Briefly:

(May 30, 2003) Financial commentator Brian Costello says he will go to the courts to appeal a sanctions decision against him announced last month by the Ontario Securities Commission (OSC). Costello was reprimanded and ordered to pay $300,000 in costs after an OSC panel ruled he had violated securities laws by failing to register as a financial advisor and failing to disclose numerous conflicts of interest.

The commission also ordered a review of Costello’s practices to determine if he is still in the financial advice business and said further sanctions could be announced after that process is completed.

In a brief statement yesterday, Costello said he believes the case raises important issues about investor education, the ability of the public to access information and the Charter of Rights and Freedom.

“Restrictions upon the information that can be shared by individuals is a threat to our freedom of speech guarantee under the Charter. These issues should be addressed and adjudicated upon by a judge of a Canadian court and I am excited about having the opportunity to participate in bringing these issues to the forefront,” Costello added.

The OSC panel rejected Costello’s investor education and Charter of Rights arguments in its final sanctions decision, released on April 30.

• • •

RBC blames strong dollar for lower profits

(May 30, 2003) RBC Financial Group earned $689 million in the last quarter, down 3% from last year. Revenues fell 4% to $3.75 billion.

A rising Canadian dollar weakened RBC’s U.S. dollar-denominated earnings, the bank said, reducing net income by $15 million and diluting earnings per share.

“We delivered reasonable results in the second quarter, considering the intense price competition in Canadian personal and commercial banking, continued weakness in demand for brokerage, investment banking and equity sales and trading services and a significant strengthening of the Canadian dollar relative to the U.S. dollar,” said RBC CEO Gordon Nixon.

• • •

CIBC predicts 76-cent loonie

(May 29, 2003) The Canadian dollar could climb to 76 cents US by year’s end, according to a research report released today by CIBC. The loonie has rallied 13% since the beginning of 2003.

“It’s too soon to close the door on U.S. dollar depreciation,” says CIBC economist Avery Shenfeld, noting that the Bush administration is welcoming the boost to American trade prospects from a cheaper currency.

“With the American dollar facing a further global slide, there’s no reason to expect that the Canadian dollar won’t be carried along with the pack to higher levels.”

Higher Canadian interest rates give the loonie a generous yield advantage, on top of a significant trade surplus, the report adds.

However, the rising currency will pose a challenge for manufacturers and exporters, Shenfeld warns. “It was a lot easier for Canadian businesses that compete with those south of the border to hire workers when they were paying their wages in 63-cent Canadian dollars,” he says.

• • •

Securities regulators sign cooperation agreement with China

(May 29, 2003) Four provincial securities commissions have signed a memorandum of understanding with the China Securities Regulatory Commission. The agreement provides for cooperation and information sharing between China and Alberta, B.C., Ontario and Quebec.

“Both the Chinese regulators and the provincial regulators in Canada recognize the increasing international activities in the securities and futures markets. We now have a framework to assist each other in protecting investors and the integrity of our markets,” says British Columbia Securities Commission chair Doug Hyndman.

The deal allows Canadian companies to participate in joint ventures in China’s securities and mutual fund industries.

Yesterday, BMO Financial became the first foreign company to invest in the Chinese fund industry, acquiring a stake in Fullgoal Fund Management (see full story below).

• • •

BMO acquires stake in Chinese fund firm

(May 28, 2003) BMO Financial Group today became the first foreign company to invest in China’s burgeoning mutual fund industry, acquiring a stake in Fullgoal Fund Management.

Terms of the deal were not released, although BMO said its stake would be equal to Fullgoal’s five existing shareholders. The acquisition has been approved by the China Securities Regulatory Commission.

BMO says it plans to help Fullgoal create and distribute funds in China. It also hopes to eventually introduce Chinese funds to the international market and, when regulations permit, to offer international funds to Chinese investors.

Fullgoal currently offers five mutual funds and has assets under management of $1.4 billion.

• • •

RBC Mortgage expands U.S. operations

(May 28, 2003) Chicago-based RBC Mortgage, a unit of RBC Financial Group, announced today it is acquiring Bank One’s wholesale mortgage business.

About 200 Bank One employees based in Phoenix, Arizona, and Columbus, Ohio, will join RBC Mortgage’s wholesale team.

RBC Mortgage CEO David Matthews says the acquisition will more than double the company’s wholesale loan volume. Financial details were not revealed.

• • •

BMO reports higher quarterly profits

(May 27, 2003) BMO Financial Group earned $409 million in the last quarter, up 36% from the same period last year. BMO chair Tony Comper credits growth in banking volumes and improved credit performance for the higher profits.

BMO said effective cost controls would help compensate for a weaker-than-expected economic environment and soft performance in some of its other business sectors.

The bank also announced it was reducing its annual provision on bad loans by $100 million to $600 million.

• • •

Earnings steady at Scotiabank

(May 27, 2003) Scotiabank today reported solid quarterly profits of $596 million, down slightly from last year. Revenue was also marginally lower at $2.8 billion, compared to $2.6 billion in 2002.

“Our second-quarter results once again demonstrate our ability to consistently deliver solid earnings from our major businesses,” said Scotiabank CEO Peter Godsoe.

Scotiabank also reduced its loan loss provision to $248 million from $350 million last year. Godsoe says the bank is “cautiously optimistic” that the worst of the credit cycle is over.

• • •

Mackenzie introduces U.S. value fund

(May 26, 2003) Mackenzie Financial today launched the new Mackenzie Cundill American Capital Class fund, managed by Peter Cundill. The fund, based on the contrarian value philosophy pioneered by Benjamin Graham, will invest in mid-sized and large U.S. corporations.

“U.S. stocks have declined substantially from their highs in 2000,” said Cundill, described by Mackenzie as one of Canada’s foremost value investors. “Value opportunities have been hitting our screens.”

“Peter Cundill is well-known for his global and Canadian value investing mandates with Mackenzie, but he forged his reputation on his success in the U.S. market in the late 1970s and 1980s,” added Mackenzie Financial president David Feather.

• • •

C.I. replaced as manager on three Mackenzie Keystone funds

(May 26, 2003) Mackenzie Financial is replacing C.I. as investment manager on three of its Keystone funds. AIM Trimark will take over the Keystone C.I. American Growth Fund, which will be renamed the Keystone AIM Trimark U.S. Companies Fund.

MFC Global becomes manager of the Keystone C.I. Signature High Income fund, which becomes the Keystone Elliott & Page High Income Fund. MFC Global manages a similar fund for Elliott & Page.

Franklin Templeton’s Bissett team takes responsibility for the Keystone C.I. Signature Select Canadian fund, to be known as the Keystone Bissett Canadian Equity fund.

The trio of funds are part of a Keystone portfolio and cannot be purchased individually.

---

Want to comment on any of these stories? Share your opinions with your peers in the “Free for All” forum of the Talvest Town Hall on Advisor.ca.

(05/26/03)