Briefly:

(July 15, 2005) An Ontario court has convicted Andrew Rankin on 11 counts of illegal tipping, but cleared him on 10 charges of insider trading, drawing to a close his six-week insider trading trial.

The former managing director of RBC Dominion Securities’ mergers-and-acquisitions branch was charged with passing insider information to his childhood friend Daniel Duic.

Duic reportedly made millions from the information and lavished Rankin with expensive gifts in return for the tips.

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BCSC finds advisor guilty of fraud

(July 15, 2005) The British Columbia Securities Commission has found that Paul Maudsley and Shaylor Management violated the provincial securities act and defrauded 23 clients.

The clients were apparently convinced to redeem about $1.6 million in mutual fund holdings to invest in other securities. Instead of making the investments, Maudsley used it to fund what one witness described as “his cocaine and gambling habit and alcohol addiction.”

“He simply took their money, or caused Shaylor to do so — about as stark an instance of deceit as there can be,” the BCSC panel said. “The evidence provides clear and convincing proof that Maudsley had subjective knowledge of the deceit, and that it would result in the deprivation of others.”

Sanctions against Maudsley have yet to be announced.

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Pro-Hedge appoints in-house manager

(July 15, 2005) Pro-Hedge has announced another expansion to its team, announcing Les Grober’s appointment as vice president and portfolio manager. Grober, a CFA, is a 10-year investment veteran, was most recently at Polar Securities, where he ran long/short and global macro hedge funds.

“We are very pleased to have Les on board” says Stuart McKinnon, president and CEO, Pro-Hedge. “His vast knowledge and considerable experience will prove a tremendous asset to our existing team of esteemed managers”.

Earlier this week, Pro-Hedge announced that author John Mauldin would sit on the firm’s investment advisory committee, offering insights on research and due diligence.

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Amvescap names new president & CEO

(July 15, 2005) On the heels of CI Funds’ unsolicited and apparently unwelcome takeover bid, British mutual fund firm Amvescap has named Martin Flanagan president and CEO, effective August 1, 2005. He succeeds Charles Brady, who will remain as chairman of the board.

“With his deep industry knowledge, global experience and demonstrated leadership skills, Marty Flanagan is the ideal CEO to lead Amvescap,” said Brady. “With Marty’s strategic vision and Amvescap’s core strengths, our company is well-positioned to capitalize on the attractive opportunities the investment management industry continues to offer.”

Flanagan was most recently president and co-CEO of Franklin Resources, the U.S.-based parent of Franklin Templeton. Amvescap is the parent of AIM Trimark in Canada, and AIM Mutual Funds in the U.S.

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Central bank predicts 2.7% growth

(July 14, 2005) The Bank of Canada has bumped up its economic growth forecast for 2005. The central bank expects growth to rise 2.7% this year, up from 2.6% when the last monetary policy update was released in April.

The bank maintained its forecast for next year at 3.3%.

Outlook for output and inflation is little changed since April, the bank says, and global and Canadian economic developments have been unfolding as expected. However, going forward there is increasing risk of a correction in global imbalances that could weaken demand.

Strong growth in domestic demand in Canada continues to offset the drag from net exports, and the economy is operating close to production capacity, the report says. Inflation is expect to return to 2% by the end of 2006 and some reduction in the amount of monetary stimulus, in other words, interest rate hikes, will likely be required in the near term to keep supply and demand in balance and inflation on target.

Risks to the outlook going forward include oil prices and non-energy commodities, the pace of growth in China and the ongoing adjustment of the Canadian economy to global developments.

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Dynamic offers currency-hedged growth fund

(July 14, 2005) Dynamic Mutual Funds has announced the launch of the Dynamic Power American Currency Neutral Fund, which aims to eliminate currency risks for Canadians seeking exposure to the massive U.S. stock market.

“The US is home to many sectors and industries that don’t exist or are under-represented in other countries” says Noah Blackstein, portfolio manager of the fund. “This fund allows Canadian investors to take advantage of those opportunities, while giving them the option to limit their exposure to currency fluctuations.”

