By Staff | March 20, 2006 | Last updated on March 20, 2006
13 min read

Mackenzie Financial is closing the Cundill Recovery Fund to new purchases, effective April 7, 2006.The fund has a mandate to invest in equity and fixed income investments, in recovery or turnaround situations, that meet Cundill’s contrarian, deep value philosophy.

“It has been increasingly difficult to find bargain issues on a global basis that have made the fund so successful,” says co-manager Peter Cundill. “Cash has built up in the portfolio. The fund needs some time to digest the additional resources.”

Going forward, only the Symmetry Specialty Stock Capital Class fund, offered through the Symmetry asset allocation Portfolio Services will be permitted to continue purchasing units of the Recovery Fund.

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Seamark announces changes to board of directors

(March 24, 2006) Halifax-based Seamark Asset Management has appointed the company’s new president and chief executive officer, Stuart Raftus to its board of directors, alongside BMO Nesbitt Burns executive managing director, Hugh Brown. Raftus will serve as the sole management director on the company’s board while Brown will join as an independent, non-management director.

The company also announced that Purdy Crawford will not stand for re-election at the upcoming annual shareholders meeting on May 1, saying Crawford chose to retire as a director in order to pursue other tasks, “notably leading the Crawford Panel on a Single Canadian Securities Regulator.”

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OSC extends cease trade order against Juniper

(March 24, 2006) The Ontario Securities Commission has extended its temporary cease trade order against the Juniper Income Fund and the Juniper Equity Growth Fund.

In early March the OSC ordered all trading in the funds to cease over concerns that the funds’ accounting and governance practices. OSC staff say there are also concerns that the calculations of the funds’ net asset value per unit may be materially incorrect.

Fund unitholders will be unable to purchase, sell or redeem units of the funds. The temporary order has been extended to May 4, 2006, the date of the next scheduled hearing.

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BCSC completes review of MFDA Pacific office

(March 24, 2006) The British Columbia Securities Commission has released audit results from its review of the Pacific regional operations of the MFDA.

The review, conducted in July 2005, mainly focused on the specific functions of the Pacific Regional Office related to enforcement investigations, membership terminations as a result of disciplinary action, compliance examinations and new membership application reviews. The BCSC also reviewed the litigation process related to regional cases.

In the report, the BCSC says “staff are generally satisfied with the operations for the Pacific Regional Office. Investigation, compliance examination and new membership application files were well documented, thorough and organized. Regional staff were experienced and knowledgeable, as evidenced by the quality of their files. Overall, the regional processes examined appeared effective for an organization still undergoing developmental changes.”

Still, the commission was mildly critical of the length of time the SRO took to conduct compliance examinations. BCSC staff reviewed seven files, noting that one file was still open after 59 weeks from the start of fieldwork and the average time from report issuance to file closure was “lengthy,” averaging 28 weeks.

In its response, the MFDA noted that this was its first round of compliance examinations and many of the SRO’s rules were new to members. “In some cases, several responses were required before issues were adequately resolved.”

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RCMP called in to investigate alleged Norbourg bribery attempt

(March 23, 2006) The RCMP’s Integrated Market Enforcement Team has been called in to investigate after Quebec’s securities regulator, the Autorité des marchés financiers, says one of its employees was offered a bribe in the Norbourg case.

An internal investigation over the past few months conducted by the AMF found that some of its employees were in contact with members of Norbourg management, including the company’s former president, Vincent Lacroix. The bribery attempt failed, the AMF says, with the employee refusing the offer.

Still, eight AMF employees have been suspended for periods varying from five days to three months. Although the Quebec regulator says no information concerning the ongoing investigation into Norbourg was relayed, the AMF concluded that some of its employees were “careless and displayed a lack of judgment.”

“[The AMF] believes that the conduct of its employees must be above reproach, given the role they play in overseeing the financial markets.”

In August, 2005, the AMF announced it was freezing Norbourg’s assets as it looked into allegations that more than $130 million had been misappropriated from 9,200 investors by Lacroix between 2002 and 2005. He has maintained his innocence.

The AMF says it considers this to be a serious matter and is co-operating with the IMET probe.

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Ontario industrial real estate market showing resilience

(March 23, 2006) Despite pressures affecting manufacturing sector companies and a fundamental shift from manufacturing to services as the engine of Ontario’s economy, a new report from GWL Realty Advisors and the Conference Board of Canada suggests the province’s industrial real estate market has remained resilient and continues to offer opportunity for property owners.

