Decisions
BARCLAY LAS VEGAS LIMITED PARTNERSHIP, et. al. [Decision]
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BCSECCOM #:
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Document Type:
Decision
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Published Date:
1999-03-12
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Effective Date:
1999-03-04
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Details:
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COR#99/030
IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418
AND
IN THE MATTER OF BARCLAY LAS VEGAS LIMITED PARTNERSHIP,
CLOVERLEAF MANAGEMENT LTD., REGIS CAPITAL CORPORATION,
ANDREW GABOR AND ADRIEN GOETZ
HEARING
| PANEL: | ADRIENNE WANSTALL | MEMBER |
 | DIANE K. WOLCH | MEMBER |
| PETER A. MANSON, Q.C.1 | MEMBER |
- 1Peter A. Manson, Q.C. sat on the hearing but died on October 3, 1998. He did not participate in the drafting of this decision.
| DATES of HEARING: | JANUARY 19 to 23, FEBRUARY 11, |
| MARCH 16 and 17, and JUNE 8 and 9, 1998 |
| DATE OF DECISION: | MARCH 4, 1999 |
| APPEARING: | PATRICK ROBITAILLE | FOR COMMISSION STAFF |
| H. RODERICK ANDERSON | FOR ANDREW GABOR |
| | AND REGIS CAPITAL |
| | CORPORATION |
| DANA PRINCE | FOR ADRIEN GOETZ AND |
| | CLOVERLEAF |
| | MANAGEMENT LTD. |
DECISION OF THE COMMISSION
1. INTRODUCTION
This decision relates to a hearing under sections 161(1) and 162 of the Securities Act, R.S.B.C. 1996, c. 418. On June 19, 1997, the Executive Director issued a Notice of Hearing alleging that Barclay Las Vegas Limited Partnership, Cloverleaf Management Ltd., Regis Capital Corporation, Andrew Gabor and Adrien Goetz distributed, or caused to be distributed, Class A units in Barclay without being registered and without filing or obtaining a receipt for a prospectus, contrary to sections 34 and 61 of the Act. The Notice of Hearing was accompanied by temporary orders under section 161(2) of the Act that:
1. under section 161(1)(b) of the Act, all persons cease trading in the class A units of Barclay; and
2. under section 161(1)(c) of the Act, the exemptions described in sections 44 to 47, 74, 75, 98 or 99 of the Act do not apply to the Respondents.
The hearing was adjourned three times by consent and the temporary orders were extended until the hearing was held and a decision rendered. The hearing commenced on January 19, 1998. At that time, Commission staff alleged that the registration and prospectus exemptions pursuant to which the Respondents had distributed the Class A units in Barclay, those in sections 89(b) and 128(b) of the Securities Rules, B.C. Reg. 194/97, were unavailable to the Respondents for two reasons. The first is that the units had an aggregate acquisition cost to the purchaser of less than $25,000. The second is that, due to changes in material facts that were not reflected in amendments to the offering memorandum that was delivered to certain purchasers, the certificate in the offering memorandum became untrue and, therefore, the offering memorandum was not in the required form when it was delivered to those purchasers.
The hearing continued on January 20 to 23, February 11, and March 16 and 17, 1998.
On March 18, 1998, the Commission issued rulings on two interlocutory applications made by the Respondents. The Commission:
1. ruled pursuant to the exercise of our discretion, that we will render our decision as to conduct and, if we determine that some or all of the allegations against the Respondents were proved, hear further submissions before issuing final orders in this matter; and
2. ordered pursuant to section 171 of the Act that the temporary orders be varied to provide that
- 1) under section 161(1)(c) of the Act, the exemptions described in
- a) section 45(2)(5) and (30) (in respect of trades designated by section 89(a) and (b) the Rules) of the Act, and
b) section 74(2)(4) and (28) (in respect of trades designated by section 128(a),(b) and (c) of the Rules) of the Act
do not apply to the Respondents, and
On May 27, 1998, the Commission issued a ruling on a third interlocutory application made by the Respondents. The Commission ordered Commission staff to disclose to the Respondents certain records respecting exemption orders recently issued to Opus Cranberries II Limited Partnership and to Brinkman Capital Corporation.
- The hearing continued on June 8 and 9, 1998.
