By Staff | March 6, 2006 | Last updated on March 6, 2006
15 min read

(March 10, 2006) Quebec’s Autorité des marchés financiers (AMF) announced today that it is filing charges against former Norbourg president Vincent Lacroix. The regulator says it is being very careful in filing charges under the Securities Act in order to avoid hindering any criminal proceedings that may be launched by the Integrated Market Enforcement Team (IMET).

The AMF is seeking a sentence of five years less a day in prison for Lacroix, plus fines between $20,000 and $5,000,000 for each instance where he is found to have manipulated the price of mutual fund units and provided regulators with misleading documents — particularly financial statements, annual reports and annual information forms. Overall, the charges include 27 counts of price manipulation and 24 counts of document misrepresentation.

“Mr. Lacroix misappropriated the funds of thousands of investors and he continues to take steps to hamper procedures,” says AMF president and CEO, Jean St-Gelais. “He is contemptuous of investors and institutions alike. Moreover, far from expressing any regret for his conduct, he publicly claims that he is being victimized. The message must be clear. It is unacceptable for defrauders to have an easy ride.”

Since the September 30, 2005 report prepared by administrators of the Norbourg and Evolution funds, the AMF says it has identified 137 irregular withdrawals, totalling more than $115 million. The original reports found a discrepancy of $130 million between the financial statements of the Norbourg Group and the assets under management being held by securities custodian, Northern Trust.

The AMF says Lacroix used investor’s assets to maintain a number of his companies that were operating in the red. In order to conceal the misappropriation, the AMF says a scheme was then set up to alter Northern Trust account statements.

Along with the new charges against Lacroix, the AMF has also added KPMG, accounting firm Beaulieu Deschambault, Northern Trust, Concentra Trust and Placements Norbourg to the list of defendants it has claims against.

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Hewitt Canada’s Ron Lloyd moving to boutique firm

(March 10, 2006) Ron Lloyd, president of consulting for Hewitt Associates Canada, is stepping down and moving to a boutique investment management firm. After 20 years with Hewitt, Lloyd is moving to Toronto-based Gluskin Sheff.

Gluskin Sheff is an independent investment firm that manages portfolios of $2 million or more for a variety of leading North American and international business people, charitable institutions, trusts, estates and pension funds. Of the $4 billion in total assets with the company, about 20% is held in pension funds.

Jeremy Freedman, managing director and chief operating officer for Gluskin Sheff, said Lloyd’s role will be in all areas of product development and he will also assist clients in structuring their portfolios. His title will be vice-president when he joins. “We’re really excited to have Ron join our team,” said Freedman.

Lloyd was unavailable for comment but is expected to start at his new job on April 3. In the interim, senior consultants Zahid Salman in Toronto and Norah Joyce in Vancouver will assume Lloyd’s duties at Hewitt. According to a Hewitt official, Lloyd is leaving on good terms and Hewitt is considering its options for his replacement.

(Filed by Joel Kranc, BenefitsCanada)

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CSA unveils reporting requirements proposal

(March 10, 2006) The Canadian Securities Administrators (CSA) has released proposals that would require all publicly-traded companies in all Canadian jurisdictions to report on the effectiveness of their internal controls over financial reporting, as early as December 31, 2007.

Following industry consultations, the CSA decided to drop an earlier proposal that would have required companies to obtain an external auditor’s opinion of management financial reporting controls and their effectiveness.

“All members of the CSA have agreed on an effective way to improve the quality, reliability and transparency of financial reporting for investors by requiring disclosure,” says CSA chair and president of the Autorité des marchés financiers (AMF), Jean St-Gelais.

The proposed rules would apply in all Canadian jurisdictions to all companies listed on the TSX and TSX Venture exchanges. To allow enough time for companies to plan for and implement the activities needed to support the new disclosures, the CSA says the rules will be in place for the financial years ending on or after December 31, 2007, at the earliest.

Under the new requirements, the CEO and CFO of reporting issuers or persons performing similar functions, will be required to certify that they have evaluated the effectiveness of their internal controls over financial reporting processes. MD&A documents will require disclosure including a description of the process used for evaluating internal controls and conclusions about the company’s financial report processes.

