Briefly:

(May 20, 2005) Securities regulators in five provinces have approved the MFDA’s long-awaited investor protection fund. The MFDA’s investor protection corporation (IPC) will begin covering customer accounts on July 1, 2005 in British Columbia, Alberta, Saskatchewan, Ontario and Nova Scotia.

The $30 million fund will cover customer accounts up to $1 million and includes all products sold by MFDA members.

The investor protection fund was first proposed by the MFDA in 2001. But following comments from members and lengthy debate within the industry, the association started talks with the CIPF aimed at establishing a single fund.

However, last year the MFDA announced that in order to complete the process by 2005 (a deadline set by regulators), it would have to go back to its original plan and create a separate fund. Still, the MFDA has left the door open for a possible merger with CIPF in the future.

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Leave interest rates alone, says C.D. Howe

(May 20, 2005) The Bank of Canada should maintain its key overnight lending rate at 2.5%, according to the C.D. Howe Institute’s Monetary Policy Council.

The panel, comprised of economists and academics, cited moderate inflation numbers, signaling that demand in Canada continues to run at or slightly below the economy’s productive capacity.

The Bank of Canada’s next interest rate is scheduled for Wednesday, May 25.

Looking further ahead, a narrow majority of council members want to see rates rise to 2.75% in July, pointing to an upward drift of inflation expectations and a tight labour market.

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Unitholders approve Mackenzie fund mergers

(May 20, 2005) Mackenzie Financial says investors have approved the merger of two Keystone funds into two Ivy funds at a special unitholders meeting held on Friday.

The Keystone Premier Euro Elite 100 Capital Class will be merged with the Mackenzie Ivy European Capital Class and the Keystone Premier Global Elite 100 Capital Class will be folded in to the Mackenzie Ivy Foreign Equity Capital Class.

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MFDA issues securities sales warning

(May 20, 2005) The MFDA says it has uncovered a number of situations where fund salespersons have engaged in inappropriate outside securities-related business activities, which in some cases, have significantly harmed clients.

For example, the MFDA has found examples of securities being sold by fund reps outside the member firm, such as principal-protected notes, private placements and limited partnerships, as well as external referrals of securities-related business.

MFDA rules require that all securities-related business be conducted through the member firm, “with exceptions for the sale of deposit instruments not on account of the member and the activities of bank employees conducted in accordance with the Bank Act.”

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AGF to stick with clone fund fee reduction

(May 19, 2005) AGF says it will follow through with its plan to reduce expenses on RSP clone funds, no matter how Thursday night’s budget vote turns out.

“In the event that this budget does not pass, but similar proposals are introduced in the next tabled budget, AGF will honour its commitment to reduce expenses retroactive to the first budget announcement on February 23, 2005,” the fund company said in a statement.

Investors who hold AGF RSP clone funds on the date the amendments to the Income Tax Act eliminating the foreign content rules become law will benefit from the reduction, AGF adds.

“We will not restart the clock when and if a new budget is introduced that contains provisions to eliminate the foreign content rules,” said AGF executive vice-president Randy Ambrosie. “It is our intention to ensure that our clients are able to benefit from these changes from the date they were first introduced, despite any shorter-term issues in passing legislation.”

AGF says it will also continue to automatically rebalance portfolios to maintain current foreign content limits, unless directed by the investor or until any new changes prescribed by law are passed.

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Compliance team at full strength, RS says

(May 19, 2005) Stock market regulator RS says it has hired a new manager for its Toronto-based trade desk compliance team and has brought in additional experienced staff.

In mid-April, Ron Vallière returned to RS as manager of trade desk compliance for the eastern region. His 11 years of trading and compliance experience includes two years as a trade desk compliance officer at RS.

Kuno Tucker also joined the compliance team in April after spending three years as an RS surveillance officer.

Naresh Tejpal came to RS last month from Wellington West Capital, where he was an agency trader. Nick Thompson is the most recent hire at RS, arriving this month from BMO Nesbitt Burns.

The trade desk team conducts annual audits of broker/dealer trade desk operations.

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Standard Life announces executive appointments

(May 19, 2005) Standard Life Assurance today announced five executive promotions. Anthony Cardone has been appointed senior vice-president, group savings and retirement. Cardone was Standard Life’s vice-president, marketing & sales development, retail markets for two years.

