By Staff | June 3, 2003 | Last updated on June 3, 2003
7 min read

(June 6, 2003) The British Columbia Securities Commission (BCSC) has issued penalty against Robert Pierre Lamblin, the remaining principal of Canadian Global Investments, banning him from securities trading for at least 15 years.

Lamblin was found in breach of securities regulations in January 2002, after he sold $20 million worth of “speculative, illiquid and highly risky” securities to conservative investors. The BCSC said that the abuse was aggravated by the fact that the investments were in companies that Lamblin held an interest and participated in management.

Lamblin was faulted for violating “conflict of interest,” “fair dealing,” “KYC” and “suitability of investment” rules. The BCSC has deferred levying a fine against Lamblin, pending further scrutiny. Canadian Global Investments is now insolvent and has not been registered as a mutual fund dealer since February 2001.

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Supreme Court to hear pension surplus case

(June 6, 2003) The Supreme Court of Canada will decide a controversial case involving the distribution of surplus pension assets. Yesterday, the high court agreed to an appeal request from Monsanto. Last year, the Ontario Court of Appeal upheld an earlier decision against Monsanto, ruling that all surplus pension assets must be distributed to employees at the time of a partial plan windup.

In a statement, the Financial Services Commission of Ontario (FSCO) said that until the court proceedings are final, no action will be taken in pension surplus cases relating to plan windups. “Until that time, plan administrators must ensure that adequate assets are maintained in the pension plan to meet their obligations if the Court of Appeal’s decision is upheld,” FSCO said.

The Ontario government has frozen its proposed pension surplus sharing legislation, pending an outcome in the court case.

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IFB offers members E&O coverage

(June 5, 2003) Independent Financial Brokers of Canada (IFB) has unveiled its errors and omissions coverage plan for IFB members, offering $1 million coverage at a starting rate of $789. The coverage is through Willis Canada.

“As the market for professional liability insurance became increasingly challenging, we were even more committed in our resolve to find a solution that would give our members the best coverage available at an affordable price,” says IFB executive director John Whaley.

IFB is still in negotiation for coverage exceeding $1 million.

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Friedberg teams up with Refco

(June 5, 2003) Friedberg Mercantile Group (FMG) has announced the proposed sale of a 50% interest in the company to Refco Futures (Canada) Ltd. Albert Friedberg will retain his position as CEO and chief investment strategist for the accounts currently held by Friedberg.

The companies say the alliance will give customers “access to a more extensive menu of products and services on a global basis,” as Refco is one of the world’s largest brokers of exchange-traded derivatives and options.

The deal leaves the door open for Refco to purchase the remaining 50% stake in FMG in five years. The deal still faces regulatory approval.

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Ontario regulator warns of new investment scam

(June 5, 2003) The Ontario Securities Commission (OSC) is reminding investors to be wary of high-pressure sales tactics after receiving several complaints of unsolicited telephone stock promotions.

Recent abuses have seen unqualified investors persuaded to sign documents stating they qualify as “accredited investors,” allowing the unscrupulous salesperson to sell them an investment without a prospectus. Under the Ontario Securities Act, an investor must have either $1,000,000 in financial assets or a personal income over $200,000 to qualify for the accredited investor exemption.

The OSC says investors should resist high-pressure sales tactics and do their homework before buying any financial product. If a deal sounds too good to be true, it probably is.

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IFIC reports lower fund redemptions for May

(June 4, 2003) Canadian investors continued to cash out of their mutual funds in May to the tune of $700 million, according to IFIC. That’s actually an improvement over April, when redemptions hit $1.6 billion.

“Net redemptions in May improved from the previous month by approximately $900 million, representing a 57% reduction,” said Tom Hockin, president and CEO of IFIC.

Hockin says net assets under fund management could total between $385 billion and $390 billion for the end of May, an increase of 2.1% from April’s $380.2 billion.

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Leading Canadian financial commentator calls for pension guarantees

(June 4, 2003) With record losses on the books of Canada’s private sector pension plans, financial commentator Gordon Pape is calling for the pension fund equivalent of the organization that guarantees bank deposits.

“The stunning revelations that our pension shortfall could be more than $230 billion combined with the news that the federal government has about 60 plans on its ‘watch list’ should be a concern to us all,” said Pape, author of Retiring Wealthy in the 21st Century.

To protect pension savings, Pape argues for a body similar to the Pension Benefit Guaranty Corporation (PBGC) in the U.S. “The PBGC just saved the pensions of some 95,000 workers at Bethlehem Steel,” Pape said. “Moreover, it doesn’t cost taxpayers a cent. It’s financed by premiums paid by individual plans, much like the Canada Deposit Insurance Corporation is financed.

Last month, Canada’s top financial regulator, Nick Le Pan, the federal superintendent of financial institutions, warned that “we cannot guarantee that benefits will be met in all cases. Employers and employees establish pension plans voluntarily. They set benefit levels and promise to fund them accordingly.”

