Briefly:

(September 24, 2004) The MFDA has been forced to appoint a new chair after Investors Group’s Terrence Wright resigned. The new chair, Robert Wright, is deputy chair of Teck Cominco, as well as a securities lawyer and former chair of the Ontario Securities Commission. He has served on the MFDA board since its inception in 1998.

Terrence Wright, senior vice president at Investors Group, stepped down to avoid any potential conflicts of interest as Ontario’s regulator continues its probe of the mutual fund industry.

Investors Group and three other firms were singled out by the OSC this week and asked to respond to allegations of market timing and frequent trading between 1999 and 2003.

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Teachers’ wins venture capital award

(September 24, 2004) Teachers’ Private Capital has won the Canadian Venture Capital Association’s “Deal of the Year” award for its investment in the Yellow Pages Group income trust.

An initial investment of $320 million in the Yellow Pages Group — which ended up being the largest IPO of an income trust in Canadian history — generated a gain of more than $500 million for Teachers’ Private Capital, says Claude Haw, chair of the CVCA’s award committee.

“We were pleased to back Marc Tellier, CEO of Yellow Pages in the acquisition,” said Dean Metcalfe, vice-president of Teachers’ Private Capital. “Yellow Pages is an icon in every household in Ontario and Quebec and was very attractive to us as a stable business with substantial cash flows.”

Teachers’ Private Capital is the private equity arm of the Ontario Teachers’ Pension Plan.

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USL project gets support from industry

(September 24, 2004) The Canadian Securities Administrators’ plan to harmonize securities laws across the country is getting strong support from the industry.

The CSA today released a summary of comments received on the Uniform Securities Legislation (USL) project, following the release of a draft version of a new Uniform Securities Act late last year.

Twenty-seven comment letters were received, the CSA says, with nearly all expressing support for the USL project and “its objective of increasing the efficiency of the securities regulatory system.”

“The positive comments we received on the concept proposal and the consultation drafts indicate that market participants support the adoption of streamlined and uniform securities legislation,” the CSA said in a release today.

Despite the generally positive tone of the responses, several industry groups expressed the opinion that a single securities regulator would provide more benefit to the industry. Others worried about the CSA’s ability to maintain uniformity, and concerns were also expressed that under USL, provinces will still be allowed to introduce local rules.

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Awareness of disability insurance lacking, survey says

(September 23, 2004) Less than half of Canadians with disability insurance completely understand the coverage their policy provides, a survey suggests. The Ipsos-Reid poll, conducted for RBC Insurance, indicates that although 48% of Canadians say they carry disability insurance, of those, only 45% know exactly what coverage they have, when the benefits would start, how much they would get and how long those benefits would last.

The survey also reveals while 60% of those surveyed are worried about disability or critical illness, only 46% are confident they would have the financial means to deal with such a situation.

And 79% of those questioned said they would have to change their lifestyle and live more conservatively in the event they became ill or unable to work.

Ipsos-Reid conducted a random survey of 2,000 adult Canadians in August.

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Manulife to set up new IT centre in Halifax

(September 23, 2004) Manulife Financial and CGI Group have signed a contract to set up a new information technology centre in Halifax. The centre will provide systems development, maintenance and integration services to Manulife and other CGI clients.

As part of the six-year, $125 million contract, 300 Halifax-based tech workers will join CGI, with the firm expecting to increase that number to 500.

“We are excited about this new initiative and look forward to further solidifying our presence in the Halifax region,” said Manulife senior executive vice president Bruce Gordon. Manulife acquired Halifax-based Maritime Life as part of its acquisition of Boston-based John Hancock.

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CompCorp bumps up protection coverage

(September 23, 2004) CompCorp has increased its protection levels for life and health insurance policyholders, today introducing 85% proportional coverage for monthly income, health expense and death benefits.

CompCorp is a not-for-profit corporation funded by the life and health insurance industry. Similar to the Canadian Investor Protection Fund, it protects Canadian policyholders against loss of benefits in the event of the financial failure of a member company.

