IFIC chair resigns over Norbourg fraud investigation

(August 26, 2005) Investment Funds Institute of Canada chairman, Michel Fragasso resigned his position last night after two companies he is involved in were shut down by Quebec regulators.

Fragasso is chair of Fonds Evolution Inc., and vice president of Norbourg Asset Management Inc. His decision to step down comes after the Autorité des marchés financiers (AMF) announced it is investigating the two companies with the help of the RCMP’s Integrated Market Enforcement Team.

The AMF says nearly $70 million belonging to investors in the Evolution and Norbourg funds were embezzled, there were “misrepresentations” in the firm’s financial statements for the last three years, and a discrepancy of $71 million exists between the latest financial statement and Norbourg’s assets under management.

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Fragasso, a member of IFIC’s board of directors since 1996, was named chairman of the board in September 2004. He also currently serves on the board of directors at FundSERV Inc.

When he was named chair, the industry was facing a different kind of crisis — investors were pulling their assets out of mutual funs and industry regulators were in the middle of investigating market timing allegations at different fund companies. Fragasso was given a mandate at the time to bring industry participants together and build consensus on different issues.

Brenda Vince, president of RBC Asset Management will replace Fragasso at IFIC, serving as acting chair of the board. Robert Frances, president and CEO of Peak Financial Group will remain as vice chair.

“It is unfortunate that Michel has stepped aside,” says Vince. “He has been an integral voice at IFIC for more than a decade and has been well known for helping to build our industry in Quebec.”

Filed by Kate McCaffery Advisor.ca, with files from Doug Watt, kate.mccaffery@advisor.rogers.com