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(June 15, 2006) Companies in developed markets are more likely to suffer from fraud at home than they are in emerging markets, despite the perception that emerging markets are riskier, says new report by Ernst & Young.

Of the close to 600 executives surveyed by the professional services firm, 75% say they have experienced significant fraud at home or in their developed market operations, while only 32% report a similar experience in emerging markets.

The findings are part of Ernst & Young’s 9th Global Fraud Survey: Fraud Risks in Emerging Markets. The perception that fraud is more prevalent in emerging markets is strong enough to lead 20% of firms globally to forgo investing in developing markets as a result of a fraud risk assessment. Canadian companies stood out in the survey since they are equally concerned about fraud at home and abroad.

“While there is a sense that emerging markets are inherently more risky when it comes to fraud, companies need to have the proper controls in place to detect and react to fraud anywhere,” says Mike Savage, a partner in Ernst & Young’s fraud investigation and dispute services practice in Toronto. While Canadians have relatively more standardized procedures for responding to allegations of fraud, one-third of Canadian companies and 40% of global organizations surveyed still have no documented anti-fraud policy.

“Preventing fraud is far better than reacting to it,” says Savage. The same study also finds that Canadian and American organizations are more likely to encourage and protect whistleblowers than are their global counterparts. In Canada companies are 15% more likely to say whistleblowers could detect and prevent fraud than their global counterparts.

Still, Savage warns that while whistleblowing is useful, it’s not a sufficient anti-fraud measure on its own. “The need for other controls is especially evident where obstacles are present, such as language or biases against whistleblowers, as may be the case in many emerging markets.”

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BMO Nesbitt Burns and Harris Nesbitt to be combined, renamed

(June 15, 2006) BMO Financial Group is combining its investment and corporate banking businesses under the new name BMO Capital Markets, pulling together the BMO Nesbitt Burns and Harris Nesbitt brands in Canada and the United States.

The business will serve clients in North America and select international markets, encompassing a wide range of services including wholesale banking and equity research.

The BMO Nesbitt Burns name will remain the brand for BMO’s Private Client Group in Canada and will continue to be used by the firm’s 1,300 plus investment advisors. Similarly, the Harris name will remain the brand for BMO’s U.S. retail and private banking operations.

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Energy sector grew more than 10% in 2005, report

(June 15, 2006) By now everyone knows the Canadian energy sector has been hot. But just how hot was it?

According to the latest PricewaterhouseCoopers 2006 Canadian Energy Survey gross revenues grew an average of 13.3% from $1.13 billion in 2004 to $1.28 billion in 2005 while average assets grew 11.4% from $1.75 billion to $1.95 billion. These numbers are hardly a shock considering oil rose from US$42 per barrel to a record high of US$69.81 in August.

Some of the report’s other findings include:

• Revenues for the top 10 integrated and senior producers grew by an average 25.8%
• Intermediate and junior company revenues grew an average 81.46%
• Average cash flow from operations increased by 28.5% to $405 million in 2005, up from $315 million in 2004
• Earnings per share increased from an average $0.40 per share to $0.61 per share
• New equity financings are up 47% in 2005 to $7.2 billion from $2.3 billion in 2004.

Also in the report, PWC projects that by 2010 production from the oil sands will double 2005 level of 990,000 barrels a day, reaching 3 million barrels per day by 2015.

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TSX Group turns to China for new listings

(June 15, 2006) For the second time in a year TSX Group is going to China to try to drum up additional resource, tech and biotech listings.

A group of business development officials from the exchange will visit Beijing, Shenyang and Dalian, to showoff the strengths of Canada’s capital markets and will meet with Chinese advisors and intermediaries who help service Chinese companies seeking access to Canadian capital markets. Last November a group from the TSX was in China in to attend the China Mining Show.

A third trip to China is already in the works for later this year to continue with the business development strategy in that region.

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PH&N terminates Global Equity RSP fund

(June 15, 2006) Phillips, Hager & North is terminating its Global Equity RSP Fund effective September 17.

Effective immediately, units of the fund are no longer available for sale. Current unitholders will be given the option to switch or redeem their units prior to the termination date.

No reason was given for the termination of the fund. According to data from Morningstar Canada the fund has only $12.4 million in assets under administration and has underperformed with a five year return of -4.1%.

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Rogers Associate Financial Partners seeks financing

(June 15, 2006) Rogers Associate Financial Partners plans to raise about $1 million by floating additional shares on the venture exchange to further its expansion efforts in Ontario and the rest of Canada.

The Calgary-based firm is floating six million units priced at $0.15 each, which consist of one common share and one common share purchase warrant, which entitles the holder to purchase an additional common share in Rogers Associate Financial at $0.35 for a period of 18 months from closing.

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Berkshire introduces new management team

(June 15, 2006) Berkshire group of companies has created a new management team to handle advisor concerns.

The new management team will provide front-line resolution support to its advisors to address any concerns or questions they have that require interdepartmental attention.

“We simply felt it was necessary to provide our advisors with another key point of contact to help coordinate and manage a successful conclusion to any matter that falls outside the realm of our advisor services department, who primarily handle processing queries,” said Craig Henshaw, vice president operations and information technology.

The team will consist of four managers including Lewis Oteruelo, Heather Payne, Michel Deshenes and Claudia Vercillo. They will report to Henshaw.

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