Briefly:

(May 6, 2005) The Manitoba Securities Commission has postponed today’s scheduled hearing on the Crocus Investment Fund until May 16.

Earlier this week, the Winnipeg labour fund laid off nearly one dozen “non-essential” staff. Crocus halted trading in December 2004 and revalued the fund shares at the end of February. The Manitoba Securities Commission (MSC) says the Crocus board “routinely and consistently” failed to determine the fair value of the fund’s common shares between April and December of last year.

The Crocus case points to a need for more transparency in the labour fund industry, says investment counselor and author Steven Kelman in a commentary posted on Morningstar Canada’s website. “LSIF portfolio statements don’t disclose valuations of individual holdings, just the total value,” he notes. “Maybe it’s time to make LSIF portfolios more transparent so investors can review both positive and negative changes of valuations.”

Crocus’ board approved a $46 million dollar write-down last month. Although the shares aren’t currently trading, a share worth $10.45 in December now has a theoretical value of about $7.

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Managed futures take a hit

(May 6, 2005) Assets in managed futures programs have fallen to $127 billion, from $131.9 billion over the past three months, according to The Barclay Group, which provides data for the industry.

“Since year-end 2004, assets under management have declined by $4.9 billion, or 3.7%,” says Sol Waksman, president of The Barclay Group. “This decline tracks the 3.11% loss in managed futures measured by the Barclay CTA Index during the same period.”

The decline in AUM is the first quarterly drop in money under management in three years. Since March of 2002, managed futures assets have tripled from $40.3 billion to over $130 billion.

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Manulife posts strong earnings

(May 5, 2005) Manulife Financial has released its first quarter earnings report, posting 13% growth in earnings per share before the costs of integrating John Hancock Financial into the firm. Net income totalled $801 million, an increase of 88% from the same quarter a year earlier. Manulife earned 99 cents per share, after factoring out the costs of the merger.

Funds under management totalled $350.3 billion at the end of the quarter, compared to $163.2 billion a year earlier, with most of this growth coming from the Hancock merger.

“The integration of John Hancock will be largely completed by year-end and we are focused on realizing the full benefits of the merger,” said Dominic D’Alessandro, president and CEO of Manulife Financial. “At the same time, Manulife Financial continues to deliver value to our shareholders as evidenced by the 15% increase in our quarterly dividend approved by our board of directors.”

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Great-West earnings rise

(May 5, 2005) Great-West Lifeco has posted first quarter earnings of $423 million, not including about $4 million in costs related to its Canada Life Financial acquisition. Earnings per share were $0.475.

Assets under administration totalled $167 billion at the end of the quarter, up $2.1 billion from the previous quarter.

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Dynamic streamlines fund lineup

(May 5, 2005) Goodman & Company, Investment Counsel Ltd. has announced plans to streamline its lineup of Dynamic mutual funds.

Assuming unitholder approval, the eliminated funds will include Dynamic Power American Growth Fund I Ltd., Dynamic Focus+ American Class, Dynamic Focus+ Global Fund, Protected Focus+ Global Fund, Commonwealth World Balanced Fund Ltd. and Dynamic Canadian Yield Bond Fund II.

The firm is also seeking approval to change the name of Dynamic Focus+ Canadian Class to Dynamic Focus+ Equity Class and to change the investment objectives and strategies of the fund. Dynamic Canadian High Yield Bond Fund I will be renamed Dynamic Canadian High Yield Bond Fund and its Series A MER will increase 10 basis points to 1.85%.

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SciVest buys stake in Quant

(May 5, 2005) SciVest Canadian Holdings has purchased a “significant interest” in Quant Investment Strategies, a Toronto-based developer of quantitative investment strategies.

“Quant has a unique quantitative investment process that will compliment SciVest’s own investment process,” says Dr. John J. Schmitz, president and CEO of SciVest. “Incremental value will also be created for SciVest, Quant and their respective clients as a result of significant operational and cost synergies, as well as opportunities for diversification that will result from this acquisition.”

Craig Lee, one of the founding partners of Quant, will serve as president and CEO.

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CEO quits Altamira

(May 4, 2005) The president and CEO of Altamira Investment Services has announced his resignation. Greg Reed is also leaving his post as senior vice-president of National Bank of Canada.

Effective immediately, Reed’s roles at Altamira will be filled by Charles Guay, who will also maintain his role as president and COO of National Bank Securities. His prior experience includes that of futures trader, stockbroker and district vice president of Fidelity Investments.

