News Release

Vancouver - The principals of a Vancouver-based investment firm must pay over $600,000 after admitting responsibility for the firm’s failures in compliance procedures, supervision of client accounts, and gatekeeper duties in a settlement reached with the British Columbia Securities Commission.

John P. Thompson, Rex W. Thompson, and Norman F. Thompson also agreed that they can act as directors or officers of a registered firm only if Union Securities Ltd. passes annual audits of its compliance and supervision practices by an independent accounting firm for four successive years.

The payments are:

• John Thompson, Union’s chief executive officer and the ultimate designated person responsible for the firm’s compliance during the securities rules breaches, will pay $250,000 to the commission, of which $50,000 represents a contribution toward the costs of the investigation
• Rex Thompson, Union’s executive vice-president and the alternate designated person, will pay $200,000 to the commission, of which $40,000 represents a contribution toward the costs of the investigation
• Norman Thompson, Union’s president and former chief financial officer, will pay $175,000 to the Commission, of which $30,000 represents a contribution toward the costs of the investigation

The trio, in their roles as directors or senior officers of Union, failed to put in place adequate systems to manage Union. The firm and the three directors failed their duty as gatekeepers to the securities market because they did not design, establish, implement or supervise a compliance regime appropriate for Union’s business.

From 1999 to 2001, four registered representatives at Union - an investment firm headquartered in Vancouver and a member of the Vancouver Stock Exchange (now the TSX Venture Exchange) since 1963 - had U.S. dollar accounts for 40 clients that were non-Canadian residents. The accounts primarily traded securities on the U.S. Over-the-Counter Bulletin Board quotation system.

The representatives failed to learn some essential facts about these clients, such as their identity, creditworthiness, and reputation - contrary to “know your client and suitability rules” of the Securities Act. The reps failed in their gatekeeper duties to the securities market by not making further enquiries about these clients and their trading and by continuing to process orders and transactions for these clients. By not taking steps to verify the identity of their clients and those authorized to trade in these accounts, they also failed to adhere to industry anti-money laundering standards.

In February 2001, one of the four Union representatives, Trevor Koenig, pleaded guilty in the U.S. to conspiracy to commit securities fraud and wire fraud in connection with the manipulation of securities he traded from Union accounts for Edward Durante. Koenig was sentenced to 22 months in prison, three years probation, and ordered to pay restitution of $885,000 (U.S.). He has served 18 months in prison but has not paid the money.

In Nov. 10, 2004, a commission panel ruled Durante manipulated share prices of OTCBB issuers to pocket $36-million (U.S.) illegally. In a March 6, 2006 settlement with the BCSC, Koenig admitted that he knew that the Durante trading was to manipulate the share prices of these issuers and that he played a significant role in facilitating these manipulations. For this, Koenig is permanently banned from the B.C. capital markets.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. You may view the settlements on our website www.bcsc.bc.ca by typing in the search box the individual names or 2006 BCSECCOM 220. If you have questions, contact Andrew Poon, Media Relations, 604-899-6880.