Briefly:

(June 30, 2005) The U.S. Federal Reserve has nudged its trend-setting overnight lending rate higher by 25 basis points to 3.25%. The move was widely predicted and already priced into the market.

Fed chairman Alan Greenspan’s commented that more rate hikes were likely to come, citing inflation threats. Greenspan said additional rate hikes would come — as always — at a “measured pace” and that current rates were “accommodative.”

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AIC to close RSP funds

(June 30, 2005) AIC has become the latest fund company to announce the elimination of its family of RSP funds as a result of Ottawa’s move to abolish the foreign property rule.

“The removal of the foreign content limit means that investors can now invest directly in foreign funds without the current 30% cap on investments,” the firm said in a statement.

Effective July 4, AIC will terminate its forward contracts and its 10 RSP funds will invest directly in the underlying funds.

AIC will terminate the funds on July 22 and investors will receive the equivalent value of their investment in the corresponding underlying mutual fund or pool.

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Liquidnet approved for operations in Quebec

(June 30, 2005) Electronic trader Liquidnet Canada has been approved by regulators in Quebec to operate as a securities dealer and alternative trading system.

“Liquidnet is dedicated to bringing Quebec and all of Canada the deepest liquidity pool possible while solving the institutional investor’s two biggest challenges: accessing liquidity and preserving anonymity,” said company president Eric LeGoff.

Liquidnet launched its Canadian operation in Ontario in July, 2004.

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CIBC reduces MERs on clone funds

(June 30, 2005) CIBC Asset Management is reducing the management expense ratio on its 14 RSP funds, effective July 6.

The changes are a result of the federal budget’s elimination of the foreign property rule for registered plans, the bank said in a statement.

“The removal of the foreign property limit presents excellent opportunities for Canadian investors,” says Murray Douglas, senior vice- president, CIBC Asset Management. “Unwinding the derivatives and reducing MERs on clone funds is the right thing to do for our clients. We are moving quickly to implement these changes.”

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Receiver appointed for Norshield

(June 30, 2005) RSM Richter has been appointed receiver for Norshield Asset Management and Olympus Funds at the request of securities regulators in Ontario and Quebec.

“This appointment authorizes the receiver to take control of all assets and to preserve any documents belonging to the parties,” the OSC said in a statement. “An application is expected to be filed for recognition of the Ontario order in Quebec as soon as possible.”

Last month, regulators began reviewing operations at the Montreal-based firm and concluded that Norshield was “unable or unwilling” to explain the investment structure offered to clients or the location of the funds.

Norshield was suspended by the OSC on May 20 and Quebec’s regulator imposed a similar restriction on June 2.

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AGF appoints Hubbes as CIO

(June 30, 2005) AGF Funds has appointed Martin Hubbes as senior vice-president and chief investment officer. Hubbes succeeds Bob Farquharson, who will remain at AGF as vice-chair.

“I’ve been considering my succession for some time and wanted to ensure an effective transition,” said Farquharson. “I am gratified that a person of Martin’s background and expertise will be assuming responsibilities for this important role.”

Hubbes has been with AGF for 13 years, manages the firm’s Canadian Stock Fund and AGF Canada Class, and co-manages the AGF Global Health Sciences Fund.

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CIBC’s Hunkin announces retirement

(June 29, 2005) CIBC has announced the retirement of CEO John Hunkin, effective August 1, 2005. Hunkin has worked at the bank for 36 years. He will be replaced by Gerry McCaughey, CIBC’s president and chief operating officer. McCaughey will also step into Hunkin’s role on the board of directors.

“Under John’s leadership, we have reduced CIBC’s risk profile, strengthened our balance sheet, delivered significant value to our shareholders and built industry-leading franchises,” said McCaughey. “Our priority will be to build on these achievements by deepening client relationships, enhancing productivity, strengthening credit quality and generating long-term sustainable growth.”

McCaughey has been a member of CIBC’s senior executive team since 1999, during which time he has had responsibility for each of CIBC’s major business units, including CIBC’s industry-leading wealth management, investment banking and credit card franchises.

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Anthony resigns as National Bank Financial president

(June 29, 2005) Kym Anthony is stepping down as National Bank Financial president and will be replaced by Louis Vachon, the bank says.

“After six great years with National Bank Financial, I have decided to step down to take some time for myself and reflect on my next business project,” Anthony said in a release.

“As one of the longest standing CEOs in a very demanding industry, Kym Anthony has achieved many important milestones for National Bank Financial,” Vachon added.

Vachon has been with the bank for nearly 10 years, formerly as vice-president of treasury and financial markets. He was appointed to the bank’s executive committee in 2002.

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MFDA launches investor protection fund

(June 29, 2005) The Mutual Fund Dealers Association of Canada has established the MFDA Investor Protection Corporation, offering protection for clients of fund dealers, in the event of an insolvency.

