Briefly:

(March 24, 2005) Quebec’s securities regulator, l’Autorité des marchés financiers (AMF), has succeeded in having a man jailed for 10 days for failure to comply with an order to cease distribution of investment contracts.

A Superior Court justice ordered Michel Maheux incarcerated and fined $4,500, with his firm, Coopérative de producteurs de bois précieux Québec Forestales fined $250 as well.

On October 15, 2003, the predecessor of the AMF ordered the firm to cease distribution of all investments covered by the Securities Act. By failing to comply with the order, Maheux was found in contempt of court.

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IFIC applauds budget bill

(March 24, 2005) While the federal budget was tabled over a month ago, the government has now tabled the bill which would implement the budget. Assuming the budget is implemented, its contents are retroactive to January 1, 2005.

“It’s a good indicator when the industry, the regulators and the federal government are all on the same page,” said John Murray, IFIC’s vice-president of regulation and corporate affairs, referring to the removal of foreign content limits for RRSPs and pension funds.

“We will continue to work with regulators and the federal government to ensure a timely implementation of the budget proposal,” said Murray.

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Accumulus shifts strategy

(March 24, 2005) Accumulus Management has announced changes to the structure of its Accumulus North American Index Momentum RSP Fund which will lower the MER by 25 basis points to 2%.

The fund is dropping its mandate of focusing on preservation of capital as well as its strategy of investing primarily in derivative instruments based on certain North American indices. The fund will now invest primarily in Canadian equities, based on momentum in earnings, price and future earnings estimates.

The fund can still invest in securities listed on the NYSE, AMEX and the NASDAQ. The fund is also seeking regulatory approval for short-selling strategies.

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Inflation rises on both sides of the border

(March 23, 2005) Inflation rates are up in Canada and the U.S. — but it’s being viewed as more of a problem south of the border.

The consumer price index was up 0.4% in February in both countries, mainly due to higher energy prices. Gasoline was up 3.4% in Canada and 3.2% in the U.S. Year-over-year, core inflation rose 1.8% in Canada and 2.4% in the U.S.

The U.S. numbers reinforce yesterday’s statement by the U.S. Federal Reserve, which said that “pressures on inflation have picked up in recent months,” and adds to the view that higher inflation is on the way, notes BMO Nesbitt Burns chief economist Sherry Cooper.

“Canadian inflation trends are moving higher after generally benign readings in the past few months,” Cooper adds. “However, it is clear that inflation is a more pressing problem in the U.S. than in Canada, suggesting that the Bank of Canada will hike rates at a more moderate pace than the Fed. The case for the central bank to lift rates in May is building, but this CPI report does not increase the odds of such a move.”

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BCSC settles with resource firm director

(March 23, 2005) The British Columbia Securities Commission has fined the former head of Jalna Resources $25,000. Daniel Matthews has also been banned from acting as a company director or officer and engaging in investor relations activities for five years.

In a settlement agreement, Matthews admitted that he failed to properly disclose company payments for investor relations activities to a firm he owned, a breach of securities law, when he was Jalna’s CEO. Jalna, a TSX Venture Exchange-listed company, received investor relations services from Incite Marketing Group, a private firm owned by Matthews.

In March 2000, Matthews directed Jalna to advance $350,000 US to Incite for investor relations services, the commission said. “Jalna did not publicly disclose this agreement or file details of it with the TSX Venture Exchange as required.”

Matthews resigned as Jalna’s CEO and president on April 20, 2000.

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Putnam, Citigroup fined by U.S. regulators

(March 23, 2005) The U.S. Securities and Exchange Commission has reached settlement agreements with Putnam Investments and Citigroup over conflict of interest charges.

Putnam was ordered to pay $40 million for failing to disclose that it had “preferred marketing arrangements” at 80 American broker-dealers designed to promote the sale of Putnam funds.

Citigroup was hit with a $20 million fine and censured by the SEC for failing to disclose information to clients about its revenue sharing program. Under the “tier program,” approximately 75 mutual fund complexes made revenue sharing payments to Citigroup in exchange for access to or “shelf space” within the firm’s retail brokerage network. Neither company admitted any wrongdoing.

“We hope securities industry professionals have by now received the message that they must fully inform their customers of the nature and extent of any conflicts of interest that may affect their recommendations,” said SEC enforcement director Stephen Cutler.

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Nova Scotia joins venture financing program

(March 23, 2005) The Capital Pool Company program, a way to access venture capital and become listed on the TSX Venture Exchange, is being launched in Nova Scotia.

“We believe the introduction of the Capital Pool Company Program in Nova Scotia will help encourage small- and medium-size businesses to investigate the public venture capital route,” said Les O’Brien, chair of the Nova Scotia Securities Commission. “It should translate into exciting new opportunities for our local entrepreneurs.”