The CSA plans to seek public comment on the proposed requirements and related amendments, later this year.

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Raftus takes over at Seamark

(March 10, 2006) SEAMARK Asset Management today announced that Stuart Raftus, former COO of Rockwater Capital and president of its investment dealer subsidiary, Blackmont Capital, will take over as president and CEO of SEAMARK, effective immediately.

“Stuart Raftus is the ideal choice to be SEAMARK’s chief executive officer,” says company chairman and former CEO, Peter Marshall. “He brings an impressive record as a leader and builder of companies as well as strategic insights into the investment industry.”

Marshall, who has served as SEAMARK CEO for more than 20 years, says he will continue on as the company’s chairman and chief investment officer.

In a separate announcement, Rockwater Capital announced it is promoting Gerald Throop, president of capital markets at Blackmont Capital, to president of the company, while Bruce Kagan, head of Blackmont’s private client group, has been appointed executive vice president and head of wealth management at Blackmont, all subject to regulatory approval.

“We congratulate them on their expanded roles and look forward to their continuity leadership and dedication,” says Rockwater president, William Packham. “We would also like to thank Stuart for his valuable contribution to our success over the last couple of years and wish him well in his new endeavor.”

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New finance minister confirms GST cut

(March 9, 2006) In his first speech as federal finance minister, Jim Flaherty said his government would follow through on a promise to reduce the GST by one percentage point. The change will likely be included in the Tories’ first budget, expected in April.

Speaking on Thursday to the Whitby Chamber of Commerce, Flaherty said the tax initiative is one of Prime Minister’ Harper’s five main priorities and will be “front and centre” when Parliament resumes in the spring.

“Of course, it’s not the only tax relief taxpayers will see, Flaherty added. “We also want to lighten the tax burden for business people.”

He said the feds would also move forward on reducing corporate taxes and eliminating the federal capital tax.

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Montreal Exchange recognized in France

(March 9, 2006) The Montreal Exchange has been deemed a “recognized market” by securities regulators in France, which carries the same moniker as the Quebec regulator, l’Autorité des marchés financiers.

The international recognition allows the Montreal Exchange to connect French market participants directly to its market, allowing them to trade in Canadian derivative products. The exchange has already earned this recognition with regulators in the U.S and Britain.

The bourse recorded a 54% increase in daily market activity in February 2006, compared to the same month a year earlier. Foreign participation makes up more than half of the bourse’s trading activity.

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IDA launches hearing

(March 9, 2006) The IDA has announced it will hold a disciplinary hearing into the activities of Robertson Rodger Dow, pursuant to IDA By-law 20.

Dow is alleged to have accepted orders “from an individual he knew or ought to have known to have had a history of securities violations and/or an association with organized crime.” The alleged transgressions took place between 2002 and 2004, while Dow was an approved person at Octagon Capital Corporation.

The hearing will convene at 10:00 am on Tuesday, June 27th, 2006, in Toronto.

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AIM seeks approval for 2 fund amendments

(March 9, 2006) AIM Trimark Investments has proposed amendments to the investment objectives of its Trimark Government Income Fund and the Trimark Diversified Income Class.

The company is seeking unit holder approval which would allow the Government Income fund to invest in high quality corporate debt as well as foreign issues.

The proposed changes for the Diversified Income fund would not change the fund’s strategy, the firm says, but will clarify the language used to describe its long-term total return approach as a means of funding regular monthly distributions.

A meeting is slated for July 27, 2006 in Toronto. If approved, these proposed changes will take effect in mid-August 2006.

• • •

ASC welcomes five new members

(March 9, 2006) The ASC has announced the appointment of five new commission members. Members of the ASC are named by the Minister of Finance, currently Shirley McClellan, and sit on the commission for a three year period.

The new appointments include: Beverly A. Brennan, FCA, former chair of the Canadian Institute of Chartered Accountants; Allan L. Edgeworth, a geological engineer; The Honourable J.C. Major, a retired Supreme Court of Canada justice; former RBC Dominion Securities retail broker, Neil W. Murphy and Karen A. Prentice, Q.C., former executive vice-president and corporate secretary of ENMAX Corporation.