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TD: Investors overlook real estate value

(June 4, 2003) While equities and fixed income investments continue to disappoint, a report from TD Bank Financial Group says Canadians are overlooking the real growth in the value of their homes.

Home values have risen dramatically since 2000 and economists at TD Financial forecast the resale growth of 3.2% over the next decade. Factor in the absence of capital gains tax on the sale of a principal residence and that growth looks even better.

“The expected after-tax 3.2% annual increase is equivalent to a pre-tax return of 5.8% on another income source that is taxed at the average marginal tax rate,” says Craig Alexander, associate vice-president and senior economist at TD Bank Financial Group.

Alexander says that despite the rise in prices, low mortgage rates make home ownership affordable by historical standards.

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Employees prefer public home care services

(June 3, 2003) Faced with growing home care needs, a majority of Canadians covered by workplace benefit plans favour publicly funded health plans over private benefits. That’s the major finding from the 2003 Aventis Health Survey, which polled 1,500 members of employee benefit plans.

The survey also found that employees rate their drug coverage as the most essential component of the healthcare plan, and then disability coverage. Half of plan members would favour higher plan premiums to maintain their plans should their benefits coverage be threatened by increasing healthcare costs.

Aventis Pharma president Jean-Francois Leprince, who noted that a previous survey found Canadians were concerned about taking care of elderly family members, said “the survey results tell us that Canadians expect support to meet the growing need for home care services.”

He also said that “medicines and technology are evolving at a dramatic pace, making the future of home care not only desirable from the patient’s standpoint but also cost-effective for the healthcare system.”

Another survey finding was that employees are expressing increasing confidence in the healthcare system.

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Mawer to merge funds

(June 3, 2003) Mawer Investment Management has called a meeting of unitholders to approve the merger of its Canadian Income and High Yield Bond funds into its Canadian Bond Fund. In addition, Mawer also wants unitholders to approve the transformation of the funds into a multi-class structure.

“Mawer is very excited about this proposal because a multi-class structure of units allows us to better meet specific investor needs,” said managing partner Donald Ferris in a statement. With the merged fund, he added, unitholders would benefit from increased economies of scale.

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Arrow extends purchase period

(June 3, 2003) Arrow Hedge Partners is extending the offering period for its Multi-Strategy Notes, a guaranteed hedge fund product, until June 20. The notes are now available through FundSERV and are designed to return 7% to 9%.

“Investors will have the assurance of guaranteed principal repayment, the benefit of consistent return potential through a fully diversified fund of hedge funds, and comprehensive risk management from an industry leader,” said Arrow managing director Jim McGovern in a statement. He added that the notes are available for a minimum $5,000 investment and are RSP-eligible.

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Templeton makes Quotential portfolio RSP-eligible

(June 2, 2003) Franklin Templeton Investments is making one of its portfolio funds 100% RSP-eligible without resorting to a clone fund structure. Instead, it’s adjusting the individual investments the Franklin Templeton Growth Portfolio can hold, allowing forward contracts on the underlying funds to be part of the portfolio.

Under a traditional clone structure, the RSP-eligible fund holds cash, whose returns are swapped with a counterpart such as a bank for the returns of the underlying fund.

“This change opens the portfolio to a new audience: RSP investors looking for a portfolio of funds that offers long-term growth and have a moderate risk tolerance,” said Franklin Templeton CEO and president Don Reed in a statement.

“With their all-in-one approach, investment portfolio and wrap programs have become very popular with investors,” Reed added. Templeton’s Quotential program has attracted $250 million in assets in just seven months, “one of the best-selling investments of its type in Canada,” Reed said. There are five different Quotential portfolios.

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RBC shuts down one advisor fund, plans to open others

(June 2, 2003) RBC Funds has stopped distributing shares of RBC Advisor Global Fund, citing limited investor interest. The fund will be wound up at the end of August.

RBC also announced that it would add to its existing lineup of 14 load funds. It said that load assets have grown by 7% over the past 18 months, while mutual fund industry assets have declined 5%.

“We are committed to growing with this channel by strengthening our relationships,” said Brenda Vince, president and COO of RBC Funds in a statement. “We have expanded our team of wholesalers across the country and are committed to providing our distribution partners with excellent service and sound solutions for their clients.”

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Regulators urge corporate insiders to check SEDI filings

(June 2, 2003) Securities regulators are warning corporate issuers to complete their supplemental information forms for the System for Electronic Disclosure by Insiders (SEDI) system. SEDI was launched May 5 and insiders will have to file about corporate events within one business day, starting June 9.

Corporate events include mergers, amalgamations, stock splits and consolidations, among other things. Issuers who have not yet filed “issuer profile supplements” may face legal action, regulators say. The supplements include contract information and a complete list of securities that the company issues to insiders.

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(06/02/03) staff


The staff of have been covering news for financial advisors since 1998.