“We are very proud of this accomplishment and all parties involved deserve credit, including MFDA members, the MFDA and IPC Boards of Directors and the recognizing CSA jurisdictions,” said Larry Waite, MFDA president and CEO. “This is a major milestone in furthering our collective goal of investor protection.”

The MFDA IPC will start with a fund of $30 million, with coverage commencing July 1, 2005. Claims are capped at $1 million per client.

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Feds announce OAS, GIS increases

(June 29, 2005) The federal government has announced the latest scheduled increase in OAS benefits, which will rise 0.7% as of July 1, based on average changes to the CPI. Basic OAS pension payments will rise to $476.97 per month.

The maximum Guaranteed Income Supplement (GIS) and Allowance payments will also increase by 0.7%. The OAS program provides basic income support for 4.1 million seniors with approximately $27 billion in 2003/2004.

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Deadline near for “Sox North” comments

(June 29, 2005) The Institute of Chartered Accountants of Ontario is pointing out that June 30 is the deadline for commentary on the proposed CSA internal control reporting rules for public companies. The institute recently partnered with the Ontario Chamber of Commerce to hold a roundtable critique of the new rules, essentially the Canadian response to the U.S. Sarbanes-Oxley act.

“No one argued with the spirit of rules promoting improved internal control reporting and that the CSA was on the right track with their proposed changes to financial reporting requirements,” said Institute president Brian Hunt. “However, participants felt there must be fine-tuning of the regulations and a better explanation of how companies and auditors are to comply with them.”

Among recommendations, the roundtable urged the CSA to:

• Reassure audit firms that the use of reasonable judgment will be recognized and respected by regulators
• Establish a Canadian equivalent to the SEC Advisory Committee on Smaller Public Companies to look for ways to help small companies comply

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CPPIB appoints vice-presidents

(June 29, 2005) The Canadian Pension Plan Investment Board (CPPIB) has appointed Mark Wiseman as vice-president, private investments and Graham Eadie as vice-president real estate investments.

Wiseman comes to the CPPIB from the Ontario Teachers’ Pension Plan, where he was head of private equity and co-investment. Eadie has served as chief financial officer at two large publicly-traded companies in the manufacturing and retail sectors and as president of Cadillac Fairview.

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OBSI gets new boss

(June 28, 2005) The Ombudsman for Banking Services and Investments (OBSI) has appointed current UNICEF Canada president David Agnew as its new ombudsman and CEO.

Effective August 1, Agnew will take over for the third-party dispute resolution body’s founding ombudsman, Michael Lauber, who is retiring at the end of the month.

Agnew is no stranger to the financial services community. He is the former executive vice-president of Credit Union Central of Ontario and one time head of the Ontario civil service. “[Agnew’s] strong record of leadership in financial services, government and international relations makes him the ideal choice to take the organization into the future,” said OBSI chair Peggy-Anne Brown in a release.

Last year the organization received 3,188 requests and considered 428 complaints — 200 of which were related to banking and 228 were related to investments. Since the body’s creation, the firms involved have fully complied with OBSI’s recommendations.

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Canadians reluctant to discuss estate planning, survey suggests

(June 28, 2005) Unless Canadians start doing a better job talking with their families about important financial issues like estate planning, financial planners could find themselves in the middle of more family feuds.

According to a poll sponsored by Investors Group, Canadians are more apt to find out about their parents wishes for their funeral arrangements than they are about their wishes to leave a legacy for young generations in the family.

Only 27% of adult Canadians whose parents are still alive have met with their parents and siblings to discuss the family estate, while 43% have discussed funeral plans with their parents.

Not surprisingly, the Decima Research poll found that Canadians tend to put off discussions with aging parents as long as they can, even though many of them know discussing these topics early will reduce the threat to their inheritances. The poll found the two main threats to inheritances were government taxes (42%) and competing family rivalries (17%).

Nearly one-third of the respondents said they had difficulty discussing estate plans and 10% said the discussion was very difficult.

Investors Group suggests that Canadians find a non-threatening way to start discussions on issues surrounding estate planning, make sure that no-one feels excluded, and consider having a financial planner sit in on the discussion.

“Open lines of communication are as fundamental to financial planning as pie charts and calculators,” says Debbie Ammeter, vice-president of advanced financial planning at Investors Group.

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Legg Mason to terminate private fund

(June 29, 2005) Legg Mason Canada is closing the private investor series of the Legg Mason Canadian Sector Equity Fund, effective August 30.

On that date, the investments in the private fund will be liquidated and the net assets returned to unitholders.

Legg Mason says unitholders have the option of switching to the Legg Mason Canadian Core Equity Fund prior to the termination date or redeeming their units without fees.

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Female entrepreneurship on the rise, report says

(June 28, 2005) Advisors targeting the small business owner take note, the face of the entrepreneur is changing. According to a report released by CIBC, there will be more than one million women entrepreneurs by 2010.

