Briefly:

(June 3, 2005) A father and son have been fined almost $250,000 by the Alberta Securities Commission for insider trading and tipping during merger/acquisition negotiations.

Ken and Lyle Pretty have admitted to the charges, stemming from information passed from Ken, the son, to his father, while serving as vice president of Newport Petroleum, Hunt Oil Company, and APF Energy.

Ken Pretty agreed to pay $145,000 to settle the allegations, as well as $3,000 towards investigation costs. Lyle Pretty agreed to pay $95,000 to settle the allegations, as well as $2,000 towards investigation costs.

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BCSC bans pair of fraudsters

(June 3, 2005) The British Columbia Securities Commission has banned two men who admitted to breaching securities laws in raising $26.6 million from 1,435 investors in seven provinces and foreign investors. They did so without a prospectus, for a company owned by one of the men.

James Nelson McCarney and Trevor William Park have been banned from the market for 20 years and 12 years and face fines of $100,000 and $5,000, respectively. The settlement notes that Park would have faced a sanction of $75,000 had there been any reasonable prospect that he could pay that amount.

The pair neglected to tell “investors” that the funds were being used to settle a lawsuit involving another company on which McCarney served as an officer and director.

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Mackenzie turns to in-house advisor

(June 3, 2005) Mackenzie Financial has appointed Wendy Chua as lead portfolio manager of Mackenzie Universal Health Sciences Capital Class fund, effective August 31, 2005. She will be supported in this role by senior vice president, Ian Ainsworth and vice president, Mark Grammer.

“Wendy and her colleagues bring three key strengths to the management of this fund: a strong technical background, dedicated healthcare investment experience and proven track records,” said David Feather, president, Mackenzie Financial Services.

Chua, assistant vice president, investments, was already an in-house Mackenzie investment manager. She replaces the fund’s previous sub advisor, Alliance Capital Management Canada.

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Ontario begins design work on single securities regulator

(June 3, 2005) A blue-ribbon panel appointed by the Ontario government has begun work on developing a detailed proposal for a single securities regulator.

The panel, chaired by Purdy Crawford, who also headed the five-year review committee, will report back to the government in October. Members include former CPP head John MacNaughton and Claude Lamoureux, president of the Ontario Teachers’ Pension Plan.

The panel’s terms of reference include detailed design work on a common securities regulator, including features to ensure a strong local presence and sensitivity to regional issues, the provincial government said in a release today.

Earlier this week, Ontario again rejected the principal regulator, or passport model initiative endorsed by the other provinces, instead deciding to focus on a common securities regulator, which Gerry Phillips, chair of the management board of cabinet calls “the key to ensuring a stronger, more modern economy. This is an economic issue, not a jurisdictional one. Vibrant capital markets help lay the foundation for strong economic growth, which benefits all provinces and territories.”

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Norshield appoints monitor

(June 2, 2005) Norshield Asset Management has appointed RSM Richter to monitor its business and financial affairs, in accordance with an order issued last month by the Ontario Securities Commission.

The monitor’s mandate is to ensure that clients’ funds are preserved and protected, the OSC says.

On May 20, the commission temporarily suspended Norshield and imposed conditions against the Montreal-based hedge fund firm and its retail division, Olympus United Group.

“To date, Olympus has not sought registration for a trading advisor in Ontario nor has it designated a compliance officer,” the OSC said. “Olympus therefore does not meet the registration requirements that would enable it to trade on behalf of its Ontario clients.”

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Dodge delivers Beijing speech on floating exchange rate

(June 2, 2005) In a carefully worded speech in Beijing today, Bank of Canada governor David Dodge discussed the benefits of a floating exchange rate system and Canada’s experience with moving from a fixed to a flexible rate.

Canada, he points out, is one of the few countries to make such a transition twice, first in 1950 and again in 1970. While referencing a number of similarities between the politics and the Canadian economy at the time and China’s situation today, Dodge extolled the virtues of Canada’s free floating currency along with the country’s use of inflation targets and other “policy anchors” to stabilize the economy. But he made no direct call for China to end its policy of pegging its currency to the U.S. dollar.