The appointees will join the Alberta Securities Commission as independent members effective April 1, 2006.

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Former Nasdaq Canada president joins consultancy

(March 9, 2006) Former Nasdaq Canada president Helen Kearns is joining independent consulting firm R.S. Bell & Associates. Kearns has more than 20 years experience in the investment industry and currently sits on the board of the Ontario Teachers Pension Plan.

“Her insights on the investment process will particularly welcomed as we continue to strive to provide to our clients an institutional level of knowledge with a personal level of service,” says company president Rob Bell.

Nasdaq closed its Canadian office in July, 2004.

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Richardson Partners reaches $5 billion in assets

(March 8, 2006) Richardson Partners Financial has topped $5 billion in assets under management, the firm announced on Wednesday, crediting the relationship building skills of its advisors.

“Our environment is free of bureaucracy as well as competing internal interests,” says company president Sue Dabarno. “Investment advisors can simply focus on meeting the unique needs of their clients. This is reflected by our investment advisors’ success in transitioning their practice seamlessly to our firm.”

On average, Richardson advisors manage more than $119 million and the firm claims to have the highest average client account size in the country.

“Our commitment to the firm is not only clear, but consistent with the way our other corporate assets are managed,” said Hartley Richardson, president and CEO of James Richardson & Sons, which controls the firm. “We intend to build Richardson Partners Financial into a dominant force, supported by the right culture, and guided by the right values.”

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RBC Insurance streamlines application process

(March 8, 2006) RBC Insurance has launched a new underwriting and application process for its Term 10 and Term 20 products, aimed at making the process simpler for insurance reps and clients.

The firm has launched RBC Illustrations, which integrates the RBC Insurance MAX and Sales Advisor software and offers a single resource that supports reps through all stages of both the individual life and living benefits insurance sales process.

“RBC Insurance is committed to helping insurance representatives grow their business,” said John Young, president and CEO, RBC Life Insurance “Our enhanced Term 10 and Term 20 products simplify the application process making it easier for you and your clients to apply. And RBC Illustrations is another value-added benefit that makes analyzing client needs much more convenient and efficient.”

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Manitoba tables business friendly budget

(March 8, 2006) The government of Manitoba has tabled a new budget that signals the province is “open for business,” according to tax expert Evelyn Jacks.

Among the highlights of the budget, the government is cutting the corporate general tax rate in stages, to 14.5% effective retroactively to the beginning of this year, dropping to 13% by July 2008.

The small business tax rate, applied on the first $400,000 of taxable income from a small business corporation has been slashed in half to 4.5% and will be cut again January 1, 2007, to 3%.

On the personal tax front, the middle tax bracket will be reduced from 13.5% in 2006 to 13% in 2007 and the basic personal amount will be increased to $7,834, in 2007, up another $100 from the 2006 amount.

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B.C. firm goes international

(March 8, 2006) An Abbotsford, B.C.-based financial services firm has launched an expansion into the U.S. Graydon Elliott Financial Group has purchased Northwest Consulting LLC, a U.S. brokerage firm registered with the National Association of Securities Dealers (NASD).

“Our business model has always had a strong cross-border component and we had been looking for an opportunity in the US for some time,” said Rodney Gelineau, President and CEO of Graydon Elliott. “We are pleased with our acquisition and we are working on a strategy to continue our expansion efforts.”

Northwest Consulting LLC will be re-branded as Graydon Elliott Capital LLC and will retain its president, Craig Jackson. The acquisition was completed March 1, 2006.

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Commodity prices softer in February

(March 8, 2006) The overall price of commodities fell for the second consecutive month in February, according to BMO Financial’s Commodity Price Index. The total index declined 3.3% to a reading of 198.0, with 1993 prices serving as the base “100” for the index.

“Commodity markets are expected to remain buoyant in 2006, coming down only a little from record levels in 2005,” said Earl Sweet, assistant chief economist, BMO Financial Group. “However, this would represent a significant loss of momentum in the Index, given that the past three years have seen growth rates averaging 21%.”

