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Here are the top reads on deals and financial services over the last week. Have a great weekend,

Crypto mystery: Quadriga’s collapse leaves investors in the lurch : Gerald Cotten built Canada’s biggest cryptocurrency exchange, but its collapse has left $180-million of investors’ funds in limbo. The mystery of Quadriga stretches from Vancouver and Toronto to a trailer park in suburban Saint John, N.B. Story (Joe Castaldo, Alexandra Posadzki, Jessica Leeder and Lindsay Jones)

Quadriga is not being investigated by RCMP, lawyer says: “We are not aware of any investigation into Quadriga itself,” Richard Niedermayer, a lawyer for the platform, known as QuadrigaCX, told The Globe and Mail on Thursday. Mr. Niedermayer’s statement contradicts local news reports from earlier this week that said QuadrigaCX was the subject of a criminal investigation involving the RCMP. Story (Jessica Leeder)

Canada’s banking regulator relaxes new deposit rules amid industry outcry: Office of the Superintendent of Financial Institutions has softened its proposed changes to rules on deposits sourced online and from brokers ― and dropped the most controversial provision that drew blowback from banks ― in a new draft released for public consultation. As a result, banks are breathing a sigh of relief. Story (James Bradshaw, for subscribers)

Scotiabank strikes deal to sell banking, insurance units in El Salvador: Bank of Nova Scotia has struck a deal to sell its banking and insurance operations in El Salvador as the lender continues to concentrate its international footprint. The agreement announced Friday will see Scotiabank El Salvador, its subsidiaries and Scotia Seguros sold to Imperia Intercontinental Inc., which is the main shareholder of Banco Cuscatlan SA and Seguros e Inversiones SA in El Salvador. Story (James Bradshaw, for subscribers)

Agency that tracks money laundering and terrorist financing to boost transparency: The federal agency that tracks money laundering and terrorist financing is answering calls for greater transparency by publishing guides detailing how it enforces laws designed to stem the flow of illicit funds. The Financial Transactions and Reports Analysis Centre of Canada (FinTRAC) has spent the past two years reviewing and revising internal policies and practices to make them available to the public. Story (James Bradshaw, for subscribers)

Aphria’s former legal adviser brokered first meeting with hostile bidder: Canadian cannabis producer Aphria Inc. and its American suitor first held discussions about a potential partnership last September, in a sit-down brokered by Aphria’s recently replaced legal adviser, new regulatory filings reveal. On Wednesday, Aphria’s board rejected a hostile takeover bid launched by Ohio-based Green Growth Brands Inc. The suitor is a newly created company backed by the Schottenstein family and run by former retailing executive Peter Horvath. Story (Tim Kiladze, for subscribers)

Why Ottawa must rethink the stress test on mortgage switches: "Mortgage rules have a broad and direct impact on many people’s lives,” says the Office of the Superintendent of Financial Institutions. You can say that again. Since Canada’s most recent mortgage stress test began a year ago, more than one in 10 potential borrowers can no longer qualify for a bank mortgage, real estate prices are falling, homes are taking longer to sell, record numbers of Canadians are turning to costly higher-risk lenders and untold numbers of mortgage renewers are now paying higher rates. Opinion (Rob McLister)

Cannabis grower Aphria rejects takeover bid by Green Growth: Cannabis grower Aphria Inc. has formally rejected a hostile bid from U.S.-based Green Growth Brands Inc. and is urging its investors to do the same, reiterating Wednesday that the offer “fails to recognize the full and fair value of Aphria.” The Leamington, Ont.-based company is publicly rebuffing Green Growth’s takeover attempt after Aphria’s board was advised by banker Scotia Capital Inc. that the financial terms were “inadequate.” Story (Christina Pellegrini, for subscribers)

The crypto world is a dangerous place for ordinary investors, and regulators: The bizarre meltdown of QuadrigaCX has prompted predictable calls to regulate cryptocurrency exchanges. But regulate what, exactly? Story (Barrie McKenna, for subscribers)

National Bank warns OSFI’s proposed deposit rules could cut lenders’ profits: Stricter rules on deposits proposed by Canada’s banking regulator could drag down profits at alternative mortgage lenders next year, according to an analysis by National Bank Financial Inc. The draft rule changes put forward by the Office of the Superintendent of Financial Institutions (OSFI) would require banks to hold more liquid assets as a buffer to help keep them stable in times of stress, The Globe and Mail reported this week. The proposals have not been made public and could still change in consultations before revisions are finalized, which could take months. Story (James Bradshaw, for subscribers)