“I want to emphasize here that with these policy anchors in place, a floating exchange rate can be a tremendous asset for an economy by helping to keep total supply and demand in balance,” he said. “I hope that my description of Canada’s struggle to develop the appropriate framework for our country will yield some insights that may prove useful as China makes its own decisions about its own policies.”

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Brierley elected chair of CLHIA board

(June 2, 2005) James Brierley, president of the Canadian life branch of the Munich Reinsurance Company and Munich Re’s chief agent in Canada since 1998, has been elected chair of the Canadian Life and Health Insurance Association (CLHIA).

Brierley has been a member of the CLHIA Board for three years, serving most recently as chairman elect and chair of the board’s standing committee on government relations. He also sits on the board of directors of the Munich Life Management Corporation, Munich Reinsurance Company of Canada, Temple Insurance, LifePlans Canada, the Institute for Quantitative Finance and Insurance, and the board of directors at the Actuarial Foundation of Canada.

CLHIA is a voluntary national trade association representing the interests of member companies in the Canadian life and health insurance industry.

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CanDeal goes global, signs agreement with TradeWeb

(June 2, 2005) Online debt securities trading provider CanDeal today announced a long-term technology and co-marketing agreement with TradeWeb to enhance domestic trading services offered by CanDeal to Canadian institutional investors and investment dealers.

Under the agreement TradeWeb will supply CanDeal with its trading network and straight-through processing technology to “significantly enhance” trading by giving access to TradeWeb’s global network of online fixed income markets.

In a press release, representatives from several of the company’s institutional clients, including Denis Girouard, executive vice president and managing director of National Bank Financial, say they are excited about the platform’s new benefits. “NBF’s expanding capital markets business is planning to take full advantage of the domestic and global opportunities afforded to us through this dynamic platform,” says Girouard. “We strongly believe that the platform will broaden our client base and enhance customer service.”

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Financial firms fare well in corporate citizens’ survey

(June 1, 2005) The financial services industry is well represented on the latest ranking of corporate responsibility, as judged by Corporate Knights, which champions responsible business in Canada. As a sector, financials posted an average score of 78.69, on a scale of 100.

The ratings system takes into consideration numerous issues, including CEO compensation, board independence and diversity among executives.

“If the corporate responsibility movement wants to be taken seriously they have to apply the same rigour and transparency that financial analysts use to determine what makes a good investment,” says Corporate Knights editor Toby Heaps. “A responsible company pays its taxes, covers its pension fund, reduces its toxic releases, and doesn’t poke its nose too often into politics.

“This is the first time that a survey lays all this information bare point by point.”

The top spot in the magazine’s Best 50 Corporate Citizens list goes to Bank of Montreal. The bank was lauded for paying all of its taxes, totaling $1.9 billion, setting it apart from the five in six TSX 60 companies which do not. The report calls CEO Tony Comper’s $7.4 million pay packet “fair” in light of the $3.4 billion the bank earned last year.

“I am extremely proud to be leading an organization professionally and objectively judged to be Canada’s Best Corporate Citizen of the Year,” said Comper. “Given the high premium we place on social responsibility at BMO Financial Group, it is especially gratifying — not just for me, but for many thousands of colleagues all across the enterprise.”

IGM Financial, parent of Investors Group and Mackenzie, ranked third, while Laurentian Bank placed fourth. TD Bank and CIBC were in ninth and 10th place, respectively.

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HSBC predicts Fed nearly finished

(June 1, 2005) The Federal Reserve may soon take a break from its credit-tightening policy, according to an economist with HSBC, based on the latest manufacturing data in the U.S.

The Institute for Supply Management (ISM) manufacturing survey for May saw activity decline to a reading of 51.4, after peaking at 62.8 in January 2004. Since 1989, the Fed has stopped raising rates every time the reading drops below 53 or 54, according to Ian Morris, Chief Economist, HSBC Securities USA.

