News Release

Released: January 19, 2000 Contact: Michael Bernard
899-6500 or
(BC only) 1-800-373-6393

Vancouver – Fortune Financial Corp., which admits it failed to keep proper client records among other major securities violations, has agreed to pay $125,000 in fines and costs in a settlement with the B.C. Securities Commission.

The settlement, reached in an Agreed Statement of Facts with the commission’s Executive Director Steve Wilson, followed a lengthy investigation of Fortune’s business practices conducted by commission staff after a routine audit in May 1997 showed up several problems.

The commission voluntarily agreed to defer collection of the costs and fines so that any potential claims by Fortune Financial’s clients would be the first in line to be paid out of a regulatory trust fund established for such claims.

Fortune Financial Corp. has ceased operations. Last year certain assets, primarily its sales force, were purchased by the Dundee group of companies.

“We believe that Fortune’s former clients should come first in this case, ahead of any regulatory penalties we may impose,” said Wilson. Of the $125,000, about $105,000 represented fines and $20,000 the costs of the commission investigation.

Commission staff found the violations, which predated Dundee’s involvement, included a range of client-related issues. Among other things, the firm failed to:

· maintain a complete and accurate record of its business transactions and financial affairs, including blotters, confirmations, orders and instructions from clients,
· properly supervise its employees, approve new client accounts or supervise client trading;
· make enquiries about clients’ financial situations or general investment needs and objectives;
· designate a compliance officer for the firm or
· provide conflict of interest statements to clients. The firm also admitted it acted as an underwriter in distributing securities without being registered or using particular exemptions and that it failed to sign a prospectus when it distributed 125,314 units of an Ontario-based security called Infinity Income Trust to 23 B.C. residents for total proceeds of $1,253,140.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities and exchange contracts within the province.

The Agreed Statement of Facts can be viewed at the commission’s Web site (www.bcsc.bc.ca) or copies obtained by phoning Communications Manager Michael Bernard.