Using a currency-hedging program, the fund will invest in the primarily in units of Dynamic Power American Growth Fund.

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IDA updates training program

(July 14, 2005) The IDA has issued a revised curriculum for its 90-day training program, a requirement for all registered representatives.

A working group composed of industry representatives and CSI staff reviewed the program and released the new guidelines this week.

Although the major themes have not changed, the guidelines provide suggested sub-topics which reflect changing industry trends, practices and products, the IDA says.

For instance, the new curriculum contains a section on hedge funds and on new legislation and regulations that could affect the securities industry.

Dealer firms are responsible for administering the program and ensuring that it is completed by all reps.

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ICICI Bank expands in Canada

(July 14, 2005) India’s largest private sector bank, ICICI Bank is expanding its branch networks in Britain and Canada as part of a strategy to beef up overseas presence. ICICI first entered the Canadian marketplace 16 months ago. According to a release from the company, the bank has opened a second branch in Leicester, England and a fourth branch in Toronto. It plans to open another branch in Victoria in October.

In addition to ICICI Bank Canada’s presence in the greater Toronto area, the company has adopted an online direct banking model, similar to the one used by ING. The full service bank provides retail and commercial banking, trade finance and remittance products, especially for Indian and Sri Lankan immigrants.

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BMO Nesbitt ranked top equity research group

(July 14, 2005) A survey of Canadian institutional investors has ranked BMO Nesbitt Burns the top equity research group. Brendan Wood is an advisory group providing strategic intelligence and consulting to active financial services corporations.

According to a BMO release, the company along with its predecessor firms, Nesbitt Thompson and Burns Fry, have scored top marks every year since Brendan Wood’s annual survey of Canadian institutional equity portfolio managers began in 1980.

This year, Brendan Wood polled 386 investors, asking them to evaluate 591 analysts and score research teams based on the quality of their ideas, the knowledge of their sector, the level of service and value to institutional money managers.

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FPSC unveils latest exam results

(July 13, 2005) The Financial Planners Standards Council has released the results of the latest sitting of the CFP exam, with 454 of 961 individuals passing the exam for a success rate of 47%.

“Congratulations to all the successful candidates for taking this critical step. The CFP examination measures their professional competence, judgment and analytical skills,” said Cary List, executive vice president and COO, FPSC. “They are now one step closer to earning the designation acknowledged throughout Canada and internationally as the gold standard for competence and ethics in financial planning.”

The 47% rate is lower than that of the last sitting in September, when 53% passed. The pass rate for those writing the exam for the first time this June was 53%, down from 60% last fall. The number of people writing the exam has also dipped slightly, from 1,040 to 961.

The exam was held June 11 in 59 locations across the country. The next sitting is scheduled for Saturday, November 19, 2005.

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Ebbers sentenced to 25 years

(July 13, 2005) Disgraced chairman of Worldcom, Bernie Ebbers, has been sentenced to 25 years in prison for his role in the world’s largest accounting fraud.

The recommended sentence of 30 years to life was reduced by the Manhattan judge, who cited Ebbers’ poor health and his co-operation in settling several lawsuits.

Ebbers’ lawyers had sought a further reduction in his sentence, so he would qualify for minimum security prison, but the judge denied the request. The defence team claims to have grounds for appeal and the Canadian-born Ebbers will not have to surrender to authorities until October 12.

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Arrow closes Goodwood fund

(July 13, 2005) Arrow Hedge Partners has announced the closing of the Arrow Goodwood Fund to further direct purchases, as of August 12, 2005. The fund has reached $85 million in assets, the limit Arrow had agreed upon with managers Goodwood Inc.

Investors will still be able to gain exposure to the fund through Arrow’s Multi-Strategy and Global Equity Long/Short fund of funds products.

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CSA issues enforcement report

(July 13, 2005) Canada’s securities regulators pursued 65 enforcement matters in the six-months ending March 31, 2005. During the same period, 88 cases resulted in either sanctions or settlement agreements, the Canadian Securities Administrators says.