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AGF April redemptions at $211 million

(May 4, 2005) AGF Management has released its assets and sales data for April, showing net redemptions in long-term funds of $211.4 million, compared to $106.7 million in April 2004. A further $11.8 million in assets were redeemed from money market accounts. AGF does not report net sales to IFIC.

Total mutual fund assets were nearly $21.6 billion, with an additional $10.1 billion in institutional and private investment accounts. Institutional and private client assets were up from $6.2 billion compared to April last year.

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RBC launches new series of notes

(May 4, 2005) RBC Financial is rolling out the next series of its Liquid Equity Option-linked noteS (LEOS) — principal-protected notes which invest in the Dow 10 index, the top yielding dividend stocks of the Dow Jones Industrial Average.

The notes are available to self-directed investors, as well as through investment advisors and financial planners until July 5, 2005. The notes mature July 9, 2013 and are callable on the anniversary date at a rate of $146.50 per $100 note.

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OSC releases Brown’s expense account

(May 3, 2005) Outgoing Ontario Securities Commission chair David Brown spent nearly $100,000 last year in expenses and a further $116,000 in 2003. The bulk of the money (about $86,000) was spent on international travel related to Brown’s work with IOSCO, the International Organization of Securities Commissions.

For instance in February 2004, Brown spent $10,291 during an IOSCO visit to Spain, $13,144 on an IOSCO jaunt to Australia in February 2003 and $16,380 on another IOSCO meeting in South Korea in October 2003.

However, Brown is clearly not a big spender when it comes to eating out in restaurants. He spent about $1,600 on business-related meals in 2004 and only about $300 the previous year.

The expense account was released by the commission as part of a request under the Freedom of Information and Protection of Privacy Act. Brown, who is leaving the OSC at the end of June earned a salary of nearly $642,000 in 2004.

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Fed hikes interest rates to 3%

(May 3, 2005) In a widely-anticipated move, the U.S. Federal Reserve hiked its key overnight lending rate 25 basis points to 3%.

In a statement accompanying the decision, the Fed said that “with underlying inflation expected to be contained, the committee believes that policy accommodation can be removed at a pace that is likely to be measured.”

The Fed started hiking rates 10 months ago, from a near 50-year low of 1%. The Bank of Canada’s current rate sits at 2.5%, unchanged since last October.

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Hub International expands into reinsurance market

(May 3, 2005) Insurance brokerage Hub International has entered the reinsurance market, acquiring THB Intermediaries in Los Angeles. Financial terms were not released though Hub says it’s a cash and stock deal.

THB, with annual revenue of about $6 million US, is one of a handful of facultative reinsurance brokers in the United States — firms that work with insurance companies to place portions of the insurers’ risks with reinsurance underwriters.

“The acquisition of THB expands our total service range and reach in the insurance brokerage business and is an important extension of our acquisition strategy,” said Hub International chair Martin Hughes. “The reinsurance brokerage business has consolidated dramatically in recent years, and THB was one of the few attractive reinsurance brokers remaining.”

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BCSC fines company president for failing to disclose insider trading

(May 3, 2005) The former president of Golden Fortune Investments has been banned from the B.C. securities market for at least 18 months and fined $10,000. Jesus Martinez failed to fully disclose his trading activity in insider reports, the commission said.

The regulator says Martinez failed to disclose 163 transactions worth more than $1.8 million and 2.1 million Golden Fortune shares in four reports filed between July 1999 and November 2002.

Golden Fortune was placed under a cease-trade order in October 2003 for failing to file annual audited financial statements and delisted from the TSX Venture Exchange the following year.

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BMO Nesbitt Burns donates institutional trading commissions

(May 3, 2005) BMO Nesbitt Burns plans to donate all institutional equity trading commissions earned on May 11 to four different organisations through the company’s new charitable program, Equity through Education.

The program is designed to raise money for students who demonstrate academic promise but lack support or means to pursue higher education.

Proceeds contributed to the program will be applied to bursaries and scholarships for Aboriginal students through the Foundation for the Advancement of Aboriginal Youth, the Canadian Merit Scholarship Foundation awards for women, National Educational Association of Disabled Students training programs to help students with disabilities prepare to enter the job market, and funding for Pathways to Education to support “at-risk” and economically disadvantaged youth to finish high school and move on to post secondary education.

