Briefly:

(February 11, 2005) The British Columbia Securities Commission has reached a settlement agreement with a couple from Atlantic Canada convicted of unregistered trading two years ago. The agreement ends a four-year prohibition against Laurie and Ronald Davis from participating in B.C.’s capital markets.

The couple solicited promissory notes in a “personal empowerment program” offering annual returns of 25%. The returns were never paid. The BCSC issued a warning about the scheme in 2000 after it was told by Atlantic Canada securities regulators that other individuals involved in the scam were believed to be moving to B.C.

The case ended up in court in Prince Edward Island in 2002, and Laurie Davis was sentenced to 90 days in prison and fined $1,000. Ronald Davis was sentenced to 30 days in prison and was fined $1,000.

In issuing today’s notice, the BCSC noted that the couple served their sentences and paid their fines, and complied with the orders prohibiting them from operating in the B.C. capital markets. It’s estimated that the scam cost as many as 80 people more than $850,000.

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HealthSource Plus to offer advice to plan members

(February 11, 2005) HealthSource Plus — a third-party administrator of group retirement plans — is teaming up with Acquaint Financial to offer financial educational services for plan members.

Plan members will have access to a financial planning website and will be offered financial educational seminars for a nominal fee. The website includes articles on financial planning, financial calculators and a glossary of financial terms.

“These new services will allow HealthSource Plus plan members to learn about the importance of financial planning while taking control of their financial situation,” HealthSource said in a release.

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Ontario Federation of Labour to sponsor labour fund

(February 11, 2005) The Ontario Federation of Labour has announced plans to become a sponsoring body of the First Ontario Fund, a labour-sponsored investment fund launched in 1995.

“Our decision to become a sponsor of First Ontario Fund signals our belief that organized workers and their unions can create funds that have a positive impact on the Ontario and national economies,” says OFL president Wayne Samuelson. “First Ontario Fund has a track record of job creation in Ontario and we look forward to seeing a continued increase in the number of jobs created in Ontario by First Ontario Fund investments.”

The First Ontario Fund has $59 million in assets and has provided capital to more than 30 Ontario-based mid-sized companies. It is already sponsored by six trade unions, including the United Steelworkers of America, the Communications, Energy and Paperworkers’ Union of Canada and the Public Service Alliance of Canada.

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Another small-cap fund closes to new investors

(February 10, 2005) The Bissett Small Cap Fund is the latest of its kind to close the door on new investors. Franklin Templeton says the fund will be closed at the end of the month.

“To follow our strategy of finding quality investment opportunities in the market while managing investment risk, we believe it is in the best interest of current unitholders to close the fund to new investors,” said portfolio manager Chris Fernyc.

“Capping the Bissett Small Cap Fund now will ensure that the fund continues to participate in the Canadian small-cap market while still remaining true to its growth-at-a-reasonable-price investment style.”

As of January 31, 2005, the fund had $620 million in assets under management. Existing unitholders will be able to continue to add to their investments, and the fund will also remain part of the Franklin Templeton’s Quotential and Tapestry Pooled Portfolios programs.

The Northwest Specialty Equity Fund and Mawer’s New Canada Fund are among other small-cap funds recently closed to new investors.

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Fund committee announces revisions

(February 10, 2005) The Canadian Investment Funds Standards Committee (CIFSC) has reduced the number of its fund categories to 34, from the current 35. One new category will be added and two existing categories will be merged.

The new category will be called Canadian Income Balanced. To qualify for this category, funds must first meet the existing holding requirements of the Canadian Balanced category, must distribute income at least quarterly and must have a median income yield over a three-year period that exceeds the median for the Canadian Balanced category.

The Canadian Mortgage category will be merged into Canadian Short-Term Bond category, which will be renamed Canadian Short-Term Bond and Mortgage. Also, Latin American Equity will be merged into Emerging Markets Equity and continue under that name.

CIFSC also announced a number of other minor changes. In the Canadian Income Trust category, the new minimum for income-trust holdings will be 50% of total assets, based on median values over a three-year period, up from 40%.

Equity holdings of funds in the four bond categories will be limited to 10% of non-cash assets. Currently, the equity limit is 30% for the Canadian Bond and Canadian Short-Term Bond categories, and 25% for the Foreign Bond and High Yield Bond categories.

