Briefly:

Previous Brieflies this week: | MON | TUE | WED | THU |

(May 10, 2006) The U.S. Federal Open Market Committee raised its key interest rate this afternoon, setting the overnight rate at 5%, up from 4.75%. None of this came as a surprise, really, and traders were more interested in divining future moves from the Fed, based on the language of the announcement.

Many were expecting a hint that the Fed would end the current credit tightening cycle after this, the 16th consecutive hike of 25 basis points. The Fed announcement said further tightening may be required, but that the “extent and timing of any such firming will depend importantly on the evolution of the economic outlook as implied by incoming information.”

• • •

Power Financial reports higher quarterly earnings

(May 10, 2006) Power Financial, owner of IGM Financial and Great-West Life, says it earned $408 million in the first quarter of 2006, up 7% from the same period last year.

Power also raised its dividend by 7.5%, while reporting decreased revenue and income from premiums. Revenue was down nearly 10% to $6.3 billion while premium income fell to $3.7 billion from $4.5 billion in 2005.

Payouts to policyholders and beneficiaries dropped 17% to around $4 billion, reducing total expenses to $5.4 billion.

Great-West Life, which owns Canada Life and London Life, earned $446 million in the quarter while IGM Financial — which runs Investors Group, Mackenzie and Counsel Wealth and is the largest mutual fund company in Canada with assets of nearly $99 billion — earned $185.3 million.

• • •

Critic says budget ignores international issues

(May 10, 2006) An expert in international tax issues says Canada appears to be standing still with regards to tax-related measures introduced in the latest federal budget.

“True the new combined rate of 46% for corporate and dividend tax is down 8 points; however, it is astronomically higher than Ireland’s 10% corporate tax rate and no withholding tax on dividends to non-residents,” says John Mill, a corporate commercial lawyer practicing in Windsor, Ontario, and a member of the Knowledge Bureau’s group of tax experts.

Canada still has not enacted the non-resident trust/foreign investment entity rules, Mills says. “However when enacted they are retroactive to 2002. In other words, planning that is completely legal today — may be illegal tomorrow going back 4 years — but maybe not. This is a deplorable way to treat residents. The government is in denial if it chooses to ignore the effect this has on decisions to stay or become a resident of Canada.”

Other important initiatives such as the tax deferred cross-border share-for-share rollover and the six month window to reinvest capital have not been acted on, he says.

“On a positive note, finance is exploring a proposal to allow foreign income to be reported in foreign currency. This will eliminate substantial foreign exchange problems. This type of reporting is currently allowed in the United Kingdom and Australia and is considered to make the tax system fairer and more competitive.”

• • •

Sun Life to offer DRP for shareholders

(May 10, 2006) Sun Life Financial has announced that it intends to establish a Dividend Reinvestment and Share Purchase Plan. Shareholders who opt to participate in the plan will be able to have their dividend payments automatically reinvested in Sun Life Financial common shares.

“We are pleased to add a convenient means of reinvesting dividends and purchasing shares to our services for common shareholders,” said Sun Life CEO Donald Stewart in a statement.

CIBC Mellon Trust will act as plan administrator for the DRP. More details will be released in the fall when the October dividend is distributed.

Although the plan is currently limited to Canadian Sun Life shareholders, the insurance giant is working with its transfer agent to set up a similar program for American shareholders.

• • •

Laurentian Bank Securities sanctioned by Montreal exchange

(May 10, 2006) Laurentian Bank Securities has agreed to fines totalling $110,000 following an investigation by the Bourse de Montreal’s regulatory division.

Between November 1999 and May 2001, LBSI was unable to demonstrate that it had properly supervised the accounts of three clients, in which the annualized commissions ranged between 13.6% and 20.3% of the initial value of the accounts, with a turnover rate of the assets ranging between 8.6% and 18.4%.

LBSI was fined $90,000 for this infraction, though the Bourse notes that the firm offered compensation to two of the clients involved for losses incurred.

LBSI was fined $10,000 for approving the opening of two new client accounts even though the clients’ investment objectives did not appear on the application forms. The firm was ordered to pay an additional $10,000 in costs.

LBSI cooperated with the Bourse during the investigation and did not have any prior disciplinary record.

• • •