The decline was led by falling energy prices, as oil and gas prices dropped 8%. Forestry products were the only other category in decline, falling 0.4%. Agricultural commodities firmed by 0.8%, but the strongest increases were among metals and mineral prices, which climbed 3.5%.

“Gold was lifted, in part, by geopolitical concerns while supply worries and strengthening demand spurred base metals,” according to Sweet. “Low inventories, continued solid demand, and limited production growth in the near term should keep prices well supported in 2006.”

On a year-over-year basis, forestry is the only sector to post a decline, with prices falling 5.1%.

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AGF Elements hits “quarter billion” mark

(March 8, 2006) AGF Funds has announced it has attracted more than $250 million to its AGF Elements fund-of-funds product in the three months since it was launched.

“AGF Elements demonstrates our commitment to our advisors and their clients,” said Randy Ambrosie, executive vice-president, sales and marketing, AGF Funds. “They asked for a product that provides all the essential elements of successful investing in one simple solution, and we delivered.”

AGF Elements offers five different portfolios. So far, AGF says, the majority of investors have chosen the balanced portfolio — with a 60-40 split between equities and fixed income — followed by the 100% equity global portfolio.

Wilshire Associates has provided assistance in the construction of the portfolios, and conducts quarterly reviews, making recommendations for rebalancing and dynamic asset allocation.

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Mackenzie launches two currency-hedged classes of U.S. funds

(March 7, 2006) Mackenzie Investments has created new currency hedged versions of the Mackenzie Universal American Growth Capital Class and Mackenzie U.S. Growth Leaders Capital Class funds.

With the new products, investors can hedge any or all of their investment against fluctuations between the Canadian and U.S. dollar and may switch between the two classes without triggering a taxable event.

“Canadian investors have watched our dollar rise strongly against the U.S. currency over the past few years. If they’ve been invested in unhedged U.S. equities, they may have received a diminished return, even if the stocks have gone up,” says David Feather, president of Mackenzie Financial Services. “These new currency-hedged funds give investors greater choice and the ability to participate in the growth of U.S. equity markets while maintaining control over their exposure to the U.S. dollar.”

Bluewater Investment Management and Waddell & Reed will continue to manage the fund’s portfolios, while Mackenzie manages the hedging program. Returns generated from the hedged classes of shares will represent the performance of the fund’s portfolio holdings plus the performance of a currency hedge.

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Bank of Canada raises overnight rate

(March 7, 2006) In a widely anticipated move, the Bank of Canada announced this morning that it is raising its target for the overnight rate by one-quarter of on percentage point, to 3.75%. The corresponding Bank Rate now sits at 4%.

The Bank says information on the Canadian and global economies received since the January Monetary Policy Report Update has been inline with expectations. Even though the Canadian dollar has recently moved above the range assumed in the update, both CPI and core inflation have come in as expected. “Overall, indications are that the Canadian economy is continuing to operate at its full production capacity.”

“Recent data to not alter the Bank’s outlook for growth and inflation, including its assessment of risks, as set out in the January Update. Consistent with this view, some modest further increase in the policy interested rate may be required to keep aggregate supply and demand in balance and inflation on target over the medium term.”

A full analysis of current economic developments and trends will be published in the next report at the end of April, following the Bank’s next scheduled date for announcing new target overnight rates.

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CNQ unveils new trading system, challenges the TSX

(March 7, 2006) Canadian Quotation and Trading System (CNQ) unveiled it’s new high performance alternative market for Canadian equity securities, last night in Toronto.

The system, dubbed Pure Trading, offers high capacity, low latency trading and an attractive fee structure for market players interested in using emerging trading technologies to conduct business.

The firm first emerged in July 2003 when it launched CNQ, a listed market matching system, originally designed to trade unlisted equities and small issuers. The new offering now targets equity securities already listed on other Canadian exchanges.

Last week the company also announced several appointments, promoting Richard Carleton to the position of vice president, corporate development, and Robert Medland to the chief financial officer role, while John MacNaughton takes over as CNQ chairman.

In a statement, the company says “with the appointments of new officers and the appointment of John MacNaughton as chairman, CNQ is moving aggressively towards the goal of providing competition in the provision of trade execution services in Canada.”