The program allows experienced directors and officers to work with junior public companies to form a capital pool company. The group would typically raise between $200,000 and $1.9 million in an initial public offering. This amount is used to seek out an investment opportunity in assets or a business with growth potential.

Capital pool companies were the most popular method for joining TSX Venture in 2004, with 87 launched.

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Fed hikes U.S. interest rates

(March 22, 2005) The U.S. Federal Reserve is sticking to its strategy of raising interest rates at a measured pace. The Fed today hiked its key overnight lending rate by 25 basis points to 2.75%.

It’s the seventh quarter-percentage point increase since last summer and came as no surprise to analysts.

“Output evidently continues to grow at a solid pace despite the rise in energy prices, and labour market conditions continue to improve gradually,” the Fed said in a statement.

Although long-term inflation expectations remain well contained, “pressures on inflation have picked up in recent months and pricing power is more evident,” the Fed added. “The rise in energy prices, however, has not notably fed through to core consumer prices.”

It’s the first time in years that U.S. interest rates have topped Canada’s. The Bank of Canada’s key lending rate has been unchanged since last fall at 2.5%. The central bank’s next rate announcement is set for April 12.

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Former Calgary fund salesperson agrees to trading ban

(March 22, 2005) A Calgary woman has been fined $5,000 and hit with a 10-year trading ban by the Alberta Securities Commission.

Line Lucienne Pouliot misappropriated $28,500 from one of her elderly clients between 1998 and 2002 and used the money to pay personal expenses. She has since compensated the client.

Pouliot was also ordered to pay $3,000 in investigation costs by the Alberta regulator.

The 55-year-old was a salesperson with OptiFund Investments from 1992 to 2004. She was dismissed from the firm when the case came to light last year.

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Quebec regulator to lead CSA

(March 22, 2005) The Canadian Securities Administrators has appointed Jean St-Gelais, head of Quebec’s Autorité des marches financiers, as its new chair, effective April 1.

“I am extremely pleased to step into this role, and look forward to working with my colleagues across Canada to continue to make improvements to the regulation of our capital markets,” St-Gelais said. In 2003, the CSA established a permanent secretariat in Montreal.

St-Gelais takes over from Alberta Securities Commission chair Stephen Sibold, whose two-year term expires at the end of the month.

Don Murray, chair of the Manitoba Securities Commission, was named the CSA’s new vice-chair, replacing Donne Smith, chair of the New Brunswick Securities Commission. “We will continue to deliver on the CSA strategic principles and ongoing efforts to harmonize securities legislation,” Murray said.

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OSC adds new commissioner

(March 22, 2005) The OSC today announced the appointment of Carol Perry as Commissioner effective February 16, 2005.

Perry, who is currently managing partner at financial advisory services firm MaxxCap Corporate Finance Inc., joins the Commission for a three-year term.

There are currently 13 Commissioners appointed to the OSC, with an overall mandate to “provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in their integrity.”

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Portus receivership extended

(March 21, 2005) At the request of the OSC, a court order has been issued, extending KPMG’s mandate as receiver for Portus Alternative Asset Management Inc., Portus Asset Management Inc. and BancNote Corp.

Under the original court order, issued March 4, KPMG was authorized to take control of any assets and preserve any documents of the above-noted parties. KPMG will continue in this role until March 24, at which time the OSC and Portus will square off in court, arguing whether the firm should be in receivership.

KPMG is also empowered to conduct investigations as appropriate and respond to questions and claims of Portus’ clients.

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Ontario introduces northern “Grow Bonds”

(March 21, 2005) The government of Ontario has announced the interest rates for its new Northern Ontario Grow Bonds, which will pay 4% over their five-year term. But the bonds are only available to residents of Northern Ontario.

“We promised a new northern investment and loan opportunity program in the 2004 Ontario budget and now we are delivering a program that is good for investors and businesses as well as the northern economy,” said Ontario’s Finance Minister Greg Sorbara. “We are offering a competitive rate that is fully guaranteed by the government. The capital raised will stay in the north for new and expanding businesses.”

The bonds are available in $100 increments to a maximum of $500,000. The proceeds from the bonds will fund investment in small- and medium-sized businesses in the province’s north.

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ASC reminder: Financial reporting rule changes

(March 21, 2005) The Alberta Securities Commission is reminding registrants that new continuous disclosure and proxy solicitation requirements come into force on March 30, as part of the Securities Amendment Act, 2003.

At that time, ASC Blanket Order 51-508 will be repealed and replaced with a new blanket order which will retain the requirements currently contained in sections 149 and 150 of the Securities Act and sections 151 and 160 of the Rules for financial statements.

Blanket Order 51-508 governs comparative financial statements, their content and delivery. The order was originally intended to remain in effect until the end of 2005.