2. BACKGROUND
The background to this matter is largely set out in the following Agreed Statement of Facts, which was signed by all the Respondents and Commission staff on January 19, 1998:
1. [Barclay] is a limited partnership established on September 8, 1995 in the Province of British Columbia.
2. [Cloverleaf] is a non-reporting issuer incorporated in the Province of British Columbia on June 5, 1995. The registered and records office of Cloverleaf is located at 300 - 1111 Melville Street, Vancouver, British Columbia. The two directors of Cloverleaf are [Gabor] who is the President and Chief Executive Officer, and [Goetz] who is the Secretary and Chief Financial Officer;
3. [Regis] is a non-reporting issuer incorporated in the Province of British Columbia on March 17, 1994. The registered and records office of Regis is 300 - 1111 Melville Street, Vancouver, British Columbia. Gabor is the President, Secretary and the sole director of Regis, and Goetz is a Vice-President of Regis;
4. the offering documents disclosed that Barclay was formed for the purpose of purchasing a 100% interest in Barclay Square Apartments located in Las Vegas, Nevada (the “Property”) through a Nevada limited partnership, Barclay Apartments Limited. Barclay proposed to refurbish and sell the apartments as individual strata-titled residences over a period of five years (the “Project”). In order to raise capital for the purchase of the Property, Barclay made an offering of Class A units in Barclay (the “Securities”) to members of the public (the “Offering”);
5. as disclosed in the offering documents Cloverleaf is the general partner of Barclay and Regis in the promoter of the Offering;
6. an offering memorandum dated September 11, 1995 (the “Offering Memorandum”) was prepared by Barclay and signed by both Gabor and Goetz as representatives of Cloverleaf. Under the Offering Memorandum, up to 620 Securities were offered at a price of $25,000 each. [The purchase price was $10,000 in cash and $15,000 by way of a promissory note in favour of Barclay bearing interest at 9.75% per year, payable monthly.] The Offering Memorandum provided that additional units could be issued by Cloverleaf if such additional units were first offered to existing unitholders;
7. Gabor and Goetz signed a Certificate attached to the Offering Memorandum stating that the Offering Memorandum contained no untrue statement of a material fact and did not omit to state a material fact that was required to be stated or that was necessary to prevent a statement that was made from being false or misleading in the circumstances in which it was made;
8. the Offering Memorandum provided that the closing date of the Offering would be December 31, 1995 unless otherwise extended. The Offering Memorandum was subsequently amended on three occasions;
9. the first amendment, dated September 26, 1995 extended the Offering to residents of the Province of Manitoba;
10. the second amendment, dated December 13, 1995, extended the Offering closing date to on or before June 30, 1996 unless otherwise extended;
11. the third amendment [,dated June 18, 1996,] extended the closing date to on or before December 31, 1996 unless otherwise extended. The third amendment also changed the terms of the promissory notes as follows:
- (a) the holder of the promissory notes was changed from [Barclay] to [Cloverleaf]; and
(b) the requirement to pay interest under the promissory note was eliminated and interest on the promissory note was to accrue until the due date of the principal of the promissory note;
13. an additional 220 Securities were sold between October 1996 and December 1996. [As a result, the cash raised by Barclay increased from US$4,513,600 to US$6,115,200 and the financial arrangement fee paid to Regis increased from US$395,333 to US$535,000.] No amendment to the Offering Memorandum was prepared or filed with respect to the sale of the additional Securities although the existing unitholders were given the opportunity to purchase additional Securities. The specifics of the extent of the additional subscription and the use of the proceeds from the sale of the additional Securities were not made known to the investors;
14. Barclay did not issue a prospectus to qualify the distribution of the Securities under section 42 of the Securities Act, S.B.C. 1985, c. 85 (the “Former Act”) (now section 61 of the [Act]). Instead, the Securities were offered pursuant to the sophisticated purchaser exemptions contained in section 117(b) of the Regulation, B.C. Reg. 270/86 (the “Former Regulation”) (now section 128(b) of the [Rules]) and section 55(2)(4) of the Former Act (now section 74(2)(4) of the Act);
15. the Respondents were not registered to trade in securities in the Province of British Columbia;
16. the Respondents relied on the exemptions from the registration requirements contained in section 76(b) of the former Regulation (now section 89(b) of the Rules) and section 31(2)(5) of the Former Act (now section 55(2)(5) of the Act);