The report, entitled “Rising Dollar: Threat or No Sweat?” shows the market continuing to perform well, with space availability staying at 3.8% to 5.5% of total inventory since the late 1990s. As well, the report says new construction levels are under control and an increasingly diverse array of businesses are keeping industrial space usage levels healthy. By comparison, industry real estate availability in the U.S. has been chronically above 8% in most cities.

“It’s easy to jump to the conclusion that manufacturing sector pressures will lead to pressures in the industrial property market,” says Susan MacLaurin, senior vice president of GWL. “But in fact, when you scratch below the surface indicators, you find an industrial market that is sustained by strong domestic economic performance and increasing diversity in the use of industrial space,” including warehousing and distribution, mixed use and research and development.

It is estimated that manufacturing comprises only 30% of the Canadian industrial real estate market and many of those facilities are user-owned, so industrial property owners have limited exposure to manufacturing sector risk.

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CoVirt adds CANNEX data to VirtGate

(March 23, 2006) CoVirt has reached an deal with CANNEX Financial Exchanges Limited to provide access to payout annuity surveys to VirtGate users at participating MGA or National Account brokerages.

Under the agreement, VirtGate users can access the surveys, normally available directly from CANNEX at a cost of $5 per survey, with CANNEX charges capped at 15% of their monthly CoVirt fees.

The comparative annuity marketplace surveys are created by CANNEX using an algorithm that crunches calculation provided by participating insurance companies. Most companies fully guarantee the accuracy of annuity quotes provided on their behalf. Users enter specific data about the annuitant like date of birth, age, gender and province of residence, along with the type of annuity required to get their comparative quotes.

Tim Fitzpatrick, president of CoVirt, says the new access gives advisors the ability to perform better analysis for their clients. As well, he says this increased awareness of annuities by advisors will result in more sales and commission for brokerages.

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Wellington Financial adopts Bullfrog Power

(March 23, 2006) Wellington Financial is one of the latest companies to start using Bullfrog Power, the only electricity retailer in Ontario that sources power exclusively from wind and low-impact water power producers that meet or exceed the federal government’s Environmental Choice Program EcoLogo standard for renewable electricity.

“By choosing to support 100% green electricity, Wellington Financial is playing an important role in supporting the production of renewable power in Ontario, as well as taking real action to reduce the organization’s carbon footprint,” says Tom Heintzman, president of Bullfrog Power. “Wellington Financial is clearly demonstrating it’s leadership on the environmental front.

“Choosing renewable power is simply the logical choice,” says Mark McQueen, president and CEO of Wellington. “Supporting Bullfrog Power allows Wellington Financial to simultaneously invest in new technologies as well as the future wellness of our planet.”

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MFDA slaps lifetime ban on fired fund rep

(March 22, 2006) The MFDA has permanently banned former mutual fund rep Donald Coleman from any securities-related business after he admitted to stealing more than $18,000 from clients.

According to the settlement agreement, over a five-month period in 2004, Coleman stole $18,234.45 from two clients when he was with PFSL Investments in London, Ont. Over that same period, the Toronto-based dealer processed redemptions in these same clients’ mutual funds without obtaining instructions or approval.

Coleman was fired from PFSL in August of that year and the firm has since reimbursed the clients.

In addition to the lifetime ban, Coleman has been assessed a $10,000 fine and ordered to pay costs of $2,500. But the MFDA does not have the legal authority to make its members pay fines after they have left the industry.

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National Bank launches new note

(March 22, 2006) National Bank is proposing a new S&P Income Trust Index note that will offer ‘unlimited’ potential return at maturity.

The notes will have an eight-year term and will invest in the S&P/TSX Income Trust index, a grouping of 72 of the largest income trusts in Canada. The notes, which are due to mature on April 14, 2014, will cost $100 and require a minimum investment of $2,000.

National Bank will charge an MER of 1.25% per year and a combined trailer fee of 0.5% a year. The bank will also pay dealers and advisors whose clients purchase the notes a selling fee of $5 per note.

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More Canadians than ever see a home as a good investment

(March 22, 2006) Nine out of every 10 Canadians think that investing in a home is a good investment, according to RBC’s Annual Homeownership Survey.

