Briefly: “AlphaPro offers preferred share ETF” and more news

AlphaPro Management has launched the Horizons AlphaPro Preferred Share ETF, Canada’s first actively managed preferred share exchange traded fund.

The Preferred Share ETF began trading today on the Toronto Stock Exchange under the symbol “HPR”. The sub-advisor to the Preferred Share ETF is Natcan Investment Management Inc., which also managed the Horizons AlphaPro Corporate Bond ETF.

“We’re very happy to be working with Natcan once again. Their fixed income team has done a great job,” said Ken McCord, President of AlphaPro. “We expect more of the same with the Preferred Share ETF based on our belief that an active strategy can overcome many of the limitations found in trying to replicate a preferred share index.”

The investment objective of the new ETF is to provide dividend income while preserving capital by investing primarily in preferred shares of Canadian companies, although it may also invest in U.S. preferred shares, North American fixed income securities, and Canadian equity securities and ETFs that issue index participation units.

“Preferred shares really hit a sweet spot for many Canadian investors,” McCord said. “They offer attractive, tax-efficient yields and are generally less volatile than common shares.”

The announcement comes a day after BlackRock Asset Management launched its own preferred share ETF, which differs in that it is passively managed.

Slow growth seen for Ontario

Ontario’s economy will grow more slowly in 2011, according to a new economic forecast released today by Central 1 Credit Union. This is partially due to the effect of the continuing slump in the U.S.

The province’s gross domestic product will rise 2.4% in 2011, compared to 3.7% this year, with a slight uptick in 2012 to 2.5%. Looking at the next three years, Central 1 says the auto manufacturing sector will lead Ontario’s growth as it rebounds from deep recession lows.

“The auto industry will surge ahead more than 30% from the depths it fell to in 2009,” said Helmut Pastrick, Central 1’s chief economist. “Plummeting vehicle sales and plant closings last year marked a low point for the sector but we’re seeing these factors reversed through 2013.”

Government spending will slow but business investment will be helped by the higher value of the Canadian dollar and lower taxes, which have been reduced as a counterbalance to the Harmonized Sales Tax (HST). In addition, Central 1’s forecast expects the Canadian dollar will break through parity with the U.S. dollar and stay above parity at times during 2011.

The housing market and job markets are also expected to undergo a shift in 2011. Ontario house sales will continue to rise early in 2011, with prices hitting record highs next year. On the jobs front, Pastrick expects the unemployment rate to decline from the current 8.6% to 8.3% in 2011, with a continual decline over the next few years. He expects that thousands of new jobs will be created, but the large number of people seeking work will keep the unemployment rate high.

Northern Ontario should experience relatively strong growth as both forestry and mining are expected to rebound from their 2009 lows. Last week Vale Inco announced about $3.4 billion in expenditures are slated for Ontario to upgrade mining and processing facilities at the company’s century-old operations in Sudbury.

Overall, Canada’s economic growth generally mirrors the U.S. through 2013 although at a higher rate of growth. “The most significant difference between Canada’s economy and the U.S. are the stronger consumer and business investment sectors,” said Pastrick.

IIROC sets hearing date for Gary Williamson

A hearing has been scheduled before a Hearing Panel of the Investment Industry Regulatory Organization of Canada (IIROC) to hear evidence and submissions in the matter of Gary John Williamson.

The hearing concerns allegations that Mr. Williamson entered orders to purchase securities with the intention of establishing a high closing bid price, thereby artificially improving the performance of an inventory account for which he was responsible.

The hearing is open to the public, unless the panel orders otherwise. The panel’s decision will be made available at www.iiroc.ca.

Hearing Date: 10:00 a.m., February 22 and 23, 2011 Location: Legal Transcript Services, 390 Bay Street, Suite 1102, Toronto

Specifically, the allegations are that Mr. Williamson entered orders on the TSX Venture Exchange (TSX-V) that he knew or ought reasonably to have known would create or could reasonably be expected to create an artificial bid price contrary to UMIR 2.2(2)(b) and UMIR Policy 2.2.

IIROC began the investigation into Mr. Williamson’s conduct in November 2008. The alleged violations occurred between January 1, 2008 and February 29, 2008 while he was a Registered Representative with Global Maxfin Securities Inc., an IIROC-regulated firm. Mr. Williamson is presently employed at Integral Wealth Securities Ltd., an IIROC-regulated firm.

IIROC disciplines Patrick Cooney, Jory Capital

A Hearing Panel of the Investment Industry Regulatory Organization of Canada (IIROC) has found that Jory Capital Inc. and Patrick Cooney, Jory’s Chief Executive Officer, President and sole director, violated IIROC Rules and the Universal Market Integrity Rules (UMIR) by failing, in the case of Mr. Cooney, to take measures to ensure the firm met compliance standards with regard to the monitoring of regulatory capital and the reliability of financial reporting; and in the case of Jory, by failing to maintain adequate risk adjusted capital.

The panel announced its findings in a decision dated November 12, 2010. The panel will meet at a future date to determine the appropriate penalty.

Specifically, the panel found that the following violations had been committed:

• Mr. Cooney failed to ensure that Jory design, establish, oversee and implement an effective financial compliance program to ensure proper compliance with regulatory requirements regarding maintenance of adequate risk adjusted capital (RAC), monitoring of regulatory capital and reliability of financial reporting, contrary to IIROC Rules 29 and 2600.