Morneau taking close look at return to 30-year insured mortgages, homebuilders’ association says: The federal government appears to be considering a budget announcement that would allow first-time homebuyers to obtain 30-year insured mortgages, up from the 25-year limit now, according to the Canadian Homebuilders’ Association. Such a move would represent a change in direction after more than a decade of measures by federal Conservative and Liberal governments since the 2008 recession aimed at cooling housing markets and encouraging Canadians to take on smaller mortgages. Story (Bill Curry)

Montreal software firm Lightspeed files IPO: Montreal’s Lightspeed POS Inc. has filed to go public on the Toronto Stock Exchange, marking one of just a handful of sizeable Canadian tech firms to test public markets in the past few years and the first since a pulled offering filed last year by cloud software firm Dye & Durham Corp. Story (Sean Silcoff, for subscribers)

Callidus Capital scores win in legal case against borrower: Callidus Capital Corp. won a legal battle against one of its borrowers, the former CEO of an insolvent casino game developer, when the Quebec Court of Appeal prevented him from proceeding with a $228-million lawsuit as part of the bankruptcy case. Story (Jeffrey Jones, for subscribers)

Investors launch lawsuits against three Canadian banks: Two Ontario-based law firms, Siskinds LLP and Bates Barristers P.C., have filed three proposed class actions against the asset-management divisions of Royal Bank of Canada, Bank of Montreal and National Bank of Canada. The suits claim that investors who bought the firm’s mutual funds through discount brokers were overcharged because certain funds paid a trailing commission that included a fee for advice. Story (Clare O’Hara, for subscribers)

Amaya insider trading case dismissed: Ontario’s top securities regulator has dismissed an insider-trading case tied to Amaya Inc.'s US$4.9-billion takeover of the PokerStars owner, ending a multi-year probe that accused four people of illegal behaviour. Story (Tim Kiladze, for subscribers)

Nova Scotia judge grants stay for embattled crypto exchange Quadriga: An encrypted laptop and memory stick could hold the keys to $180-million in missing cryptocurrency, a Nova Scotia court heard Tuesday. Justice Michael Wood of the Nova Scotia Supreme Court issued a 30-day stay of proceedings against Canadian virtual trading platform QuadrigaCX, shielding the floundering company from legal action from panicked customers collectively owed $250-million. Story (Jessica Leeder, Joe Castaldo, Alexandra Posadzki, for subscribers)

OSFI official defends mortgage stress test: Carolyn Rogers, the assistant superintendent for regulation at the Office of the Superintendent of Financial Institutions (OSFI), shows no sign of wavering in the regulator’s conviction that a stress test on new mortgages has been a necessary check on loose lending. She is defending the test against an array of criticisms, arguing it has improved lending standards across the industry. The stress test has attracted intense public scrutiny since it was introduced 13 months ago, including calls from some mortgage professionals and politicians to relax its terms or scrap it entirely. Story (James Bradshaw, for subscribers)

Battered oil patch could face further financial woes after Supreme Court cleanup ruling: Canada’s battered oil patch could face another financial hit as banks assess whether to reduce producers’ borrowing capacity after a top court judgment that ranks environmental cleanup above secured creditors’ claims in bankruptcy cases. The ruling in what is known as the Redwater case could bring further chill to an industry in which the ability of companies, especially smaller ones, to borrow money has shrunk through four years of weak prices for oil and gas and squelched cash flows. Story (Jeff Jones, for subscribers)

Caisse suspends executive Martine Gaudreault over partner’s alleged links to organized crime: Canadian pension fund manager Caisse de dépôt et placement du Québec has suspended an executive following the publication of a newspaper story questioning her partner’s links to a reputed Montreal organized crime family. The Montreal-based pension fund said Tuesday it suspended Martine Gaudreault, a vice-president working with Otéra Capital, a Caisse subsidiary active in commercial real estate financing. Story (Nicolas Van Praet, for subscribers)

Canadian entrepreneur Doug Putman buys 100 HMV stores in U.K. in bet on music store revival: Canadian entrepreneur Doug Putman is making a big bet on the return of old-fashioned vinyl records after snapping up 100 HMV music stores in the United Kingdom and more than doubling the size of his Sunrise Records chain. Mr. Putman emerged on Tuesday as the winning bidder for what’s left of the iconic music retailer, which filed for bankruptcy protection in Britain on Dec. 28. Story (Paul Waldie, for subscribers)