17. the promissory note contained no provision to make demand for payment prior to the due date. The sum due under the promissory note was due on a date certain, December 31, 2000. At the option of the investor, the due date on the promissory note could be extended to December 31, 2005 and on that date, accrued interest and the principal was due and owing;
18. one of the reasons for the extension of time on the promissory notes was to ensure that investors would not be required to pay the sum due and owing under the promissory note until the Project was likely to be completed;
19. the Offering Memorandum contemplated that the project would be completed by December 31, 2000. As a result of raising the additional proceeds through the sale of additional units, the time frame for the project was accelerated, and it is now anticipated that the selling of the strata residences will be completed by April or May, 2000;
20. after the sale of all strata residences at the Property, Barclay will be dissolved in accordance with the terms of the Limited Partnership Agreement;
21. the FOFI set out in the Offering Memorandum and prepared by chartered accountants does not account for the payment into the partnership of the principal sums due and owing under the promissory notes, even though the due date for payment upon the promissory notes was within the time frame considered by the FOFI which ended on December 31, 2000 [As well, the use of proceeds set out in the Offering Memorandum includes in the proceeds only the cash portion of the investment.];
22. the returns calculated by the Respondents and set out in promotional materials with regard to the project were based on returns on the $10,000 cash portion of the investment only; and
23. the sales agents who sold the Securities were entitled to a 10% commission solely on the cash portion of the investment rather than on the entire $25,000.
Subsequent to these events, and to the issuance of the Notice of Hearing, the Commission issued two exemption orders for offerings that the Respondents say are structured in a manner similar to the Barclay Offering. Specifically, in all three offerings, a portion of the consideration is a promissory note payable by the investor at about the same time as a distribution of cash is expected to be made to the investor by the issuer. The Respondents submit that “the deals are structured in a manner where the investor at the time of investing would have a reasonable expectation that the investment would generate sufficient profits or distribution that would satisfy their obligation to make payment under the notes that they signed.” The Opus Cranberries order was issued on September 5, 1997, by Commission staff. The Brinkman order was issued on February 25, 1998, by the Chair and Vice-Chair of the Commission after the applicant was given an opportunity to be heard. At the Brinkman hearing, Commission staff took the position that the order should not be issued. The Chair and Vice-Chair did not issue reasons for their decision.
At this hearing, the Commission heard testimony from the Commission staff investigator, from Robert Katz, the chartered accountant who prepared the financial projections in the Offering Memorandum, from Alan McNulty, a mutual fund salesperson who sold Securities to three of his clients, and from eight investors who purchased Securities. Some of these investors testified that, at the time they bought the Securities, they had been confused as to whether they were making a $10,000 investment or a $25,000 investment. However, most testified that they had recognized at the time that they were obligated to pay the amount owing under the promissory note, but anticipated that they would not have to come up with the money as they expected that the profits from the Project would cover the payment.
3. FINDINGS
Commission staff allege that the Respondents distributed, or caused to be distributed, Securities without being registered and without filing or obtaining a receipt for a prospectus, contrary to sections 34 and 61 of the Act, which provide as follows:
- Section 34(1)
(1) A person must not
- (a) trade in a security or exchange contract unless the person is registered in accordance with the regulations as
- (i) a dealer, or
(ii) a salesperson, partner, director or officer of a registered dealer and is acting on behalf of that dealer,
Section 61(1)
(1) Unless exempted under this Act or the regulations, a person must not distribute a security unless a preliminary prospectus and a prospectus respecting that security
- (a) have been filed with the executive director, and
(b) receipts obtained for them from the executive director.
A distribution is defined in section 1(1) of the Act to include a trade in a security of an issuer that has not been previously issued.