Jean Guay has been promoted to senior vice-president, group insurance from senior vice-president, information technology. Senior vice-president Christian Martineau has been handed responsibilities for information technology in addition to his current finance role.

Penny Westman has been promoted to senior vice-president, legal and compliance after spending seven years as the firm’s general counsel.

Finally, Michèle Parent has been promoted to vice-president, external communications and corporate affairs, responsible for media and regulatory regulations.

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AIM Trimark hires veteran fixed income manager

(May 19, 2005) AIM Trimark Investments has appointed Alfred Samson to its Toronto-based fixed-income portfolio management team. Samson, a CFA, has more than 14 years of experience in the fixed income world, including nine years as a fund manager with Maritime Life.

“We welcome Alfred to the team,” says AIM Trimark CIO Patrick Farmer. “We pride ourselves on our close teamwork, which we believe is essential to the process of successful investing.”

As portfolio manager, Samson joins fixed income industry veterans Rex Chong, Anthony Imbesi and analyst Gary Lew.

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$2 million missing from Portus trust fund

(May 18, 2005) KPMG investigators say executives at Portus funnelled $3 million from company accounts to set up a trust fund to pay for legal expenses. The transfer was essentially fraudulent, KPMG says, since it took place on February 1, after the firm was insolvent.

The receiver has since located $910,000 of the $3 million and has ordered those funds to be frozen. However, company founder Boaz Manor has apparently attempted to transfer the remaining $2 million to his own account, KPMG says, citing information obtained from a confidential source.

Manor is living in Israel and KPMG investigators offered to meet with him there later this week. However, Manor’s lawyers say their client is too ill to be interviewed and have requested a 3 to 4 week delay.

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BMO Nesbitt Burns appoints new vice chair

(May 18, 2005) BMO Nesbitt Burns has named Fred Mifflin as the new vice-chair of its investment banking group.

Mifflin will immediately assume management responsibility for the firm’s investment and corporate banking division in Canada, the U.S. and Britain.

“Fred has extensive financing experience and has been responsible for numerous advisory, restructuring and privatization assignments,” says BMO Nesbitt Burns CEO William Downe. “He will be an integral part of our team as we continue to reinforce our leading positions in Canada and accelerate growth in the United States.”

Mifflin previously served as COO of the firm’s investment and corporate banking division and before that, was responsible for BMO Nesbitt Burns’ global mining business.

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Foreigners scoop up Canadian stocks

(May 19, 2005) Foreign investors purchased $1.9 billion worth of Canadian securities in March, mostly equities, according to Statistics Canada’s monthly report on international security transactions. That’s up from February’s total of $1.5 billion.

But for the second month in a row, those foreign inflows were offset by Canadians investors, who were even more active in the market, acquiring $3.6 billion in foreign securities, mostly in bonds ($2.8 billion).

For the first quarter, of the year, Canadian investors bought $6.7 billion in foreign securities with more than three-quarters going to foreign bonds, says StatsCan. The Q1 total is the highest in nearly three years.

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Crocus hearing delayed

(May 17, 2005) The Manitoba Securities Commission has postponed a hearing on labour fund company Crocus until May 27. Crocus halted trading in December and announced a portfolio review.

The commission alleges that the Crocus board “routinely and consistently” failed to determine the fair value of the common shares of the fund.

Crocus board members were supposed to meet once a week to value the shares, but no meetings took place between April and September of last year, according to the regulator.

In addition, Crocus board members were advised of “significant risks” managing the portfolio last September, but took no specific steps to deal with those issues until a special meeting was called in November, the MSC alleges.

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Brown to receive honorary degree

(May 17, 2005) Ontario Securities Commission chair David Brown will receive an honorary Doctor of Laws degree from McMaster University in Hamilton at a ceremony next month.

The degree recognizes Brown’s “distinguished public service in the field of securities regulation on the provincial, national and international stages,” the OSC said in a release.

During the June 6 ceremony, Brown will address the students of McMaster’s DeGroote School of Business who will receive undergraduate or graduate degrees.

“David Brown is an outstanding leader in Canada’s capital markets — his insight, integrity and clarity of purpose contributed to significant improvements in our system of securities regulation,” says McMaster president Peter George.

“It is indeed a great privilege to receive an honorary Doctor of Laws degree from a university that it so committed to innovation and excellence,” added Brown. “And I am honored to be invited to address the graduating class of McMaster’s Faculty of Business — members of the next generation of business leaders in Canada.”