“As we are now below that at 51.4, it suggests the Fed will stop soon, if history is any guide,” Morris said in a research note. “Of course, one could argue things are different now, given nominal and real rates are still so low. Nevertheless, this historical experience need to be respected.

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Canaccord’s Elford named top analyst

(June 1, 2005) Starmine and the National Post have released their top 10 list of stock-picking analysts, naming Canaccord Capital’s Sara Elford as the number one star.

“Elford had several profitable recommendations last year, particularly in the Industrial Products Industry, where she had a return 62.7% higher than the industry benchmark,” said the Starmine report.

Starmine, a strategic partner of Thomson Financial, measured analysts’ performance based on the return of their stock recommendations and the accuracy of their earnings estimates.

Second and third spots were taken by John Clarke of Octagon Capital Corporation and Doug Cooper of Paradigm Capital.

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Little support found for phased retirement

(May 31, 2005) There is little enthusiasm for phased-in retirement among employers in Canada, according to Morneau Sobeco’s latest “60 Second Survey,” with only 12% of respondents saying they would encourage employees to shift into part-time work leading to full retirement.

Fifty-one per cent of respondents said they would only consider such a plan if the employee suggested it first. The biggest hurdle to phased in retirement, according to 60% of respondents, is that most jobs require full-time attention and cannot be reduced to part-time hours.

Twenty-five per cent said the required re-design of pension and benefit plans would pose too great a challenge. Only 6% felt the main stumbling block is that it would encourage employees to stay too long.

“We expect the idea of phased-in retirement will gradually pick up steam as baby boomers start to reach retirement age in larger numbers,” said Scott Simpson, Managing Partner of Morneau Sobeco’s retirement practice in Ontario. “It is still early days, though, and so the cautious response we saw in our survey is understandable.”

Survey respondents were also not keen on the idea of tapping into pension plans to top up income for semi-retired employees, even if there were no tax or regulatory hurdles to doing so.

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Atlantic insurance brokers consolidate

(May 31, 2005) One of Nova Scotia’s largest insurance brokers, Macdonald Chisholm of Kentville, has acquired Yarmouth’s L.G. Trask Insurance, making the firm one of the largest in the Maritimes.

“The acquisition of L.G. Trask Insurance will allow our insurance brokerage to expand our reach and become the largest distributor of home, auto and commercial insurance in the province,” said Mike Brien, president and CEO of Macdonald Chisholm. “By combining the two organizations, we will be in a position to expand the scope of our advisory services within Nova Scotia.”

The combined brokerage will consist of 20 offices, with a staff of about 150, serving more than 50,000 customers.

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CI to streamline offerings

(May 31, 2005) CI Mutual Funds is seeking unitholder approval for a plan to merge 16 of its funds with overlapping products, changing the underlying holdings of 16 segregated funds in the process.

“With these moves, we are streamlining our lineup while completing the integration of the Clarica-branded mutual funds into the CI lineup,” said Peter Anderson, CI president and CEO. “Altogether, we will be offering Canadian investors a clearer, stronger set of investment options.”

Only one fund will see a change in management, as Sionna Investment Managers takes over management of Clarica Canadian Small/Mid Cap Fund, replacing UBS Global Asset Management. UBS managed the fund before the planned merger with CI Canadian Small Cap Fund, which is being terminated.

CI says it will ensure that the management fee of each continuing fund is the same as or lower than its terminating fund.

The mutual fund mergers will result in changes to the underlying funds of 11 Clarica Portfolio Segregated Funds, as well as the BPI International Equity Guaranteed Investment Fund and BPI International Equity Segregated Fund.

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Dynamic contracts disclosure to ADP

(May 31, 2005) In an effort to meet proposed new disclosure obligations, Dynamic Mutual Funds has contracted ADP Investor Communications, and will use its “Smart Disclosure” service.

Under National Instrument 81-106, investors will be entitled to customized financial statements and management report of fund performance that contain only information specific to that investor’s holdings.