The Respondents had distributed Securities pursuant to the registration and prospectus exemptions contained in sections 89(b) and 128(b) of the Rules, which provide as follows:
- Section 89(b)
Registration under section 34(1)(a) of the Act is not required for a trade in the following circumstances:
(b) the trade is made by an issuer in a security of its own issue if
- (i) the purchaser purchases as principal,
(ii) the purchaser is a sophisticated purchaser,
(iii) the aggregate acquisition cost to the purchaser is not less than $25,000, and
(iv) an offering memorandum is delivered to the purchaser in compliance with section 133;
Section 128(b)
Section 61 of the Act does not apply to a distribution in the following circumstances:
(b) the trade is made by an issuer in a security of its own issue if
- (i) the purchaser purchases as principal,
(ii) the purchaser is a sophisticated purchaser,
(iii) the aggregate acquisition cost to the purchaser is not less than $25,000, and
(iv) an offering memorandum is delivered to the purchaser in compliance with section 133;
Section 133 of the Rules provides that an offering memorandum, among other things, must be delivered to the purchaser before an agreement of purchase and sale is entered into and must be in the required form. The required form is Form 43. Form 43 contains a certificate, to be signed by the president or chief executive officer and by the chief financial officer of the issuer, stating that:
- The foregoing contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is necessary to prevent a statement that is made from being false or misleading in the circumstances in which it was made.
Commission staff allege that these exemptions were unavailable to the Respondents for two reasons. The first is that the Offering had an aggregate acquisition cost to the investor of less than $25,000. The second is that, due to changes in material facts that were not reflected in amendments to the Offering Memorandum, the certificate became untrue and, therefore, the Offering Memorandum was not in the required form when it was delivered to purchasers after June 18, 1996.
- We will deal with these two allegations of Commission staff separately.
1. Aggregate Acquisition Cost
The exemptions in sections 89(b) and 128(b) of the Rules provide that the aggregate acquisition cost to each investor cannot be less than $25,000. Under the Offering, investors paid $10,000 in cash and signed a $15,000 promissory note. Commission staff submit that payment in this manner did not constitute consideration adequate to satisfy the $25,000 aggregate acquisition cost as the promissory note was not “virtually certain” to be paid. Local Policy Statement 3-24, Statutory and Discretionary Exemptions, provides as follows:
- For those issuers not precluded from accepting promissory notes, such as limited partnerships, the Commission takes the position that consideration may include a promise to pay only if the purchaser is certain, or virtually certain, to be called upon to make payment. This would disqualify commitments under various tax oriented arrangements where the issuer or promoter has held out to the investor a hope or expectation that payment of a promissory note will be waived.
The promissory notes are due on December 31, 2000, which is the estimated completion date of the Project (at which time Barclay will be dissolved). The due date may be extended until December 31, 2005, at the option of the investor. This extension option is provided to ensure that investors will not be required to make payment under the promissory notes until the Project is likely to be completed.
Commission staff submit that the investment is structured in this way so that payment of the promissory notes will be made, in effect, from distributions from Barclay. Therefore, they argue, even if the promissory notes are a legal obligation in a technical sense, their use in this manner constitutes an inappropriate use of the exemptions, in substance if not form.
In support of their position, Commission staff referred us to In the Matter of West Coast Dart Digest Ltd., Hanover Financial Services Ltd., Helvetia Marketing Services Inc. (January 8, 1988), (1988) 54 British Columbia Securities Commission Weekly Summary, a decision of the Superintendent of Brokers (now the Executive Director). The issuer in that case distributed securities under a blanket order, BOR#87/20, that provided exemptions from the registration and prospectus requirements of the Former Act where the securities were purchased by a sophisticated purchaser, where the aggregate acquisition cost to the purchaser was not less than $25,000 and where certain other conditions, including provision of an offering memorandum, were met. An investor in that case was required to pay only $5100 in cash. The remaining $20,000 would actually be paid by the investor only if the investment did not proceed as anticipated. The Superintendent held that, when determining whether the exemption was available to the issuer, it was necessary to look at the substance, and not just the form, of the transaction. He found at page 11 of the decision that “there is little or no expectation of liability connected with the $20,000 balance” and that the issuer could not rely on the exemptions.
The Respondents admit that the Project was designed so that the investor, at the time of investing, would have a reasonable expectation that the investment would generate sufficient profits to satisfy the obligation under the promissory note. Having said that, the Respondents argue that the investor is liable under the promissory note and that, on any reasonable interpretation and application of the Policy, the investor is not only virtually certain, but certain, to be called upon to make payment of the promissory note. Further, the Respondents point to the Opus Cranberries and Brinkman orders as evidence that an investment structured in this way is appropriate from a regulatory perspective. Finally, the Respondents argue that if the Commission is now of the view that such an investment structure is inappropriate and, consequently, that the Policy is deficient in not addressing this, the Commission should amend the Policy rather than trying to remedy the deficiency through the hearing process.