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Surging crude prices won’t derail growth, says Conference Board

(May 17, 2005) High oil prices will dampen, but not derail world economic growth in 2005, according to a report released today by the Conference Board of Canada.

“The global economy has so far handled higher oil prices without major economic disruption,” says board researcher Kip Beckman. “Strong corporate profits, the rise of the global service industry and quick actions by central banks are cushioning the impact.”

Still, if oil prices remain above $55 per barrel for an extended period, GDP growth will weaken further, Beckman adds, though a global recession is unlikely.

After expanding by nearly 4% in 2004, the board expects the world economy to post real gross domestic product growth of around 3% this year, led by the U.S. and China.

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GMP opens new retail branches

(May 17, 2005) GMP Private Client is opening two new full-service retail branches in Calgary and Toronto. The firm has also recruited six experienced advisors, who are expected to manage assets of approximately $1 billion.

“We are proud to open our doors in these two locations with such a high quality group of investment advisors,” said company CEO James Werry. “These branches mark the initial step in our strategy of offering clients an unmatched value proposition in the Canadian market.”

GMP expects to open more branches in major centres in the coming year and has set a target of hiring 15 to 20 advisors with assets of $3 billion.

“Investment advisors recognize the tremendous potential to owning a stake in this new enterprise, and we continue to generate exceptional interest among top professionals across the country,” added Werry.

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MFDA substantiates findings against Saskatchewan rep

(May 17, 2005) The MFDA says it has confirmed allegations of wrongdoing against a former mutual fund salesperson in Saskatchewan.

At a hearing on Monday in Regina, an MFDA panel found that in July 2002, Arnold Tonnies borrowed $250,000 from two clients to finance his outside business activity as a cattle farmer, placing his personal interests above those of his clients, creating a conflict of interest and violating the MFDA’s ethical standards.

The panel also ruled that in December 2003, Tonnies failed to produce documents requested by the MFDA to investigate the complaint.

The MFDA has yet to issue sanctions against Tonnies.

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Portus hearing put off to September

(May 16, 2005) The Ontario Securities Commission has delayed a hearing on Portus, scheduled for this week, until September 16, 2005.

The decision means that the OSC’s temporary orders against the hedge fund firm will remain in effect until the new hearing date. The OSC froze Portus’s assets in February, ordered the firm to cease trading in securities and appointed KPMG as receiver. The commission gave no reason for the delay, but KPMG has said the complexity of Portus’s corporate structure and transactions has slowed its investigation.

KPMG has also had difficulty interviewing Portus founder Boaz Manor, believed to be living in Israel.

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IGM Financial doubles up on top brass

(May 16, 2005) IGM Financial, parent of Investors Group, has named Murray Taylor and Charles Sims co-presidents and chief executive officers. Taylor and Sims currently hold the same posts with Investors Group and Mackenzie Financial, respectively.

The pair replace Jeffrey Orr, who last week became president and CEO of Power Financial, the holding company which controls IGM, among other assets in the financial industry.

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OSC offers webcast on continuous disclosure

(May 16, 2005) The Ontario Securities Commission has introduced a webcast designed to answer basic questions about NI 81-106, the national instrument on Investment Fund Continuous Disclosure. The new rule comes into force on June 1, 2005 and applies to all investment funds, from mutual funds to pooled funds and LSIFs.

The new rule lays out guidelines for annual financial statements from the firms that manage such funds and largely harmonizes the existing rules across the country. To access the web cast, please click here.

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Loring Ward appoints execs

(May 16, 2005) Loring Ward International has appointed Tara Maw as CFO of Loring Ward Group, the division which holds the firm’s U.S. operations. Paul Gluck has also been named general counsel.

“We are delighted to have been able to attract individuals of Tara and Paul’s caliber to assume these key positions on our executive management team,” said Donald Herrema, president and CEO of Loring Ward International. “With the significant experience they possess in their relative areas of expertise, they will both play important roles as we continue to work to build a strong company.”

Maw is the former CFO of Brokertec and spent eight years with Price WaterhouseCoopers. Gluck is a former partner at Dechert LLP. Loring Ward, whose corporate headquarters are in Winnipeg, was spun off from Assante when that firm was taken over by CI in 2003.

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