The David Berry saga continues to drag on:
A hearing was originally scheduled before a Hearing Panel of the Investment Industry Regulatory Organization of Canada (IIROC), in the matter of David Berry for April 10 to April 23, 2012. The hearing was adjourned to June 13, 2012.
The hearing concerns allegations that Mr. Berry solicited client orders during the distribution of new issues by Scotia Capital contrary to UMIR 7.7(5) (as it existed prior to May 2005), and conducted off-marketplace trades that were not printed on a marketplace or recognized exchange as required by UMIR 6.4.
Assiduous Readers will remember that David Berry was a superb trader of preferred shares, who was assigned significant capital by Scotia at a time when the market was starved for liquidity. He made ridiculous potfulls of money for the bank and in so doing, a pretty good pile for himself. The bank’s executives got upset that a mere peon was making so much and, when he wouldn’t accept a voluntary pay cut, unleashed an army of accountants and lawyers on his trading to uncover instances where a rule had been broken – I have also heard that clients were swept up in this witchhunt and required to cooperate voluntarily with the investigation as a condition of doing business with Scotia.
Naturally, they found a few picayune transgressions, pretended to be shocked and fired him. He’s suing for $100-million. IIROC is an eager participant in this charade.
Royal Bank is scooping up full control of RBC-Dexia:
Royal Bank of Canada (RY-T57.04-1.70-2.89%) is buying the 50-per-cent stake in RBC Dexia Investor Services that it doesn’t already own from its struggling European partner.
Canada’s largest bank said Tuesday morning it will purchase the 50 per cent stake of RBC Dexia partnership from Banque Internationale à Luxembourg SA for $1.1-billion in cash.
The deal will give RBC full control of the European business, which advises institutional investors and administers large pensions and investment funds. The assets went on the block last year when Banque Internationale à Luxembourg, formerly known as Dexia Banque Internationale, was hit hard by the European banking crisis and forced to jettison assets to stabilize its operations.
RBC will take an after-tax charge of approximately $200 million, with $170 million (after tax) of that owing primarily to a write-down of intangibles as a result of revaluing the 50% of RBC Dexia that is already owns. The other $30 million (after tax) represents RBC’s share of a loss related to an exchange of securities at RBC Dexia.
Courtesy of the US housing market, here’s another illustration of the law of unintended consequences:
As many as 1.25 million of America’s least cared for homes are headed for auction after a year-long probe into foreclosure practices kept them off the market.
Sales of repossessed properties probably will rise 25 percent this year from 1 million in 2011, according to Moody’s Analytics Inc. Prices for the homes could drop as much as 10 percent because they deteriorated as they were held in reserve during investigations by state officials resolved in February, according to RealtyTrac Inc. That month, 43 percent of foreclosures were delinquent for two or more years, from a 21 percent share in 2010, according to Lender Processing Services Inc. in Jacksonville, Florida.
…
Homes stockpiled less than a year sell for about 35 percent below the value set by lenders, according to a March 15 report by the Federal Reserve Bank of Cleveland. At two years, the loss is close to 60 percent.
The Fed’s confidence in the US economy is increasing:
The Federal Reserve is holding off on increasing monetary accommodation unless the U.S. economic expansion falters or prices rise at a rate slower than its 2 percent target.
“A couple of members indicated that the initiation of additional stimulus could become necessary if the economy lost momentum or if inflation seemed likely to remain below” 2 percent, according to minutes of their March 13 meeting released today in Washington. That contrasts with the assessment at the FOMC’s January meeting in which some Fed officials saw current conditions warranting additional action “before long.”
There are many pairs of words that, when seen in the same sentence, alert the reader that some insane logic based on infantile assumptions is about to result in nonsensical verbiage. One such pair is “Privacy” and “Commissioner”. Another is “Internet” and “Regulators”:
Google Inc. (GOOG), owner of the world’s most-popular search engine, misled Australian consumers in 2007 by including paid advertisements from competitors in search results for businesses, an appeal court ruled.
The Federal Court of Appeal in Sydney today overturned a lower court decision and ordered the Mountain View, California- based company to set up a protocol to avoid repeating the practice.
…
The ACCC appealed, citing four advertisements, including those that showed up in a search for the Australian company Harvey World Travel, that it said Google should have known would contravene the law.A search for a business name would include results from competitors who paid to have their ads placed in a column beside the search results.
…
A user who sought information about Harvey World Travel was instead given the web address of one of its competitors, the panel said.“Google tells the user that the URL provided below is the contact information about Harvey World Travel,” the panel wrote. “The enquiry is made of Google and it is Google’s response which is misleading.”
So my question is: why does it matter whether Google’s respons is misleading, assuming that a rational person would consider it misleading, which is by no means obvious? The user isn’t paying Google anything for the service, zip, zero, zilch! How does Google owe some kind of duty to the user? As far as I’m concerned, Google can answer queries of any type with pictures of naked women without breaching any duty; if they aren’t pretty enough, I’ll use a different search engine.