We agree with Commission staff that we must look at the substance, as well as the form, of the Barclay Offering in determining whether it meets the $25,000 aggregate acquisition cost requirement in the section 89(b) and 128(b) exemptions.
- As to form, we agree with the Respondents that the investors are liable under the promissory notes.
As to substance, however, several aspects of the Offering lead us to the conclusion that this is, in effect, a $10,000 investment rather than a $25,000 investment. The returns calculated by the Respondents and included in the promotional materials were based on the $10,000 cash portion only. The commissions paid to the sales agents were based on the $10,000 cash portion only. The use of proceeds section of the Offering Memorandum refers only to the cash portion of the investment. The cash flow projected in the FOFI in the Offering Memorandum does not include payment of the promissory notes, even though they are payable within the time frame covered by the FOFI (though they can be extended at the option of the investor). Unless something were to go wrong, the amounts owing under the promissory notes are not required to fund the Project and will not have to be paid out of pocket by the investors.
The exemptions in sections 89(b) and 128(b) of the Rules are designed to identify investors that have sufficient sophistication that they do not require either the advice provided by a registrant or the civil remedies provided by a prospectus. One of the tests for identifying such investors is that they meet the definition of “sophisticated purchaser” set out in the Rules. Another test is that they are prepared to pay at least $25,000 for the investment. This amount should lead investors to ensure that they obtain adequate information and, if necessary, appropriate advice before deciding that they are prepared to accept the risks of the investment. We are concerned that if investors do not anticipate actually having to pay this amount out of their own pockets, they will be less cautious in making their investment decisions.
We find that the Securities had an aggregate acquisition cost to the purchaser of less than $25,000 and, therefore, that the Barclay Offering could not be made under the exemptions in sections 89(b) and 128(b) of the Rules.
2. Offering Memorandum
Commission staff submit that, on two occasions, there was a change in the material facts in respect of the Offering and these changes should have been disclosed to investors who purchased subsequent to the changes, by way of amendment to the Offering Memorandum. Otherwise, the certificate becomes untrue and, as a result, the Offering Memorandum is no longer in the required form. These two changes were
(i) the sale of 220 additional Securities, and
(ii) the accrual of interest payments on the promissory note (this change was noted in the third amendment to the Offering Memorandum, but the FOFI in the Offering Memorandum was not amended to reflect the reduction in cash flow to Barclay).
The Respondents submit that there is no express requirement in the Act or Rules for an issuer to amend an offering memorandum, as there is in respect of prospectuses, take over and issuer bid circulars, and directors’ and officers’ circulars. Further, they say that even if there were such a requirement, the two changes identified by Commission staff do not amount to misrepresentations that would have to be the subject of an amendment.
We recognize that there is no provision requiring amendment of an offering memorandum. However, that does not end the matter. We must also look at the conditions attached to the use of the exemptions in sections 89(b) and 128(b) of the Rules.
In particular, it is a condition of these exemptions that “an offering memorandum is delivered to the purchaser in compliance with section 133”. Section 133 provides that the offering memorandum must be delivered to the purchaser before an agreement of purchase and sale is entered into and that it must be in the required form, and the required form provides that the offering memorandum must include a certificate. Thus, for each distribution to a purchaser, the purchaser must be given an offering memorandum with a truthful certificate before the agreement of purchase and sale is entered into. It follows from this that, where an issuer is relying on these exemptions to distribute securities to several purchasers over a period of time and during that period of time a change occurs that would make the certificate untrue, for all distributions subsequent to that change, the issuer must do one of two things - either prepare a new offering memorandum, which would include a new certificate, or prepare an amendment to the existing offering memorandum, which would also include a new certificate. Unless the issuer provides a purchaser with an offering memorandum containing a truthful certificate, the exemptions will not be available. It would be a strange result if the issuer could continue to make distributions pursuant to an offering memorandum that, for example, contained an untrue statement of a material fact simply because the certificate was true at the time it was signed.
As a result, we must consider whether one or both of the changes identified by Commission staff resulted in the certificate in the Offering Memorandum becoming untrue.
The certificate signed by Gabor and Goetz on September 11, 1995, provided as follows: “The foregoing contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is necessary to prevent a statement that is made from being false or misleading in the circumstances in which it was made.”
