has appointed actuary Neil Silverman and distribution manager Doug McGee as executive consultants. The Toronto-based firm says the new hires will enhance its capabilities in insurance operations and product distribution.

“Many of our clients, particularly in the carrier and brokerage sectors, face fundamental changes in how they support and deliver their products and services,” said Byren Innes, director of NewLink. “Neil and Doug enable us to bring a high level of quality experience and capability to bear on behalf of these clients and the many others we serve.”

The company says the two also extend its ability to make NewLink’s benchmark research more accessible to all sectors of the wealth management and financial services industries in Canada and the U.S.

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OpenSky adds new notes

(February 7, 2006) OpenSky Capital has added two new principal protected notes to its lineup of products, including Series 2 Blue Chip Optimizer notes, guaranteed by Citibank and Series 6 Asset Allocation notes, guaranteed by Société Générale.

The asset allocation notes invest in eight different indexes, diversified by asset class and geographic exposure while the blue chip Optimizer notes invest in a basket of eight different blue chip companies from Canada and the United States. Each year on the anniversary date of the notes issuance, managers lock in the best performing share or index and discard the unit from the portfolio for the purpose of calculating future locked in performances. Both notes offer 100% principal protection if held until maturity.

The asset allocation notes, available for sale until March 24, mature on or around March 31, 2014. The blue chip notes, for sale until March 10, mature on or around March 17, 2014. Minimum investment is $1,000.

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Bourdeau to speak at Canadian Club in Montreal

(February 7, 2006) Yvan Bourdeau is scheduled to speak at a lunch conference on Wednesday at the Fairmont Queen Elizabeth Hotel in Montreal. At the seminar, entitled China Rising: Canada’s Pacific Opportunity the new BMO Nesbitt Burns chief executive will discuss his monthly trips to China and the comparative advantages that exist for Canadians doing business in China.

The former president and chief operating officer took over as the Nesbitt Burns CEO and head of BMO’s investment banking group on February 1, 2006.

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Harper reveals cabinet

(February 6, 2006) Newly sworn-in Prime Minister Stephen Harper has ended speculation over who will make it into his minority Conservative cabinet on Monday, as his choices for the front bench were sworn in.

The post of Finance Minister has gone to Jim Flaherty, former treasurer of Ontario under the government of Mike Harris. Monte Solberg, who had served as finance critic while in opposition, was named minister of citizenship and immigration.

The Ministry of Revenue will be headed up by Carol Skelton of Saskatchewan, while, John Baird, another veteran of the Ontario Conservatives, was named President of Treasury Board.

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IDA levies $1.3 million fine

(February 6, 2006) The IDA has slapped a $1.3 million fine and permanent ban on Robert Ernest Leo Hart, formerly with the Toronto office of CIBC World Markets. He also faces $40,797 in costs.

Hart was found to have “fraudulently misappropriated” $800,000 from two client accounts between April 2002 and May 2004. Furthermore, he failed to co-operate with the investigation, skipping a hearing on July 20, 2005.

The IDA points out that CIBC World Markets has reimbursed both clients for their losses, while Hart has made no efforts to reimburse either the CIBC or the clients. He was arrested by local police in Toronto on October 22, 2005, charged with forgery and fraud over $5,000.

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CanDeal posts record volumes

(February 6, 2006) Canadian institutional investors have traded more than $35 billion in fixed income securities through the CanDeal and TradeWeb markets in January 2006, according to CanDeal.

“Canadian institutional investors are becoming increasingly aware of the advantages afforded to them on CanDeal,” said Jayson Horner, president and CEO of CanDeal. “Our leading dealers and buy-side participants are continuing to make CanDeal part of their daily workflow and we fully expect the increase in trading volumes to continue as new institutional investors, dealers, products and functionality are added.”

The $35 billion total exceeds CanDeal’s previous monthly trading record by 30%. The majority of the trade volume was transacted in domestic Canadian dollar debt.

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Mackenzie seeks global bond fund merger

(February 6, 2006) Mackenzie Investments has announced it will seek unitholder approval for the merger of Mackenzie Sentinel Tactical Global Bond Fund and Mackenzie Sentinel RRSP Global Bond Fund, at a meeting slated for April 21, 2006.

The merger will require investment mandate changes on the Sentinel RRSP fund to allow the fund “to achieve a high level of current income” and “long-term capital growth by investing in a diversified portfolio primarily consisting of fixed-income securities of foreign issuers.”

Following the merger of the two funds, and the change of mandate, it is expected that Mackenzie Sentinel RRSP Global Bond Fund will be renamed Mackenzie Sentinel Global Bond Fund. The merged fund will continue to be sub-advised by Waddell & Reed portfolio managers Dan Vrabac and Mark Beischel.

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