Almost 20% of homeowners say their homes will be their primary source of retirement income. Many of those surveyed who feel this way live in Atlantic Canada and in Quebec where the average person has only about $61,000 left owing on their homes, which is about $35,000 below the national average.

Still, more Canadians are falling further into debt, the survey notes. Almost 40% of those surveyed say they have borrowed against their homes, 60% of Canadian homeowners currently have a mortgage, up 10 percentage points over 2000, and as many as a third of those aged 55 and up think they will carry that mortgage into retirement.

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OSC reports sharp increase in fraud complaints

(March 22, 2006) The Ontario Securities Commission says there has been a 50% increase in inquires and complaints regarding investment-related fraud compared to last year.

It is unclear whether if the number of fraud cases is up or if it’s simply a matter of greater awareness and people taking the time to alert the OSC. “It’s pretty difficult to get a handle on the size of the problem because this is an operation where people are going to great lengths to hide,” says Perry Quinton, manager of investor communications for the OSC.

However, she says a low interest rate climate could make fraud a little more prevalent or make people more susceptible as those who invest in fixed income products seek greater returns.

The OSC released a series of fraud warnings, highlighting several red flags. Some of the tell-tale signs you can warn your clients about include the following:

  • Assurances of legitimacy: scam artists will make assurances they are licensed and qualified. Investors should contact the OSC to check their registration.
  • High-pressure sales tactics and repeat calls: sales people may make several calls before asking for money. Investors should never feel rushed to invest.
  • Unsolicited calls: investors should know how the caller got their number.
  • Offer to invest in a new IPO: Sales people are not allowed to use this tactic. Often a salesperson will promise a high return for a minimal risk. In those cases remind your clients of the old saying, if it sounds too good to be true…

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Altamira appoints former Brandes executive

(March 22, 2006) Altamira has appointed a former Brandes Investment Partners regional director as its new senior vice president.

James Whitman, who spent the last four years working on the sales and business development for Brandes’ Canadian retail business, will look after the both direct and dealer market for Altamira, a subsidiary of National Bank of Canada, starting April 10.

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OSFI wants detailed avian flu plans

(March 21, 2006) The Office of the Superintendent of Financial Institutions has sent letters to various industry groups, warning of the possible threat posed by avian flu to business continuity.

In letters to the Canadian Bankers Association, the Insurance Bureau of Canada and the Canadian Life and Health Insurance Association, Julie Dickson, assistant superintendent, regulation sector, says OSFI is discussing approaches to pandemic planning with selected financial institutions and domestic and international regulatory agencies.

OSFI is requesting that the three groups provide information on the contingency plans of their respective members in preparation for a potential pandemic.

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IDA terminates LVM Canada

(March 21, 2006) The IDA has terminated the registration of LVM Canada and imposed a $13,921 fine against the Montreal-based firm.

In a settlement agreement, LVM Canada admitted that between August 2003 and January 2006, it failed to maintain a risk-adjusted capital greater than zero at all times as required by IDA bylaws.

The firm also failed to produce audited financial statement for its last fiscal year and has not appointed a qualified chief financial officer.

LVM Canada’s registration was suspended by Quebec’s securities regulator and the IDA in May 2003 after the firm discontinued its activities as an investment dealer.</p.

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BCSC shuts down Corporate Express group

(March 21, 2006) The British Columbia Securities Commission has imposed a permanent cease-trade order against a group of Bahamas-incorporated companies accused of selling securities to B.C. residents without being registered.

The Corporate Express group includes Corporate Express Inc., Corporate Express Club, and Corporate Express Club (CEC) 1998, Fortress International Ltd., Great American Gold Ltd., John Thomas McCarthy and Cameron Willard McEwen. In September 2005, the BCSC ruled these companies and individuals distributed securities without registration or filing a prospectus.

Corporate Express offered investors returns ranging from 50% to 400% in promoting its securities. Corporate Express, Fortress and Great American, McCarthy and McEwen also breached the commission’s temporary orders by trading in the securities of Corporate Express and Great American.

The BCSC has banned McCarthy and McEwen from trading and distributing securities in B.C. for 10 years, and the pair may not serve as directors or officers of any issuer during that period.

