News Release

Released: 12/22/00 Contact: Dean Pelkey
NR 00-55 (604) 899-6880 or
(BC only) 1-800-373-6393

Vancouver -- Canadian American Financial Corp. (Canada) Ltd. has agreed to pay the British Columbia Securities Commission $22,500 in penalties and costs after admitting some of its B.C. sales people sold scholarship plans without being registered.

The Ontario-based scholarship plan dealer also admitted to contravening prohibitions in the B.C. Securities Act against cold calling.

Between September 1998 and December 1999, some of CACF's salespeople were not properly registered in B.C. to sell its scholarship plans. Under the B.C. Securities Act, anyone dealing in any form of security must be registered with the commission.

Between August 22, 2000 and October 18, 2000, CACF also obtained leads from a third party who identified and solicited interest in scholarship plans through a door-to-door survey. This was against the section of the Securities Act that prohibits cold calling.

CACF has agreed to have a registered representative meet with clients who purchased a scholarship plan from an unregistered sales person to ensure the clients are properly informed about the investment and its suitability for them. These clients will be offered an opportunity to return the investment and have their money refunded.

In addition to the financial penalty, any commissions CACF earned on plans that are not rescinded must be paid to the BCSC Investor Education Fund. This amount could total $33,000.

Scholarship plans are low-risk securities through which parents subscribe to an education savings plan for their children

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities and exchange contracts within B.C. The agreement can be viewed in the documents database of the commission’s website www.bcsc.bc.ca or by contacting media relations officer Dean Pelkey at 899-6880.
Backgrounder

Here is partial text of the agreed settlement between Canadian American Financial Corporation and the BCSC. Text of the full agreement can be found at www.bcsc.bc.ca.

2.1 CAFC is a federally incorporated company that has been registered as an extra-provincial corporation in British Columbia since December 24, 1975. It is not a reporting issuer under the Securities Act, R.S.B.C. 1996, c. 418 (the "Act”).

2.2 At all times material to this agreement CAFC was registered as a Scholarship Plan Dealer under the Act.

2.5 During the period from September 1998 to December 1999:

2.5.1 certain scholarship trust plan units were sold by representatives of CAFC at times when those representatives were not properly registered, in contravention of section 34 of the Act. CAFC retained commissions from these transactions; and

2.5.2 the compliance officer appointed by CAFC to review client transactions failed, in some cases, to review the scholarship plan enrollment applications and failed, in certain other cases, to make adequate inquiries to ensure that all trading activity was being conducted by properly registered personnel, in contravention of section 65 of the Rules.

2.6 CAFC displayed the name "Heritage Scholarship Trust Plans" in the reception area of its Vancouver office and on stationary, application forms and business cards used by its salespersons without making appropriate reference to CAFC as the registered dealer as required by NIN # 97/30.

2.7 CAFC did not take adequate steps to ensure that its internal policy of having representatives submit all proposed advertising materials to Head Office for prior review and approval was followed in each and every instance. As a result, at least three CAFC representatives were able to place recruitment advertisements that contained misleading or inappropriate information.

2.8 CAFC failed to adequately supervise at least one representative who hired individuals to attend at the residences of potential clients and talk to them for the purpose of trading in a scholarship plan, which is contrary to section 49 of the Act.

2.9 During the period August 22, 2000 to October 18, 2000 CAFC engaged the services of an agent in British Columbia who attended at residences in Vancouver to, among other things, identify people who were interested in receiving additional information about scholarship plans. The underlying purpose of these inquiries was to trade in scholarship plans. CAFC ought to have known that calling at residences for the purposes of trading in securities, either directly or through an agent, would contravene section 49 of the Act. CAFC subsequently contacted, at their residences, approximately 150 of the people who had expressed interest in receiving additional information, in contravention of section 49 of the Act.