“Western Canada appears to be the preferred location for women entrepreneurs, with B.C. and Alberta showing the highest rates of growth in the number of self-employed women, followed by Ontario,” said Rob Paterson, senior vice president, CIBC small business banking.

The report points out that self-employed women are becoming more active in lucrative occupations, especially in business and finance. In 1989, only one-third of female entrepreneurs earned more than the average wage. That figure has now reached 50%.

Self-employed women seem to be happy with their career choice, with 82% saying they would do it again if they had the chance to start over. And they don’t appear to be slowing down later in life, with an annual growth rate of about 4% since 1989 among those over 55 years of age.

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CI overhauls brand

(June 27, 2005) CI Funds has announced it will change its name to CI Investments, saying the new brand more accurately reflects the firm’s “broad and diverse lineup of investment options,” which now includes segregated funds, structured products, alternative investments and asset allocation programs, on top of the traditional mutual fund business.

“It also embodies our continuing commitment to providing Canadians with an innovative and high-quality lineup of products and services that will help them meet their financial goals,” said Peter Anderson, CI president and CEO.

The parent company is also changing its name, from CI Fund Management to CI Financial. CI has also adopted a new logo and a new web address, www.ci.com.

CI announced on Friday that it had received regulatory permission for its funds to hold its Toronto-listed stock (CIX).

“The funds now have the opportunity to invest in shares of CI,” said Anderson. “CI Fund Management has been the eighth best performing stock on the index since the company went public in June 1994.”

CI has established an independent review committee — comprised of William Harding, Stuart P. Hensman, Stephen T. Moore and Sharon M. Ranson — to oversee decisions regarding investments in CI stock, a regulatory requirement for such an exemption.

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Mintz to step down from C.D. Howe

(June 27, 2005) The C.D. Howe Institute has announced the retirement of Jack Mintz, president and CEO of the fiscal think-tank since 1999. He will step down in the summer of 2006.

“I am confident that the institute’s excellent reputation and solid financial position will enable it to recruit a top-notch leader who will guide it to even greater success as it approaches its 50th Anniversary in 2008,” said Mintz, who is also the Deloitte & Touche LLP professor of taxation at the Rotman School of Management.

C.D. Howe chairman Tim Hearn says the institute’s board of directors has appointed a search committee and its members will work with a leading executive-recruitment firm in the coming months to find a suitable replacement.

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Regulators smooth the way for windup of RSP funds

(June 27, 2005) The Canadian Securities Administrators has granted mutual fund companies an exemption from the requirement that investors be provided 60 days notice before a fund is terminated.

The move comes in anticipation of the disappearance of RSP or clone funds, as Ottawa’s proposal to eliminate the foreign property rule moves slowly through the legislative process.

The exemption requires fund companies to issue a press release and follow-up with communications to dealers and investors, IFIC explained in a statement issued on Monday. When a clone fund is terminated, investors will become holders of units in the underlying funds that the clone had mirrored.

“Effectively, given the widespread publicity surrounding the elimination of the foreign content restriction, the CSA has now significantly shortened the amount of time it will take for a fund company to terminate its clone funds,” said IFIC president Tom Hockin.

“This is good news for investors who wish to be able to take advantage of the full benefits of investing outside of Canada,” he added.

Several fund companies have already taken advantage of the exemption, including Fidelity, Mackenzie and Investors Group.

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Corporations should “over-disclose” on compensation, says Conference Board

(June 27, 2005) When it comes to executive compensation, there’s no such thing as too much disclosure, according to a new report from the Conference Board of Canada.

“The rule of thumb for corporations should be to disclose,” says David Brown, the author of the report. “Public attention may cause some organizations to experience short-term pain, but the long-term gain is greater transparency and trust.”

Leading compensation committees disclose annualized executive compensation, present value of executive pensions, liability in the event of either normal retirement or unexpected departures and “overhang” of stock options and grants, the report says.

Firms should also design a compensation plan and form a committee of independent directors to develop executive compensation plans and outside experts should report to the committee, the report suggests.

“Compensation levels for executives and board members continue to increase, due in part to demand for their skills and experience and the increased responsibilities they now bear, Brown says. “But many institutional investors are more concerned about the way the levels are determined than the actual amount of compensation.”

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Economist to advise Ontario government

(June 27, 2005) The Ontario government has appointed former BMO economist Tim O’Neill to provide advice on the province’s economic and fiscal policies.

O’Neill — who recently completed an independent study on the federal government’s approach to economic and fiscal forecasting used in budget planning — will be Ontario’s first visiting economist.

“This government is determined to get the best possible advice as it shapes policy for the new Ontario economy,” said Ontario Finance Minister Greg Sorbara. “We are very much looking forward to Dr. O’Neill’s insights on strengthening the Ontario economy.”

“I am excited to be able to contribute to the development of policies which will help Ontario deal with the challenges it is facing,” said O’Neill. “The health of the Ontario economy is important not only to Ontarians but to the rest of Canada as well.”

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