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Industrial Alliance signs agreement, expands brokerage operations

(May 3, 2005) Industrial Alliance Securities has signed a broader carrying broker agreement with clearing firm Penson Financial Services Canada to include newly acquired brokerage firms Lynch Investments and KingsGate.

As part of the firm’s aggressive expansion plans, the firm acquired Lynch in December and KingsGate in January. The expanded agreement allows Lynch and KingsGate to increase their product offerings in line with those available from Industrial Alliance.

“Outsourcing our clearing operations to an independent, specialist supplier is intrinsic to our future growth and success,” says Industrial Alliance president, Gaeton Plante. “Pension’s independent status also allows us the liberty to recruit new reps from the banking sector at large.”

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Many corporations unprepared for succession needs

(May 3, 2005) Recruiters say many organisations are not prepared with an effective succession plan if their CEO were to leave unexpectedly.

The quarterly Executive Recruiter Index by executive search and recruiting firm Korn/Ferry International surveyed 201 consultants worldwide.

More than half say lack of preparation is the most common mistake companies and organizations make. More than 27% say lack of a formal evaluation process is one of the biggest mistakes they see, and 17% say subjectivity in selecting internal candidates is the biggest succession planning misstep. Indifference or lack of buy-in from the board of directors and position specifications that are too rigid were also included in the list of difficulties companies face.

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Scotia Capital named best investment bank in Canada

(May 3, 2005) International financial magazine, Global Finance released the results of the second annual Investment Bank Awards, naming Scotia Capital the best investment bank in Canada for the second straight year.

Market share, including the number and size of the company’s deals, customer service and advice, structuring capabilities, distribution network, efforts to overcome difficult market conditions, innovation, pricing and after market performance of underwritings were all considered by magazine editors, analysts and industry experts in selecting the winner.

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ICAC names new president

(May 2, 2005) The Investment Counsel Association of Canada (ICAC), an organization for Canadian investment and portfolio management firms, today announced F. Gwyer Moore would be the association’s new president, replacing executive director Keith Douglas, effective May 1, 2005.

ICAC chairman Richard Knowles says the organization plans to step up efforts to encourage public policy development related to the investment industry. The new full time president and his staff will be located in the ICAC’s new offices at 100 Yonge Street in Toronto.

Moore has more than 25 years of experience in the financial services industry, most recently as senior vice president of Guardian Capital. He has also served as governor of the Toronto Stock Exchange and as an Investment Dealers Association board member.

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CIBC implements fair value pricing

(May 2, 2005) CIBC Asset Management announced it has implemented fair value pricing practices in valuing some CIBC mutual funds, Imperial Pools, Talvest Funds, Renaissance funds and Frontiers Pools to assist in avoiding stale prices and accurately assessing net asset value of funds when prices are not available.

Fair value pricing models adjust net asset values using information collected after markets close to determine the underlying value of securities that are not being traded.

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BCSC bans former director and marketing company owner

(May 2, 2005) The British Columbia Securities Commissions (BCSC) has settled with a TSX Venture Exchange listed company director for failing to disclose payments made for investor relations services.

Peter William Dunfield, formerly a director with Jalna Resources, admitted he breached securities laws when he allowed the company to file inaccurate or inconsistent financial statements that failed to properly account for an investor relations contract the company had with Incite Marketing Group. Jalna paid $350,000 US to Incite without disclosing the agreement to the public or filing details of it with the TSX Venture Exchange as required. Dunfield agreed to pay the BCSC $10,000.

Incite’s owner, Daniel Brennan Matthews settled with the BCSC in March and agreed to pay $25,000. Matthews may not serve as a public company director or officer, or engage in any investor relations activities for at least five years. Dunfield is similarly barred for at least three years.

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Crocus issues pink slips

(May 2, 2005) Non-essential staff at Manitoba’s Crocus Investment Fund received their walking orders today. The fund’s board of directors announced nearly one dozen layoffs from different departments, effective immediately.

The labour sponsored fund halted trading in December 2004 and revalued the fund shares at the end of February. The Manitoba Securities Commission (MSC) says the Crocus board “routinely and consistently” failed to determine the fair value of the fund’s common shares between April and December of last year. The MSC will meet again on May 6 to address the issue. Fund shares can not be sold or redeemed at this time.

Today’s announcement is part of an ongoing series of initiatives undertaken by Crocus to reduce operating expenses. The fund has already cancelled non essential purchasing and made arrangements to sub-lease vacated office space.

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