In addition, funds in the Asia ex-Japan category will be required to invest, at a minimum, in three countries in the Asia ex-Japan region and will be allowed to maintain up to 5% exposure in Japanese stocks.

“Fund category definitions are always a work in progress for our committee,” said CIFSC chair Rudy Luukko. “In the months to come, we will be reviewing the implications of the pending inclusion of income trusts in the S&P/TSX Composite Index. Subject to that review, additional amendments to definitions could be made later this year affecting domestic equity and other categories.”

The latest changes take effect May 31, 2005.

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Record number of shareholder proposals filed

(February 10, 2005) A record 110 shareholder proposals have been submitted for voting at Canadian annual meetings this year, according to the Shareholder Association for Research and Education (SHARE). And that number could rise even higher, predicts SHARE executive director Peter Chapman.

More than half of the shareholder proposals involve the big banks. In general, the main issues are concerns about excessive executive compensation and poor social and environmental disclosure, SHARE says. A series of proposals has also been filed by pension and mutual funds, calling on companies to publish sustainability reports using Global Reporting Initiative (GRI) guidelines.

GRI proposals have been filed at Sears Canada, Barrick Gold, Cott and EnCana. At several corporations, shareholders will also have the opportunity to vote on the right to elect directors individually. “Activist shareholders have long opposed the corporate practice of proposing an all-or-nothing slate of directors, which prevents investors from withholding votes for directors considered to have conflicts of interest or poor attendance records,” says SHARE.

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Mavrix IPO raises $290 million

(February 9, 2005) The Mavrix Income Fund has completed its initial public offering, selling 29 million units at $10 for a total of $290 million.

The fund is designed to provide investors with exposure to a broadly-diversified portfolio of income trusts, with an approximately 50% bias toward small-cap trusts, Mavrix said in a statement.

Middlefield Capital Corporation will manage the fund’s investments, including asset mix and security selection.

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Wellington West completes merger with Harris Partners

(February 9, 2005) Winnipeg’s Wellington West Capital has completed its takeover of Toronto’s Harris Partners, first announced last fall. The new firm will be known as Wellington West Capital Markets, an institutional securities firm focused on research, sales, trading and investment banking.

No financial details were released, but the merger was approved by regulators on Tuesday.

“Already this business combination has proven advantageous all-around. Our corporate issuer clients are benefiting from our direct access to a premier, high-quality, highly productive retail distribution network for their underwritings,” said Greg Thompson, president of Wellington West Capital Markets.

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Credit unions complete amalgamation

(February 9, 2005) Ottawa’s CS Co-op credit union is joining forces with Toronto’s Metro Credit Union to create a new financial institution: Alterna Savings.

“Our vision to make Alterna Savings the most progressive and innovative credit union in Ontario has been enthusiastically embraced by our members,” said Metro Credit Union chair Earl Campbell.

The CS Co-op, originally created to serve civil servants, has 145,000 members, mostly in Ottawa, while Metro has 10 branches in the Toronto area and 45,000 members. Alterna, set to open April 1, will have $1.8 billion in assets. Ottawa will remain the company’s head office with a branch office in Toronto.

Gary Seveny will head the new organization and promises there will be no layoffs and that employees will have expanded career opportunities in the larger organization.

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Lower crude prices seen cutting profits in oil patch

(February 9, 2005) A steady decline in world oil prices will hurt the Canadian oil and gas industry over the next few years, according to the Conference Board of Canada.

“World oil prices are expected to fall gradually from the mid-$40-US per-barrel level, contributing to a steady weakening of industry profits from the windfall of 2004,” said the board’s associate director, Louis Thériault.

Oil and gas industry profits exceeded $22 billion in 2004, as oil prices reached record levels. However, the board projects profits to decline starting this year, decreasing from $15 billion in 2005 to $9 billion in 2008.

“Nevertheless, profits at this level would still be substantially above historic levels, the board notes. “The upside for the industry is the increase in world demand for oil, especially from developing economies such as China, which will limit the expected world oil-price decline.”

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CFA Institute moves closer to global performance standards

(February 8, 2005) The CFA Institute today released an updated version of its Global Investments Performance Standards (GIPS) and announced plans to move to a single, worldwide standard next year.