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Tremont announces executive appointment

(May 31, 2005) Tremont Capital Management has appointed Mark Sack to the new position of vice-president, institutional sales.

Before joining Tremont, Sack held senior institutional sales and marketing positions with several large financial institutions, including Fidelity Investments and Maple Financial.

“Tremont is delighted to strengthen our commitment to Canadian institutional investors and consultants. Sack’s appointment will create added depth to our presence in Canada,” said John Hock, Tremont’s executive vice-president and head of global institutional sales.

“Tremont is building on an established retail presence, by offering a significant menu of institutional disciplines with long track records, and a top-notch educational program geared to Canadian plan sponsors, trustees, and consultants,” Hock added.

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Market regulator announces hearing date for RBC-DS execs

(May 30, 2005) Market regulator RS will hold a contested hearing in July to determine if four senior executives at RBC Dominion Securities engaged in manipulative and deceptive trading.

RS alleges that Ian MacDonald, managing director, Canadian equity derivatives; David Singh, director, Canadian equity derivatives; Edward Boyd, vice-president, Canadian equity derivatives; and Peter Dennis, senior equity and derivatives trader engaged in a “manipulative and deceptive method of trading when they effected trades in shares of Royal Bank of Canada and Bank of Montreal in the Market On Close Facility of the Toronto Stock Exchange which involved no change of beneficial or economic ownership.”

The alleged trading offences took place on August 11, 2004. The hearing, which is open to the public, has been scheduled for July 27.

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Fixed exchange rates leading to global economic imbalance, says Dodge

(May 30, 2005) Countries which have chosen to adopt a fixed exchange rate regime are undermining the efficiency of their own economies and creating global imbalance, says Bank of Canada governor David Dodge.

In a speech in Montreal, Dodge noted that the ability of a flexible exchange rate to help with economic adjustment was a major factor behind Canada’s decision to float its currency in 1950.

“By the end of the 1990s, most industrialized economies and a number of emerging-market economies had done the same,” he said noting that other countries, particularly in Asia, are sticking with the fixed rate approach.

“Because of this, global imbalances are growing, and this is increasing the risk of a disorderly correction at some point down the road,” he added. “In addition, the longer the adjustment is delayed, the greater the risk that industrialized nations will take protectionist measures against emerging-market economies that are perceived as not playing by the rules.”

Dodge travels to China, whose exchange rate is fixed, later this week.

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French vote does not signal euro’s demise: report

(May 30, 2005) France’s decision to reject the European Union’s constitution does not mean the union, or the euro, will collapse, says CIBC World Markets. Still, the no vote will make the EU’s enlargement and decision-making process very difficult, the report adds.

As for the markets, CIBC says the impact will be limited, since a no vote was already priced in.

The euro has already depreciated by 7% against the dollar since the beginning of the year, CIBC notes and could fall further this week. “We could also see temporary weakness in euro bonds.” But the overall impact is expected to be short-lived. “By Friday, the constitution issue may have been forgotten,” CIBC predicts.

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Ontario announces rates for 2005 savings bonds

(May 30, 2005) The Ontario government today launched its 11th annual offering of savings bonds.

The five-year step-up bond interest rates are 2.25%, rising to 2.75% in the second year, 3% in the third year, 3.5% in the fourth year and 4% in the final year.

The three-year fixed-rate bond interest rate is 3.1% and the seven-year variable-rate bond offers a 2.35% rate for the first six months.

The bonds, available until June 21, are sold in amounts ranging from $100 to $500,000.

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Accountant suspended by CGA

(May 30, 2005) The Certified General Accountants of Ontario has suspended accountant David Chan for 12 months. The suspension means that Chan can no longer refer to himself as a certified general accountant.

Chan is currently the subject of a criminal investigation by the Toronto Police Fraud Squad, CGA Ontario says. “It is alleged that he has misappropriated client funds. A warrant for Mr. Chan’s arrest has been issued.”

CGA Ontario says it will further investigate a complaint received from one of Chan’s clients.

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