- “Material fact” is defined in section 1(1) of the Act as follows:
- “material fact” means, where used in relation to securities issued or proposed to be issued, a fact that significantly affects, or could reasonably be expected to significantly affect, the market price or value of those securities.
The first change identified by Commission staff was the sale of 220 additional Securities between October and December 1996. As a result of this, the cash raised by Barclay increased from US$4,513,600 to US$6,115,200 and the financial arrangement fee paid to Regis increased from US$395,333 to US$535,000. The Offering Memorandum disclosed that additional Securities could be issued if they were first offered to existing holders. However, the Offering Memorandum did not disclose how any additional proceeds would be used or that Regis would get an additional fee. Nor did the FOFI in the Offering Memorandum contemplate the increase in the cash flow raised.
The use to which the proceeds of an offering will be put is one of the most fundamental pieces of information for an investor in that offering. Where the actual proceeds turn out to be 35% greater than those estimated in the offering memorandum, and no indication is given as to how they are to be spent, the investor is missing information critical to his or her investment decision. Also, the Commission has held that an investor is entitled to know precisely how much an agent is receiving as a result of the sale of a security: Re: Fraser Bow Securities Inc. (August 18, 1988), (1988) 84 British Columbia Securities Commission Weekly Summary.
We find that the increase in cash flow and in the fee paid to Regis resulting from the sale of the 220 additional Securities were facts that could reasonably be expected to significantly affect the market price or value of the Securities. Therefore, we find that the sale of the additional Securities caused the Offering Memorandum to contain untrue statements of a material fact.
The second change identified by Commission staff was the accrual of interest payments on the promissory note, which was effected in the third amendment to the Offering Memorandum, dated June 18, 1996. In the FOFI set out in the Offering Memorandum, these interest payments constitute the predominant portion of Barclay’s net cash flow over the first three years of the five year Project: 66.4% in 1996; 80.5% in 1997; and 99.6% in 1998.
We are of the view that it is not enough that this change was included in the third amendment to the Offering Memorandum. The cash flow represented by the interest payments on the promissory notes would have given comfort to an investor that the Project would have sufficient cash flow to execute its business plan over the first three years of the Project. As it turns out, the loss of the interest payments in those years was almost offset by the cash generated from the sale of the 220 additional Securities between October and December 1996; however, as noted above, the investors were not told about that change either.
We find that the accrual of interest payments on the promissory notes was a fact that could reasonably be expected to significantly affect the market price or value of the Securities. Therefore, we find that the accrual of interest on the promissory notes caused the Offering Memorandum to contain untrue statements of a material fact.
We have found that the failure to disclose in the Offering Memorandum both of the changes identified by Commission staff caused the Offering Memorandum to contain untrue statements of material facts relating to the financial health of the Project and therefore that the certification in the Offering Memorandum was untrue. As a result, we find that, after June 18, 1996, the Offering Memorandum was not in the required form and, therefore, that the Barclay Offering could not be made under the exemptions in section 89(b) and 128(b) of the Rules.
3. Conclusion
We have found that the Barclay Offering could not be made under the exemptions in sections 89(b) and 128(b) of the Rules. We also find that no other exemptions were available in respect of the distributions purported to be made under those exemptions. Finally, we find that all of the Respondents carried out acts in furtherance of the distribution of the Securities: Barclay was the issuer of the Securities; Cloverleaf is the general partner of Barclay and became the holder of the promissory notes; Regis was the promotor of the Offering and received a financial administration fee in connection with the Offering; Gabor is President, Chief Executive Officer and one of the two directors of Cloverleaf, as well as being President, Secretary and the sole director of Regis; Goetz is Secretary, Chief Financial Officer and the other director of Cloverleaf, as well as being a Vice-President of Regis.
Therefore, we find that all of the Respondents traded in the Securities without being registered, contrary to section 34(1) of the Act, and distributed the Securities without filing a prospectus with, and obtaining a receipt for it from, the Executive Director, contrary to section 61(1) of the Act.
4. DECISION
We have found that all of the Respondents contravened sections 34(1) and 61(1) in connection with the distribution of Barclay Securities. In accordance with our ruling of March 18, 1998, we will hear further submissions before issuing orders in respect of those contraventions.
DATED at Vancouver, British Columbia, on March 4, 1999.
FOR THE COMMISSION
| Adrienne R. Wanstall | Diane K. Wolch |
| Member | Member |