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(April 27, 2007) A hearing panel of the British Columbia Securities Commission has found that a White Rock, B.C., man ran two fraudulent investment schemes that cost investors nearly $15 million in losses.

Between January 2000 and November 2004, Brian David Anderson raised approximately $14.7 million from 352 investors, 57 of whom were residents of B.C., while promoting two separate investment schemes, Frontier Assets and the Alpha Program. The panel ruled that Anderson perpetrated a fraud, made misrepresentations and distributed securities illegally in his efforts to promote these investments.

The first investment scheme was promoted under the name Frontier. Anderson promised investors in Frontier that he would invest their funds in businesses, commodities and financial instruments. Instead, he used the funds of new investors to pay interest to previous investors.

The BCSC estimates that Anderson pocketed between $40,000 and $50,000 on Frontier. The 242 people — 41 from B.C. — who invested about $7.7 million in Frontier will likely never be repaid, according to the panel.

The second scheme, Alpha Program, which Anderson also created and operated, was an investment scheme in which investors purchased units of “desks” that were purportedly part of a new commodity exchange called Flat Electronic Data Interchange (FEDI).

The BCSC says Anderson did not invest any of his own money in FEDI, which never commenced operations. Instead, Anderson used about $3.6 million US of investors’ money on things other than FEDI. Many of the statements he made to Alpha Program investors were misrepresentations. Alpha Program raised more than $7 million from 100 investors — 16 from B.C. Most of the money is outstanding and will never be recovered, the BCSC says.

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Ontario credit unions applaud harmonized regulation

(April 27, 2007) A coalition of Ontario credit unions is happy with the progress being made by the provincial government to harmonize credit union regulation.

As part of the budget on March 22, Finance Minister Greg Sorbara released amendments to the Credit Unions and Caisses Populaires Act, 1994. Credit union groups say the new measure will increase their flexibility and will make it easier for credit unions to expand.

“We are encouraged that the government has changed several of its proposals,” said Jack Vanderkooy, chair of the Association of Credit Unions. “The government has taken the time to listen to many of our concerns, and this bill is a substantial improvement over the draft released last August.”

The association says it has submitted a series of proposals over the past three years in an effort to harmonize Ontario’s legislative framework with more modernized rules that are in place in other provinces, particularly in British Columbia and Quebec.

“We are hopeful that the end result will provide Ontario’s credit unions and caisses populaires with the flexibility and business powers they need to prosper and grow as they have in other provinces,” says Howard Bogach, president and CEO of Credit Union Central of Ontario. “The minister has committed to working closely with the coalition as regulations are developed. We are pleased with his commitment thus far and are confident that he will listen to our call for more flexibility and further harmonization in the regulations.”

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Hartford replaces fund manager

(April 27, 2007) Hartford Investments Canada has announced that, effective May 1, 2007, Robert Crusha, vice-president of Hartford Investment Management, will no longer be involved with the investment decisions regarding the Hartford Canadian Money Market Fund.

Hartford announced that Adam Tonkinson, assistant vice-president of Hartford Investment Management, will assume responsibility for the investments of the fund.

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Unitholders approve BMO changes

(April 27, 2007) BMO Investments announced that shareholders have approved changes to its BMO Global Balanced Class and BMO Short-Term Class.

Effective April 30, 2007, the investment objectives for BMO Global Balanced Class will be changed in order to allow the fund to invest primarily in dividend-yielding common and preferred shares of companies from around the word. The fund’s name will be changed to BMO Global Dividend Class.

The fund’s management is also changing. KBC Asset Management International Limited will become the portfolio manager, replacing Insight Investment Management Limited.

“Investors are increasingly looking outside of Canada for opportunities to participate in the stability and growth potential of large-cap blue chip firms,” said Ed Legzdins, president and CEO, BMO Investments Inc. “Investors in BMO Global Dividend Class will benefit from global equity exposure and geographic diversification in their portfolio, with an emphasis on dividend-distributing equities.”

The shareholders of the BMO Short-Term Income Class have voted to change the name of the fund to the BMO Capital Yield Class, which will take place later in the year. The name change reflects the fund’s new investment objectives, which are to provide a return similar to that of a fixed-income fund by investing primarily in Canadian equity securities and entering into forward contracts or other derivatives in order to provide the fund with a return determined by reference to the performance of a fixed-income fund.

BMO expects these earnings to be treated as capital gains, which will be capital gains dividends for tax purposes, if distributed to shareholders. If after-tax returns do not outweigh the costs of using the derivative strategy, the fund may primarily invest directly in fixed-income securities. In these circumstances, it is expected that the earnings generated will be interest income.

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(04/27/07)