The revised GIPS standards represent the most comprehensive and significant upgrade since their introduction in 1999, the institute said in a release, and will replace the AIMR-PPS standards used in North America on January 1, 2006.

“Moving to one standard globally should simplify the compliance process, as well as eliminate confusion concerning multiple standards in the North American marketplace,” said Karyn Vincent, chair of the AIMR-PPS Implementation Committee. “The revised GIPS standards incorporate many of the best practices already followed by many U.S. and Canadian firms.”

The standards are based on the principles of fair representation and full disclosure and provide an ethical framework for the calculation and presentation of investment performance for investment management firms.

“While compliance is voluntary, the marketplace strongly suggests that firms use GIPS,” commented Alecia Licata, senior director of investment performance standards at the CFA Centre for Financial Market Integrity.

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Corporate profits bounced back in 2003

(February 8, 2005) Corporate profits rebounded in a big way in 2003 to more than $187 billion, Statistics Canada reported today, a 10% rise from the previous year.

Profits peaked at $191 billion in 2000, thanks to high energy profits and the booming electronics and telecommunications industry. But earnings declined in 2001 and were flat in 2002.

Corporate Canada focused on realignment and cost containment in 2003 and the results appear to have paid off. Operating revenues rose 3.2%, while growth in operating expenses was held to 2.7%.

The top five industries ranked by operating profits were banking and other depository credit intermediaries, oil and gas extraction and support activities, utilities, non-depository credit intermediaries (finance, leasing and credit card issuing companies) and real estate. All industries, with the exception of air transportation, showed a profit in 2003.

The financial sector shone, with an impressive 25% gain in profits in 2003 to nearly $50 billion, the agency noted, following two straight years of decline.

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Manitoba government seeks to expand Crocus probe

(February 8, 2005) Manitoba’s auditor general has asked to expand the scope of its current review of the troubled Crocus Investment Fund.

Crocus said today it is reviewing the request from the Office of the Auditor General (OAG) and will respond as soon as possible. “The fund is already engaged in a full and complete review of its portfolio, operations and governance,” said Crocus interim CEO Alfred Black. “We have been fully co-operating with the OAG on their review to date.”

Crocus says it wants to ensure that the expanded probe “will in no way jeopardize or violate any confidentiality provisions it has with its investee businesses or other stakeholders.”

The labour fund halted trading on December 10, 2004, prompting a number of investors to threaten a class-action lawsuit against the fund’s managers. Last month, retired accountant Delmore Crewson was appointed special advisor to lead an organizational review and portfolio assessment.

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TSX named world’s most cost-efficient exchange

(February 7, 2005) The Toronto Stock Exchange is the most cost-efficient stock market in the world, according to a survey released today. The study measures market impact costs in basis points, as the volume-weighted price change per trade, as a percentage of the total dollar volume, over a specific period of time.

The study, conducted for Institutional Investor magazine, found that Canadian market impact costs were the lowest of 44 countries surveyed.

“Our progress did not come about by accident. Addition of impact-lowering features such as icebergs, anonymity and other features contributed to making our marketplace a world leader,” said TSX president Richard Nesbitt.

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RBC names new ombudsman

(February 7, 2005) RBC Financial Group has appointed Wendy Knight as the bank’s new ombudsman. She replaces Keith Oosthoek, who retired last week.

Knight has been with RBC since 1987 and has held various positions in commercial banking and risk management in Canada and Asia. Her most recent appointment was vice-president, group risk management, in Western Canada.

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>(February 7, 2005) Mackenzie files prospectus for new resource-based limited partnership

Mackenzie Financial Corporation announced today that it has filed a preliminary prospectus for an initial public offering of the MSP 2005 Resource Limited Partnership.

The new product’s investment objectives are to maximize total return for limited partners, and to provide significant tax benefits, through investments in flow-through shares of resource issuers engaged in oil and gas or mining exploration and development or other energy production.

Fred Sturm, Mackenzie’s Chief Investment Strategist, will lead the partnership’s investment advisory and portfolio management team. He was previously lead manager on the Mackenzie 2004 Resource Limited Partnership and will utilize a similar investment strategy for this year’s offering.

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