Self-regulatory organizations concluded 19 settlement agreements in the same time frame, ordering sanctions in eight cases.

The biggest cases, in terms of financial penalties, revolved around last year’s market timing scandals. Five mutual fund companies and three brokerages were slapped with stiff fines for failing to detect potentially harmful market timing practices.

Despite the relatively large number of enforcement proceedings and settlement agreements in the securities industry over the past six months, very few cases have ended up in the court, the report indicates.

Seven cases of illegal distribution went to the courts as well as one case of misconduct (Portus) and one case of insider trading. Four court cases were classified by the CSA in the miscellaneous category, including two in Quebec where individuals refused to testify before investigators.

Five insider trading cases resulted in settlement agreements and regulators issued decisions wrapping up six market manipulation and fraud investigations.

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Central bank stands pat on rates

(July 12, 2005) The Bank of Canada has announced it will maintain its trendsetting overnight rate at 2.5%.

“Global and Canadian economic developments since the May 25 interest rate announcement have been broadly consistent with the bank’s expectations,” the central bank said in a press release. “In Canada … the economy is operating close to its production capacity.”

In its update, the bank also said that inflation is expected to return to 2% by the end of 2006.

“To support aggregate demand and facilitate the adjustment of the Canadian economy to global developments, the bank has held the target for the overnight rate unchanged since October 2004,” the release said. “However, in line with the bank’s outlook, some reduction in the amount of monetary stimulus will be required in the near term to keep aggregate demand and supply in balance and inflation on target.”

That suggests the bank could hike rates at its next meeting in September.

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IPC buys out Toronto fund dealer

(July 12, 2005) Investment Planning Counsel has announced the purchase of mutual fund dealership Faiz & Associates of Toronto. Financial terms were not released, but $100 million in mutual fund assets will be transferred from Faiz to IPC. In addition, Faiz and Associates’ licensed financial advisors have joined IPC.

“Our agreement with Faiz & Associates supports Investment Planning Counsel’s strategy of attracting the industry’s top advisors who offer highly innovative products and services and build strong connections with our clients,” said Chris Reynolds, president, IPC. “This demonstrates that Investment Planning Counsel remains a top choice for independent financial professionals who seek exceptional service and support in building their practices.”

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TD expands in the U.S.

(July 12, 2005) TD Bank has announced the planned acquisition of Hudson United, a regional bank operating in the northeast U.S., through its American subsidiary, TD Banknorth. The deal involves $1.9 billion US in cash and stock, but still requires shareholder and regulatory approval.

“We are pleased to support [TD Banknorth chairman, president and CEO] Bill Ryan and his team in this strategic acquisition,” said Ed Clark, president and CEO, TD Bank Financial Group. “This transaction delivers on our shared vision for growth and marks a significant milestone in TD Banknorth’s expansion strategy.”

The acquisition will bolster TD’s presence in Connecticut and eastern New York, while adding branches in New Jersey and Philadelphia.

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OpenSky launches new series of notes

(July 13, 2005) OpenSky Capital has launched Series 2, Index Optimizer US$ Notes, which the firm says offer investors access to eight diversified world class indices, with 100% capital protection at maturity.

The notes have a maximum 11.1% compounded annual rate of return over eight years, for a potential final value of $232.12 US per note at maturity. Investors may look back and lock in the return of the best performing index (from settlement date) each year among the remaining eligible indices.

Index Optimizer US$ Notes will be available until August 12, 2005 at $100 US per note, with a minimum investment of $1,000 US. They carry an up-front selling commission of 4%.

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Former SRI leader moving into politics

(July 12, 2005) Deb Abbey, founder of Real Assets Investment Management, hopes to run for mayor in Vancouver. Abbey, known for her work in socially responsible investing, will seek the mayoral nomination for Vancouver’s Coalition of Progressive Electors, according to a published report.

Abbey told The Georgia Straight that her campaign issues would include environmental sustainability, social justice and affordable housing.

She left Real Assets last month to pursue other opportunities.