If any user of the Internet can run crying boo-hoo-hoo to the courts to get something fixed – and, doubtless, to get some kind of pecuniary benefit out of the whimpering – I’ve got a long list of websites that I know contain demonstrably false statements about preferred shares …
It was another positive day for the Canadian preferred share market, with PerpetualPremiums up 10bp, and both FixedResets and DeemedRetractibles gaining 12bp. Volatility was good, but surprisingly skewed to the downside. Volume was low.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
|||||||
| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.3950 % | 2,427.7 |
| FixedFloater | 4.42 % | 3.83 % | 38,772 | 17.59 | 1 | -0.0465 % | 3,529.0 |
| Floater | 2.97 % | 3.00 % | 46,933 | 19.76 | 3 | -0.3950 % | 2,621.3 |
| OpRet | 4.94 % | 3.89 % | 67,518 | 1.20 | 6 | -0.1611 % | 2,494.5 |
| SplitShare | 5.24 % | -5.32 % | 87,088 | 0.70 | 4 | 0.3525 % | 2,695.1 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1611 % | 2,281.0 |
| Perpetual-Premium | 5.46 % | 1.10 % | 92,358 | 0.16 | 23 | 0.0994 % | 2,214.6 |
| Perpetual-Discount | 5.19 % | 5.21 % | 136,524 | 15.12 | 10 | 0.2246 % | 2,396.6 |
| FixedReset | 5.01 % | 3.01 % | 190,426 | 2.22 | 67 | 0.1175 % | 2,390.1 |
| Deemed-Retractible | 4.96 % | 3.93 % | 206,753 | 2.02 | 46 | 0.1164 % | 2,303.6 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| IGM.PR.B | Perpetual-Premium | -1.42 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2018-12-31 Maturity Price : 25.00 Evaluated at bid price : 26.35 Bid-YTW : 4.90 % |
| ELF.PR.F | Perpetual-Discount | -1.30 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-04-03 Maturity Price : 23.97 Evaluated at bid price : 24.26 Bid-YTW : 5.47 % |
| BAM.PR.X | FixedReset | -1.08 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-04-03 Maturity Price : 23.04 Evaluated at bid price : 24.70 Bid-YTW : 3.58 % |
| BAM.PR.C | Floater | -1.07 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-04-03 Maturity Price : 17.55 Evaluated at bid price : 17.55 Bid-YTW : 3.00 % |
| MFC.PR.B | Deemed-Retractible | -1.02 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.31 Bid-YTW : 5.61 % |
| SLF.PR.G | FixedReset | 1.02 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.87 Bid-YTW : 3.51 % |
| BAM.PR.M | Perpetual-Discount | 1.02 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-04-03 Maturity Price : 22.48 Evaluated at bid price : 22.85 Bid-YTW : 5.21 % |
| BAM.PR.N | Perpetual-Discount | 1.33 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-04-03 Maturity Price : 22.45 Evaluated at bid price : 22.80 Bid-YTW : 5.22 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| ENB.PR.H | FixedReset | 167,400 | Recent new issue YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-04-03 Maturity Price : 23.13 Evaluated at bid price : 25.10 Bid-YTW : 3.61 % |
| ELF.PR.H | Perpetual-Discount | 124,756 | Recent new issue YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-04-03 Maturity Price : 24.59 Evaluated at bid price : 24.98 Bid-YTW : 5.52 % |
| BAM.PF.A | FixedReset | 55,895 | Recent new issue YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-04-03 Maturity Price : 23.14 Evaluated at bid price : 25.15 Bid-YTW : 4.33 % |
| ENB.PR.D | FixedReset | 37,485 | TD crosssed 27,000 at 25.54. YTW SCENARIO Maturity Type : Call Maturity Date : 2018-03-01 Maturity Price : 25.00 Evaluated at bid price : 25.52 Bid-YTW : 3.69 % |
| BAM.PR.H | OpRet | 29,090 | Called for redemption. YTW SCENARIO Maturity Type : Option Certainty Maturity Date : 2012-05-03 Maturity Price : 25.00 Evaluated at bid price : 24.99 Bid-YTW : 6.72 % |
| PWF.PR.I | Perpetual-Premium | 28,806 | RBC crossed 23,900 at 25.90. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-05-30 Maturity Price : 25.00 Evaluated at bid price : 25.66 Bid-YTW : -4.04 % |
| There were 20 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| ENB.PR.B | FixedReset | Quote: 25.29 – 25.74 Spot Rate : 0.4500 Average : 0.3145 YTW SCENARIO |
| PWF.PR.H | Perpetual-Premium | Quote: 25.41 – 25.76 Spot Rate : 0.3500 Average : 0.2527 YTW SCENARIO |
| TD.PR.C | FixedReset | Quote: 26.56 – 26.81 Spot Rate : 0.2500 Average : 0.1544 YTW SCENARIO |
| TD.PR.S | FixedReset | Quote: 26.05 – 26.29 Spot Rate : 0.2400 Average : 0.1522 YTW SCENARIO |
| RY.PR.H | Deemed-Retractible | Quote: 26.92 – 27.20 Spot Rate : 0.2800 Average : 0.2105 YTW SCENARIO |
| GWO.PR.M | Deemed-Retractible | Quote: 26.00 – 26.39 Spot Rate : 0.3900 Average : 0.3217 YTW SCENARIO |