• Mr. Cooney failed to ensure that Jory establish, maintain, and enforce a supervisory system, contrary to Rule 38; and failed to ensure that Jory develop and implement a trade supervision policy, as required by UMIR 7.1.

• Mr. Cooney engaged in conduct unbecoming and detrimental to the public interest by failing to ensure that Jory fulfilled representations provided to IIROC, contrary to IIROC Rule 29.1.

• Jory failed to maintain its RAC greater than zero on January 24, 2008, during the months of June to October 2009 and again on April 14, 2010, all contrary to IIROC Rule 17.1.

IIROC formally initiated the investigation into Mr. Cooney’s and Jory’s conduct on September 28, 2009. The alleged violations occurred between 2005 and 2009 when Mr. Cooney was an Approved Person employed at the Winnipeg office of Jory, an IIROC-regulated firm. Mr. Cooney continues to be registered in the same capacity at the same office.

IIROC imposes penalty on Bradley Trites

A Hearing Panel of the Investment Industry Regulatory Organization of Canada (IIROC) has imposed a permanent ban against Bradley Ferris Trites after finding that he failed to co-operate with an IIROC investigation. The panel also ordered Mr. Trites to pay a $25,000 fine and $4,500 in costs.

The panel announced its findings and the penalty at a hearing held on September 30, 2010 in Vancouver, British Columbia. The panel’s written decision, dated October 27, 2010, is available on the IIROC website.

Specifically, the Hearing Panel found that Mr. Trites breached IIROC Rule 19.5 when he refused and/or failed to attend an interview and give information as part of an IIROC investigation into his conduct. The underlying investigation concerned complaints made to IIROC by four of Mr. Trites’ clients alleging he had engaged in discretionary trading, unsuitable investments and misrepresentation. IIROC was unable to complete the investigation without interviewing Mr. Trites.

The permanent ban precludes Mr. Trites from approval in any capacity with IIROC. In its decision, the panel explained, “We consider Mr. Trites’ failure to attend IIROC’s interview to be a serious matter, which warrants a penalty which will prevent Mr. Trites from participating in IIROC in the future and will discourage others, including others who have already resigned from IIROC, from ignoring their regulatory obligations.”

IIROC began its formal investigation into Mr. Trites’ conduct on October 31, 2008, while he was a Registered Representative with the Kelowna, B.C. branch of Canaccord Genuity Corp., an IIROC-regulated firm. The Rule 19.5 violation occurred while Mr. Trites was no longer registered with IIROC.

IIROC sets date for Rocco Cornacchia, Northern Securities

A hearing has been scheduled before a Hearing Panel of the Investment Industry Regulatory Organization of Canada (IIROC) to hear evidence and submissions in the matters of Rocco Tony Cornacchia and Northern Securities Inc. These matters are related and the Hearing Panel will review them together.

The hearing concerns allegations that Mr. Cornacchia had some of his clients participate in an investment in a private placement which was based on an exemption for which they did not qualify. It is also alleged that Mr. Cornacchia failed in his know your client obligations by not updating client account forms.

At the same time, the hearing also concerns allegations that Mr. Cornacchia’s firm, Northern Securities, facilitated those purchases without ensuring that the clients qualified for the exemption. It is also alleged that Northern failed to have the proper procedures, training and guidance in place to ensure their staff understand such private placements and the exemption requirements.

Hearing Date: 10:00 am, March 8, 9, and 10, 2011 Location: Reportex Agencies Ltd., 925 West Georgia Street, Suite 1010, Vancouver, British Columbia

The hearing is open to the public unless the panel orders otherwise. The panel’s decisions and reasons will be made available at www.iiroc.ca.

Specifically, it is alleged that Mr. Cornacchia engaged in conduct unbecoming and detrimental to the public interest, contrary to IIROC Rule 29.1, when he:

(a) Facilitated the participation of 12 clients in a private placement for which the issuer relied on the accredited investor exemption from the registration and prospectus requirements of the British Columbia Securities Act, even though the clients did not qualify for the exemption.

(b) Failed to use due diligence to remain informed of the essential facts of as many as 12 clients by failing to update the New Client Application Forms for those clients.

The specific allegations against Northern are that it:

(a) Facilitated purchases of a private placement in client accounts pursuant to the accredited investor exemptions of the British Columbia Securities Act without ensuring that the clients qualified for the exemption, contrary to IIROC Rules 1300.1(a) , 1300.2, and 2500.

(b)Failed to establish and maintain investment review or approval procedures regarding private placements pursuant to accredited investor exemptions, and failed to establish and maintain sufficient training and guidance to its approved persons to ensure clients properly qualified for the investments, contrary to IIROC Rule 29.27, 1300.2, and 2500.

IIROC began the investigation into Mr. Cornacchia’s conduct on July 31, 2008 and into Northern’s conduct on April 8, 2009. The alleged violations occurred when Mr. Cornacchia was a Registered Representative at the Vancouver branch of Northern Securities Inc., an IIROC-regulated firm. Mr. Cornacchia is still employed as a Registered Representative at Northern.

(11/23/10)