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AGF sells back office unit

(July 11, 2005) AGF Management has announced it will sell off its subsidiary, Unisen Holdings, to Citigroup’s Global Transaction Services, effectively outsourcing the fund company’s back office operations.

Unisen will be fully integrated into Citigroup and will continue to service all existing clients. Unisen will continue to service AGF and AGF mutual funds under a 10-year agreement effective after closing.

“This agreement represents a huge win for AGF shareholders, clients and employees,” said Blake Goldring, president and CEO, AGF. “We can now focus fully on our core investment management business and have created significant value for AGF shareholders. By partnering with a large global provider like Citigroup, we can drive further economies of scale and give our clients access to the best in professional client services and administrative processing.”

The $122 million cash deal is expected to be completed by the end of the year. About 100 of Unisen’s staff will return to AGF, while 950 will stay with the firm through the transfer of ownership.

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Economists offer rate advice

(July 11, 2005) With the Bank of Canada set to announce its latest decision on interest rates on Tuesday, the C.D. Howe Institute’s Monetary Policy Council is calling for no change to the key overnight lending rate.

“With housing and consumer spending already very strong, they judged that some flagging would likely offset possible upsurges in investment on structures, and that a sudden emergence of an inflationary output gap was improbable,” the institute said in a press release. “Group members noted survey evidence of higher inflation expectations, but were inclined to think that these responses gave too much weight to headlines about higher energy prices and neglected disinflationary pressures in other markets.

The council is made up of bank economists and academics, including: Don Drummond, TD Bank; Warren Jestin, Bank of Nova Scotia, David Laidler, University of Western Ontario; Angela Redish, University of British Columbia; Nicholas Rowe, Carleton University; and Craig Wright, RBC Financial.

Laidler and Rowe dissented from the majority of the council, calling for a 25 basis point hike to 2.75%. When asked for their opinion on the September rate decision, however, only Jestin maintained the 2.5% target, with the rest agreeing that 2.75% would be appropriate.

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KPMG sees private bank consolidation

(July 11, 2005) The wealth management and private banking sectors are set for a massive wave of consolidation, with 87% of North America’s firms indicating they plan to propel growth through acquisitions over the next three years, according to KPMG’s Global Private Banking and Wealth Management Survey.

“As onshore private banking in Canada is concentrated in the hands of the big banks, the focus of wealth management M&A activity within Canada is, and will continue to be, the money management sector,” the report says. “This characteristic distinguishes Canada from Europe, where stand-alone private banks are commonplace.”

The North American market expressed the strongest desire to grow through acquisition, while 54% of Asia-Pacific firms said organic growth was central to their strategy.

“As the Asia Pacific market is much younger than the market here in North America, its opportunities for organic growth are stronger,” said Georges Pigeon, a financial institutions professional at KPMG’s Advisory Services Practice in Montreal. “In comparison, the market in North America is already highly saturated with less room for organic growth, forcing buyers to pay significantly higher prices to acquire a competitor.”

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Mauldin joins Pro-Hedge

(July 11, 2005) Pro-Hedge Funds has announced the addition of John Mauldin to their team. Mauldin is a New York Times best selling author, known also for his weekly e-mail newsletter.

Mauldin will sit on the Pro-Hedge Investment Advisory Committee, offering his insights on research and due diligence for investments for the fund.

“I am quite excited about joining forces with Stuart McKinnon and Pro-Hedge, to be able to bring an elite group of hedge funds managers from around the world to Canadian investors,” said Mauldin. “Pro-Hedge also adds the ability to source the best of Canadian managers to our worldwide network. It is a perfect fit and one that will work to the betterment of the clients of both firms.”

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RBC launches commodities-linked note

(July 11, 2005) RBC Financial Group has launched the RBC Principal Protected Commodity Linked Notes, Series 1, which offers returns based on a basket of commodities including aluminum, crude oil, copper, lead, natural gas, nickel and platinum.

The notes offer 125% exposure to the commodity basket, are RRSP eligible and available until July 26, 2005. The notes are available through FundSERV.

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