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Mavrix launches new flow through partnership

(March 21, 2006) Mavrix Fund Management has filed a final prospectus for the Mavrix Explore 2006-I FT Limited Partnership, which will invest in flow-through shares offerings from companies exploring for minerals, oil and gas in Canada.

The maximum size of the offering is $75,000,000 through a syndication led by Canaccord Capital and TD Securities. The offering closes March 31, 2006. Other syndicate members include Dundee Securities, Scotia Capital, Berkshire Securities, Blackmont Capital, HSBC Securities (Canada), Raymond James, Desjardins Securities, Wellington West Capital, Bieber Securities, Industrial Alliance Securities, Integral Wealth Securities, IPC Securities, MGI Securities, and Union Securities.

Mavrix has previously managed six resource flow-through limited partnerships that have raised more than $125 million.

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Canadian equities popular with foreign investors

(March 20, 2006) Foreign investors snapped up $4.7 billion worth of Canadian equities in January, as the TSX closed the month at record levels. Americans were the main buyers, purchasing $3.8 billion worth, which was their largest foray into Canada’s secondary market since June 2000, according to Statistics Canada.

Foreigners sold of a total of $1.3 billion in Canadian bonds in January, following a divestment of $7.4 billion in December. The January divestment was almost entirely due to non-residents selling outstanding bonds back to Canadians, largely federal issues, the agency explained.

Meanwhile, Canadians continued to invest heavily in foreign bonds in January. Canadians acquired a record $4.5 billion worth of foreign bonds in the month, mostly concentrated in U.S. treasury bonds, and sold off $837 million in foreign equities.

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CIBC Mellon chooses new head of equity securities

(March 20, 2006) CIBC Mellon Global Securities has appointed Brendan Hughes as director of equity securities in an attempt to increase the firm’s domestic equities business.

Hughes, who has held senior positions at a number of Canadian investment dealers, will be responsible for developing the company’s client base and implementing its growth strategy.

“I’m very pleased to have Brendan join our team, and I’m confident that his extensive experience and strong relationships in the domestic marketplace will further drive our future growth in this segment,” said Rob Chiuch, executive director, global securities lending.

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Rice Financial signs up with PlanPlus

(March 20, 2006) Winnipeg-based Rice Financial has become the latest in a series of firms to adopt PlanPlus Web Advisor. The web-based program has been fully integrated to Rice Financial’s Centrac system, the two companies announced on Monday.

The advisory firm, which runs wholly-owned branch network and has independent representatives in smaller communities, adopted PlanPlus Web Advisor because easily integrates into its existing Centrac system, said Fred Wing, executive vice-president of Rice Financial. “We wanted a solution that would allow us to provide quality investment planning and financial planning services quickly and easily, and lever our existing technologies.”

Rice Financial representatives will be using PlanPlus Web Advisor to deliver customized Investment Policy Statements for clients, as well as more comprehensive financial plans, says Dale Hrycaiko, manager of special services at Rice Financial. “We felt it was important for our advisors to have access to an integrated planning tool to service our clients at a level that would meet or surpass the new Practice Standards that come into effect through the Financial Planning Standard Council of Canada this April.”

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Quebec announces deadlines for complaint reporting system

(March 20, 2006) Financial services firms in Quebec have until April 28 to report any consumer complaints received in the second half of last year.

Quebec’s securities regulator and the Financial Services Commission of Ontario launched the web-based complaint reporting system in October 2005, intended to help companies fulfill their obligations to report consumer complaints.

Now that the system is up and running, the deadlines will be stricter. Complaints received from January 1 to June 30, 2006 must be reported no later than July 30, 2006 and complaints received during the period from July 1 to December 31, 2006 must be reported no later than January 30, 2007. Firms must use the system even if they have no complaints to declare.

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Tristone Capital appoints new energy analyst

(March 20, 2006) Energy advisory firm Tristone Capital has hired John Tasdemir to lead its team of oilfield services analysts.

Tasdemir will be based in Tristone’s Calgary office and will cover the Canadian oilfield industry.

Prior to joining Tristone, Tasdemir was vice president of equity research at Raymond James in Houston. He also worked for Zurich Kemper Investments and served as an analyst on the William C. Conner Investment Fund.

“With more than 10 years experience with the top-ranked oilfield services team in the United States, John will be a tremendous asset to Tristone,” says the firm’s chair George Gosbee.

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