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Canaccord rolls out PlanPlus

(March 7, 2006) Canaccord Capital advisors have a new integrated software platform at their disposal for generating investment policy statements and financial planning strategies.

The company released PlanPlus Web Advisor to their sales staff after several months of development. “Canaccord has been extending our product and service offerings for high net worth individuals, a strategic aspect of which was to implement a corporate standard for high quality investment policy statements. We also wanted the ability to evaluate the impact of our portfolio recommendations in our client’s life plans,” says J.P. Lavoie, Canaccord vice president of product development.

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Caisse dropped from lawsuit against Evolution and Norbourg

(March 6, 2006) Lawyers representing Evolution and Norbourg fund shareholders have decided to not pursue action against the Caisse de dépôt et placement du Québec in a class action suit against Evolution Funds.

The Caisse was originally named as a defendant by virtue of its 80% interest in Teraxis Capital. Teraxis sold the Evolution and Norbourg funds and owned asset manager, Evolution Funds Inc. The Caisse rejected all allegations in the matter, saying there were no facts to justify the lawsuit.

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Arrow proposes fund merger

(March 6, 2006) Arrow Hedge Partners has announced a special meeting of unitholders of the Arrow Epic North American Diversified Fund on March 16, to seek approval to merge the fund’s assets into the Arrow Epic Capital Fund.

The combined assets will continue under the Arrow Epic Capital Fund name and will be reopened for new investor purchases. The company says the merger will eliminate duplicate administrative and regulatory costs and eliminate duplication in the fund’s investment portfolios. The Arrow Epic Capital Fund has been closed to investors since 2003. It returned capital to unitholders in January 2004 because managers said assets had exceeded predetermined maximum levels.

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Abria launches new energy funds

(March 6, 2006) Abria Alternative Investments has launched the Abria Energy Trust and the international Abria Energy Fund for investors seeking alternative strategies in global energy markets. The new funds are designed to maximize risk adjusted investment returns from exposure to global energy markets.

Abria CEO and chief investment officer, Henry Kneis says in a market that exhibits extreme volatility, a buy and hold strategy is much less desirable than a diversified fund of energy hedge funds that is designed to maximize returns while mitigating risk. “Our approach is to capitalize on the opportunities that price fluctuations present, as well as the vast opportunities that lie outside the exploration and development area of the energy value chain.”

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Housing market sales could soften: RBC

(March 6, 2006) Home buying intentions are at their lowest levels since 2000, according to a new study from RBC.

The RBC Royal Bank 13th Annual Homeownership Survey found that overall intentions to buy a home in the next two years remain the same as numbers recorded in 2005, but the market could be softening with those who are “very likely to buy” dropping 3% since last year to 10%. The number of Canadians who expect to purchase a home in the next six months now sits at 8%, down from 10% in 2005.

“This year’s results are a definite change from what we witnessed over the last five years,” says Catherine Adams, RBC vice president of home equity financing. “The intention to buy is still evident, but the intensity to do so is no where near as great.”

The only region in the country which saw an increased intention to buy is Atlantic Canada, where those “very likely to purchase” increased to 14%, up from 8%. Alberta is holding steady at 18%. The numbers have decreased in other regions with British Columbia dropping to 11% from 16%, Saskatchewan and Manitoba dropped from 12% to 10%, Ontario to 10% from 14% and Quebec moving to 7% from 11% last year. Overall intentions to buy a home in the next two years remains unchanged at 29%.

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AGF Dividend Fund celebrates 20 years

(March 6, 2006) The AGF Canadian Large Cap Dividend Fund and its portfolio manager, Connor, Clark & Lunn are celebrating a 20 year anniversary of delivering returns under the same manager.

The fund has grown to more than $3 billion in assets under management with an annual average return of 10.6% since inception 20 years ago. The company says the fund has delivered positive returns in 17 out of 20 calendar years.

AGF re-introduced a targeted 1.5% annual distribution in 2005 to attract investors looking for cash flow.

“There are few funds in the Canadian marketplace with a more committed team and distinguished track record of performance,” says chief investment officer, Martin Hubbes.

(03/10/06) staff


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