TORONTO, Feb. 4 /CNW/ - Mavrix Fund Management Inc. ("Mavrix") (TSX: MVX)
announced that, as part of a general fact-finding exercise by the Ontario
Securities Commission ("OSC") into non-bank sponsored asset-backed commercial
paper ("ABCP"), it received a general inquiry letter from the OSC on
August 20, 2007. Following discussions on the matter and additional
correspondence with the OSC, Mavrix determined that such securities were no
longer eligible to be held within a money market fund and transferred at par,
an aggregate of approximately $3.4 million of ABCP from two money market funds
managed by Mavrix to one open-end mutual fund and two flow-through limited
partnerships also managed by Mavrix. The ABCP is comprised of extendible
Series E Notes of Rocket Trust and Gemini Trust.
On November 7, 2007, Mavrix received a letter from the OSC advising that
it believed that relief was required to have been obtained in connection with
the inter-fund trades and that the OSC has concerns related to the
appropriateness of the trades and, in particular, the price at which the
trades were effected. The OSC subsequently advised Mavrix that these matters
have been referred to the Enforcement Branch of the OSC for further inquiry.
Mavrix has cooperated fully with the OSC in connection with its inquiry
and will continue to do so. Mavrix has acknowledged to the OSC that the
inter-fund trades were prohibited under self-dealing restrictions in
securities legislation and that Mavrix did not make an application for
exemptive relief to make the inter-fund trades. Additionally, pending
resolution of the inquiry, Mavrix has undertaken to the OSC that it will not
execute inter-fund trades without the prior consent of the OSC and, further,
that, if the value of "illiquid assets" in any fund exceeds 10%, it will
consult with the fund's Independent Review Committee concerning the
appropriateness of a third party valuation of such securities.
On December 12, 2007, Mavrix announced that it would backstop the ABCP
held in its funds by reimbursing the funds for any shortfall should the ABCP
held in such funds realize less than par value on maturity or on a prior sale.
By providing the backstop, Mavrix will ensure that none of its funds will
suffer a loss as a consequence of holding ABCP (or any securities issued in
exchange therefore as a consequence of the Montreal Accord). Mavrix has agreed
with the OSC that, prior to releasing its audited financial statements for the
year ended December 31, 2007, it will obtain a valuation of the ABCP then held
in funds managed by it and to set up a reserve in respect of its obligations
under the backstop commitment.
Mavrix anticipates resolving these matters promptly and cooperatively
with the OSC and continuing to execute on its business plan.
Mavrix Fund Management Inc. is a growing Canadian asset management
company with shares listed on the Toronto Stock Exchange. Its stock symbol is
For further information:
For further information: Raymond Steele, Chief Operating Officer and
Chief Financial Officer, 36 Lombard Street, Suite 400, Toronto, Ontario, M5C
2X3, Toll Free: 1-888-964-3533, Direct: (416) 365-4071, Email: