News Release

Released: 28/05/01 Contact: Andrew Poon
NR 01-20 (604) 899-6880 or
(BC only) 1-800-373-6393

Vancouver -- A former mutual funds salesperson who allegedly convinced investors to put close to $1-million into a "risky, illiquid and speculative" investment has been ordered to appear before the BC Securities Commission.

Mark Webster Vaughan Foster, of Victoria, faces allegations of promoting unsuitable investments to unsophisticated investors; distributing securities without filing a prospectus; not disclosing conflicts of interest; and making misrepresentations to investors. He is scheduled to appear before a BCSC panel Wednesday to fix a date for a hearing.

Possible sanctions include a lifetime trading ban and financial penalties of up to $100,000.

Commission staff alleges that beginning in January 1996, Foster recommended to clients that they put money into securities of various companies including Specialized Surgical Services Ltd. -- a company in which Foster served as director -- for a proposed health and medical center in Coquitlam, B.C. He also advised clients to invest in Foster First Financial Corp., a securities dealer that he owned.

"The securities of Specialized Surgical were risky, illiquid and speculative and as a result were unsuitable investments for many of the investors," allege Commission staff. Foster did not advise investors that the securities were unsuitable for them contrary to his responsibilities as a registrant.

Foster is alleged to have made numerous misrepresentations in three offering documents to investors. Shares in Specialized Surgical were sold under exemptions that applied to experienced or so-called sophisticated investors. (A sophisticated investor definition includes someone who has either a minimum net worth of $400,000 or an annual income of at least $75,000 or a household income of $125,000.)

Commission staff maintains that in some cases, investors were persuaded by Foster to take monies they had in relatively secure, liquid financial instruments -- T-bills and money-market funds -- to invest in Specialized Surgical.

In 1998 and 1999, foreclosure proceedings were initiated by mortgage holders against property owned by Specialized Surgical and the clinic did not open for business in the third quarter of 1998 as promised. The clinic was never opened.

Foster also did not disclose to investors that he received a 15 per cent commission and other financial incentives for selling Specialized Surgical securities at the same time that he served as a director of the company.

Between Sept. 1997 to Oct. 2000, Commission staff allege that Foster made 15 illegal distributions of shares in Foster First Financial.

The following have also been ordered to appear before the Commission panel in connection with the same allegations: Foster First Financial Corp., M.W. Foster & Associates Ltd., Falconhouse Investments Inc., Teresa Inez Marie Mitrou and Specialized Surgical Services Inc. and its directors; James Swanney, David Steinart, Wayne A. Hansen, Peter Hoogewerf, Barry Crocker, George Gow, Miles F. Kilshaw and Robert B. Murray.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities and exchange contracts within the province. The full notice of hearing can be viewed in the documents database of the commission’s website www.bcsc.bc.ca or by contacting Media Relations Officer Andrew Poon at 899-6880.