The enhanced coverage applies to all Canadian policyholders with an existing product and to any new policies purchased from a member company.

“Canada has a very sound financial services industry and the life and health insurance sector has an excellent record for being able to keep its promises to consumers,” said CompCorp president Gordon Dunning. “It is unlikely that your company will ever become insolvent and the introduction of 85% proportional coverage provides policyholders with enhanced protection and security for their promised benefits.

CompCorp also provides protection on individual life insurance products up to $200,000, and up to $60,000 for critical illness insurance and segregated funds.

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Quebec to join national registration database

(September 22, 2004) The Autorité des marchés financiers (AMF), Quebec’s financial services regulator, has announced it will be a full participant in the national registration database (NRD) as of January 1, 2005. The AMF began its transition to the electronic registration system this summer.

“As of January 1, 2005, any person governed by the Quebec Securities Act and the act respecting the distribution of financial products and services (group savings plan brokerage, investment contract brokerage and scholarship plan brokerage sectors) must enrol with the NRD,” read a release from the AMF. “Reporting issuers will be asked to enrol with the NRD during the fall of 2004 and to register information regarding their representatives and officers beginning on January 1, 2005.”

The NRD — already in use by the IDA and securities regulators in Ontario, Alberta and B.C. — is a Web-based system that enables companies and industry representatives to file registration forms and any necessary updates electronically.

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Manulife to compensate for undervalued accounts

(September 22, 2004) Due to accounting errors, certain mutual funds and segregated funds sponsored by Manulife Investments have been undervalued on a net asset value per unit basis, according to a report on Morningstar.ca. As a result, some investors will be compensated by the company with additional fund units.

Mutual fund unitholders should expect their compensation later this year, while seg fund holders will be compensated in 2005. Manulife has not yet revealed how many accounts were affected or the dollar value of the compensation.

The errors arise from flaws in Manulife’s accounting methodology for funds that have more than one class. The firm has since corrected its methodology.

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Jovian subsidiary launches protected note

(September 22, 2004) Jovian Capital subsidiary Accumulus Management is launching the Accumulus TargetYield Protected Note Series 1. With 100% capital protection by National Bank of Canada, the note has the potential to deliver investors an 8% compounded annual return if redeemed at mid-term by the bank, or an unlimited potential return if held to maturity, the firm says.

Portfolio management will be split, with Leon Frazer & Associates managing the 60% equity portion of the note and the remaining 40% invested in income trusts, managed by Felcom Management. The note is 100% RSP eligible and is open for investment from September 20, 2004, to November 11, 2004.

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IDA offers pre-approval for CE accreditation

(September 22, 2004) The Investment Dealers Association is introducing an accreditation process next month to pre-approve courses and seminars for the brokerage industry association’s continuing education (CE) program.

Courses will be evaluated by Harrington Lane based on the IDA’s CE eligibility criteria. All types of education programs including seminars, written and electronic courses collectively may apply for pre-approval.

Accreditation will not be mandatory for a course to be acceptable for CE credits. But it will allow a member to accept a course with certainty that it meets IDA guidelines.

Courses administered by the Canadian Securities Institute which have already been approved by the IDA will continue to be accredited, as will other courses that have previously met IDA requirements.

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Fed raises rates again

(September 21, 2004) The U.S. Federal Reserve has increased its key overnight lending rate by 25 basis points to 1.75%. It’s the third consecutive quarter-point hike for the Fed since rates hit a historic low of 1%.

In a statement, the Fed said the economy “appears to have regained some traction and labour market conditions have improved modestly.” The move comes as no surprise and had largely been priced into the market.

Speculation is that the Fed is not finished in this tightening cycle and will raise rates again at its meeting next month, which comes a week after the U.S. election.

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U.S. regulator fines TD Waterhouse

(September 21, 2004) The Securities and Exchange Commission has charged TD Waterhouse Investor Services for making undisclosed cash payments to three investment advisors to encourage them to use TD Waterhouse for their clients’ brokerage business. The three advisors in question have also been charged by the U.S. securities regulator.

The three registered independent investment advisers who received the payments are: Kiely Financial Services based in Greenville, North Carolina, Rudney Associates of San Ramon, California and and Brandt, Kelly & Simmons of Southfield, Michigan.

“By creating these serious conflicts of interest, TD Waterhouse’s undisclosed cash payments carried the potential to corrupt the fiduciary relationship between an investment adviser and its clients,” said Helane Morrison, district administrator of the SEC’s San Francisco Office.

TD Waterhouse has settled the case, agreeing to pay $2 million US in penalties.

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Investor Education Fund sponsors programs for seniors, students

(September 20, 2004) The Investor Education Fund has announced sponsorship money for two programs focused on seniors and students.

Toronto’s Advocacy Centre for the Elderly (ACE) and the Seniors Assistance Team of the Ontario Provincial Police will offer training on avoiding financial abuse of the elderly. The Investor Education Fund is providing $13,625 to help support this training.

The fund is also contributing $6,000 to support a contest for Toronto District School Board students, designed to complement a new Grade 12 course called “Financial Securities” and is based on the “Creating an Investment Portfolio” activity pulled from the Fund’s popular Taking Stock in Your Future teachers’ program.

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BMO Nesbitt Burns hires linked note experts

(September 20, 2004) BMO Nesbitt Burns has hired two specialists to the firm’s newly created equity linked and mutual fund linked products group. Luke Seabrook has been named head of the department, and along with Duncan Marks will develop non-proprietary products for the firm.

“We believe linked products provide investors with a meaningful alternative,” said Seabrook. “There is a large investor audience who are not willing to risk their principal but are dissatisfied with the current level of interest rates paid on low risk investments.”

The firm also has announced the launch of the Franklin Templeton Investments bestlink Protected Note, Income Trust Class, Series 1, which is linked to the Bissett Income Fund Series A. The note has a five-year term of maturity and is principally guaranteed at maturity.

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Dynamic launches CIBC linked notes

(September 20, 2004) The Dynamic Family of Funds has launched the CIBC Fulpay Star Dynamic Funds-Linked Deposit Notes, Series 1.

“Dynamic continues to respond to the demand by investors for innovative investment solutions,” said David Goodman, President, Dynamic Mutual Funds. “These notes are designed to provide upside potential and downside protection.”

The deposit notes are available in $100 increments with a $5,000 minimum investment and are RSP eligible. They have a five year maturity and the principal carries a 100% guarantee. The notes are available from September 20, 2004 to November 12, 2004.

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CI Funds shuffles management deck and announces fund mergers

(September 20, 2004) CI Funds has announced management changes affecting six of its funds as well as a proposal to merge five Clarica-branded mutual funds with other similar products.

Effective immediately, CI’s Harbour Funds Group has been named portfolio advisor to Clarica Balanced Fund, Clarica Canadian Large Cap Value Fund and Clarica Global Large Cap Value Fund, replacing AIM Funds Management. Gerald Coleman, CIO of Harbour, is lead manager of the three funds, while Stephen Jenkins is co-manager of Clarica Global Large Cap Value Fund.

Sionna Investment Managers has been named portfolio advisor to CI Canadian Small Cap Fund and the Canadian small-cap value portions of Synergy Canadian Style Management Class and Synergy Tactical Asset Allocation Fund. Kim Shannon, CIO of Sionna, and Teresa Lee are the portfolio managers. Sionna replaces Robert Tattersall of Howson Tattersall Investment Counsel.

CI is also merging five smaller funds, pending investor approval, sold under the Clarica banner, including the Clarica Balanced Fund, Canadian Large Cap Value Fund and Clarica Global Bond fund, into larger existing Clarica and CI funds with similar mandates.

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