Briefly: “MFDA issues decision against Marlene Legare” and more news

A disciplinary hearing in the matter of Marlene Legare concluded on September 14, 2010 in Vancouver, British Columbia before a three-person Hearing Panel of the MFDA’s Pacific Regional Council, at which time the hearing panel reserved its judgment.

In its decision and reasons dated October 29, 2010, the hearing panel found that the following allegations set out in the notice of hearing had been established:

Allegation #1: Between November 2005 and June 2006, the respondent borrowed $49,650 from client SG to cover personal expenses, thereby placing her own interests above those of her client and giving rise to an actual or potential conflict of interest, contrary to MFDA Rule 2.1.4 and MFDA Rule 2.1.1.

Allegation #2: Commencing August 24, 2007, the respondent failed to attend and give information to the MFDA during the course of an investigation, contrary to section 22.1(c) of MFDA By-law No. 1.

In its decision and reasons, the hearing panel also directed that submissions with respect to penalty shall take place on a date and at a venue to be announced.

Click on the following links for the Decision and Reasons and Notice of Hearing.

– Staff

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IIROC schedules hearing for Paul Ryan Klemke

A disciplinary hearing has been scheduled before a hearing panel of the Investment Industry Regulatory Organization of Canada (IIROC) to hear evidence in the matter of Paul Ryan Klemke.

The hearing concerns allegations that Mr. Klemke made numerous trades in accounts without the clients’ knowledge, consent or authorization; that he violated his know-your-client and suitability obligations in certain trading in client accounts; and that he traded in a security that was not eligible for distribution, contrary to IDA (now part of IIROC) Rules.

Hearing Date: 10 am, Thursday Dec. 15 and Friday Dec. 16, 2010 Location: Calgary Telus Convention CTR., 120-9 Avenue SE, Calgary

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

Specifically, it is alleged that Mr. Klemke violated Investment Dealers Association By-law 29.1 (now IIROC Rule 29.1) by failing to observe high standards of ethics and conduct and engaged in business that was unbecoming and/or detrimental to the public interest when he:

• Made discretionary purchases of a single security in 42 separate client accounts without their knowledge, and/or consent and/or authorization; and

• Engaged in unauthorized trading by redeeming mutual funds in client accounts without the clients’ knowledge and/or consent and/or prior authorization, in order to fund the above purchases; and

• Sold and/or attempted to sell a security to residents of Saskatchewan when it was not eligible for distribution in that province.

It is further alleged that Mr. Klemke failed to use due diligence to ensure trades conducted in client accounts were suitable trades based on factors such as the clients’ financial situation, investment knowledge, investment objectives and/or risk tolerance, contrary to IDA Regulation 1300.1(q)(now IIROC Rule 1300.1 (q)).

IIROC began investigation into Mr. Klemke’s conduct on May 15, 2008. The alleged violations occurred in March and/or April 2008, when Mr. Klemke was a registered representative with a Calgary branch of Jennings Capital Inc., an IIROC-regulated firm. Mr. Klemke is no longer registered with an IIROC-regulated firm.

– Staff

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Sun Life profit rebounds

Good times have returned to Sun Life Financial Inc. Canada’s third-largest insurance company earned $453 million in the third quarter of 2010. Last year, the company lost $140 million during the same quarter.

Sun Life points to an improved credit market and interest rate swaps tempering the impact of lower interest rates for the company’s recovery. A 10% increase over last year, Sun Life is estimated to have $455 billion in assets under management.

Sun Life Asia continued to be a strong performer almost tripling last year’s third quarter earnings of $13 million to $37 million.

In its outlook, Sun Life warned that volatility in the equity markets and a weak economy were continuing factors that could affect the company’s bottom line.

– John Powell

• • •

Manulife posts huge loss

Toronto-based Manulife Financial has been hit with another steep loss.

In the third quarter, Canada’s largest life insurance provider posted a $947 million loss. The loss has been blamed on low interest rates and a $1 billion writedown on Manulife’s U.S. insurance business.

In the second quarter, Manulife lost $2.4 billion. In the year-before period, Manulife lost $172 million.

“Despite the reported results, our underlying earnings were strong,” said CEO Donald Guloien.

“We produced highly satisfactory adjusted earnings in the quarter through our strong franchise in high-growth Asian markets, and our existing platforms in wealth management, pension, and other products in the United States and Canada. At the same time, through a variety of initiatives we bolstered our capital position, materially, reduced interest rate risk and hedged an additional $3.3 billion of variable annuity in-force business.”

– John Powell

• • •

Strong growth for Standard Life

Despite a weak, and at times turbulent, economy, Standard Life Financial is reporting solid gains, thanks to its retail individual investments.

Premiums and deposits in retail investment funds and disability management grew 30% to $300.3 million, up from $230.6 million last year. Standard Life blames interest rates for a slowdown in group defined contribution retirement plans and sales of term funds.

The company also saw an improvement in its assets under management, which rose to $38.2 billion at the end of Q3, up from $35.7 billion a year ago.

“Standard Life successfully took advantage of the opportunities that have arisen since Canadian investors returned to the market after the financial crisis,” said Standard Life president Joseph Iannicelli. “We are speeding up the development of our wealth management business, with a specific focus on helping people with their retirement planning.”

Demand continued to be steady for Standard Life’s Ideal Segregated Funds, with premiums and deposits growing 51% to $147.8 million, and premiums and deposits in Standard Life mutual funds improved by 15% to $107.6 million. These increases were offset by declining revenues from term funds and life insurance, with premiums and deposits for individual products 25% lower at $361.2 million.

Term fund sales in the 2010 Q3 were lower than a year ago. In Q3 2009, volatile stock markets and investor caution had boosted term fund sales to unusual levels.

Premiums and deposits in group business were 5% higher at $796.1 million despite slower market activity. Group insurance premiums rose 8% to $166.2 million. Premiums and deposits in group savings and retirement plans increased 4% to $629.9 million and included a large defined contribution plan and a series of new defined benefit mandates secured in the third quarter.

Although cautious about prospects in the group savings and retirement markets, Standard Life’s earnings are expected to benefit from the growth of its assets under administration and rising equity markets. In November, the company will be moving from a structure divided by line of business to one divided by functional expertise. The goal is for the company to be more flexible.

– John Powell

(11/04/10)