AGF, Franklin Templeton lay off mining experts amid sector woes: Ani Markova, a fund manager with AGF Investments, and Peter Maletis, a precious metals analyst with Franklin Templeton, were laid off within the past few weeks. A long-time employee of AGF, Ms. Markova was a vice-president and portfolio manager for the investment firm’s Precious Metals Fund. Mr. Maletis was an analyst who supported Franklin’s Gold and Precious Metals Fund. They were both let go after years of declining investor interest in the gold and metals sector. Ms. Markova and Mr. Maletis separately declined to comment. Story (Rachelle Younglai, for subscribers)

Cadillac Fairview anchors new $150-million tech fund spun out of BDC: Cadillac Fairview Corp. Ltd. is the latest Canadian real estate giant to make a concerted push into technology investing by backing a new $150-million venture-capital fund being spun out of Business Development Bank of Canada. Framework Venture Partners said Tuesday it has raised $100-million to date, securing $50-million from BDC Capital and $50- million from Cadillac Fairview, Royal Bank of Canada and the British Columbia government’s BC Tech Fund, managed by Toronto’s Kensington Capital. Story (Sean Silcoff, for subscribers)

Namaste Technologies weighs sale after firing CEO: Namaste Technologies Inc. is weighing a sale after firing its chief executive for alleged wrongdoing related to recent deal-making. The Vancouver-headquartered cannabis company said Monday in a news release that its board has terminated CEO and director Sean Dollinger after an internal investigation found that Mr. Dollinger allegedly breached his fiduciary duty to the company and improperly enriched himself. The company took issue with asset sales, including the 2017 sale of Namaste-owned Dollinger Enterprises US Inc. for US$400,000, to entities in which Mr. Dollinger and another senior executive have a beneficial interest, the Namaste news release claims. Story (Christina Pellegrini, for subscribers)

An increasingly cashless world is forcing banks to improve the penalty box ambiance of their branches: The declining use of cash in our society could be the best thing to happen to branch banking. The old-style bank branch sent a subtle message to customers: You need us more than we need you. Lineups were slow, the spaces were cramped and the service was minimal at best. The declining use of cash has broken this power dynamic. People don’t need to visit the branch as much as they used to, which means there are fewer opportunities for banks to sell the investments, credit lines and credit cards that sustain their revenues and profits. The Royal Bank of Canada branch that opened beside the Place d’Orleans Mall in suburban Ottawa last May is a shining example of how banks are trying to keep branch banking alive in an increasingly cashless world. Story (Rob Carrick)

Scotiabank’s MD deal meets resistance from doctors: Among the swag Paul Healey received on his first day of medical school was a backpack with the logo of a financial company he’d never heard of: MD Physician Services. A few years later, when Mr. Healey started working and earning money, he found himself turning to MD for investment advice. Born 50 years ago to help time-pressed doctors manage their savings, the firm was an arm of the Canadian Medical Association (CMA). For many physicians, it was the only place to consider taking their money. “People really did not question what MD was doing,” Mr. Healey said. The firm marketed itself as being run by doctors, for doctors. "It was just assumed they were working on behalf of physicians.” That deep trust has been dented. Last May, Bank of Nova Scotia announced it would buy MD for $2.6-billion. It was a jaw-dropping price and, for many doctors, the deal was an unexpected development. Story (Clare O’Hara and Tim Kiladze, for subscribers)


Private equity: Canadian private equity firm Brookfield Asset Management is in preliminary talks with India’s Reliance Industries to buy a stake in its optical fibre and telecom tower assets, The Times of India newspaper reported on Friday. Story (for subscribers)

Earnings: CI Financial Corp. says it earned a fourth-quarter profit of $140.4 million as its revenue fell compared with the same period a year earlier. Story

Regulators: Canada’s biggest securities regulator said on Friday that it was looking into Quadriga CX, the digital platform whose founder died in December, trapping millions of dollars in cryptocurrencies in its accounts. Story (for subscribers)

Credit cards: Visa Inc on Friday sweetened its offer for payment company Earthport Plc to about 247 million pounds (US$319-million), pushing past rival Mastercard Inc’s earlier bid and setting up a showdown for the assets. Story


Which online brokerage is best in 2019? Rob Carrick ranks your options: The annual Globe and Mail ranking of online brokers has seen some battles over its 20 years, but never anything as tense as today. A big divide has opened up between the middling to weak players and the elite. The top firms have cut fees in a few cases while adding new features to help clients build and manage portfolios. The also-rans continue to plod along as if they’re still basically waiters taking your order for stocks or funds to buy. Story (Rob Carrick, for subscribers)

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