Common use of AGREED FACTS Registration History Clause in Contracts

AGREED FACTS Registration History. 6. The Respondent has been registered as a mutual fund salesperson in the province of Ontario with Sterling Mutuals Inc. (“Sterling”) since June 2002. 7. Prior to working at Sterling, the Respondent was registered as a mutual fund salesperson with Fund Equity Plus Inc. from April 2001 to June 2002 and at Odyssey Capital from February 2000 to April 2001. 8. Xxxxxxxx became a Member of the MFDA on March 8, 2002. 9. On March 14, 2003, Paradigm Asset Management Inc. which subsequently changed its name to Portus Alternative Asset Management Inc. (“Portus”) was registered as an Investment Counsel and Portfolio Manager (“IC/PM”) in all Canadian jurisdictions except Quebec (and became registered in Quebec when it changed its name). Portus developed certain principal-protected investment products that were distributed to retail investors by means of referrals from various sources, including Members of the MFDA. In total, approximately $792 million was invested in Portus principal-protected investment products. 10. On February 2, 2005, the Ontario Securities Commission (“OSC”) issued orders requiring Portus and its affiliates to cease trading in securities because of apparent breaches of the Securities Act, R.S.O. 1990, c. S.5 as amended (the “OSA”). Subsequently, the OSC commenced enforcement proceedings against Portus, its affiliates and certain officers and directors of Portus. Upon application of the OSC, KPMG Inc. (“KPMG”) was appointed as the Receiver of all of the assets of Portus and related entities. The Receiver later applied for, and obtained, a bankruptcy order, among other things, adjudging Portus bankrupt. In its most recently disclosed assessment, KPMG estimated that realizations would exceed 95% of Portus Customer Claims when final distributions are made. Prior to the issuance of the cease trade orders, the Respondent was not aware of the improper conduct that gave rise to the OSC enforcement proceedings and the cease trade orders against Xxxxxx. 11. Xxxxxxxx never authorized the sale of Portus investment products by its Approved Persons and did not enter into a referral arrangement with Portus. In fact, as described below, Sterling expressly directed its Approved Persons, including the Respondent that they were not permitted to sell or refer clients to Portus investment products. 12. In approximately January 2006, mutual fund dealers and investment dealers that were registered in Ontario and referred clients to Portus (the “Ontario Dealers”), voluntarily agreed to terms and conditions on their registration stipulating that the Ontario Dealers would repay clients all referral fees received from Portus (the “OSC Terms & Conditions”). As part of that process, many of the Ontario Dealers, in turn, subsequently clawed back from Approved Persons any compensation that had been paid to them in respect of such referrals. Taking into account the OSC Terms & Conditions, the OSC, the Investment Dealers Association of Canada and the MFDA agreed not to pursue enforcement proceedings against the Ontario Dealers for shortcomings in the due diligence and supervision of their Portus referral programs. 13. In light of the fact that Xxxxxxxx never had a referral arrangement with Xxxxxx and did not receive referral fees from Portus, Sterling was not subject to the OSC Terms & Conditions and was not expected to repay any referral fees to its clients. Consequently, unlike the clients of the Ontario Dealers, prior to the commencement of this proceeding, individuals who had purchased Portus investment products through the Respondent or the companies that he controlled were not repaid the referral fees that had been paid by Portus to the Respondent or his companies (approximately $136,100 as described below). 14. Between January 2004 and January 2005, the Respondent or companies that he controlled sold, referred or facilitated the sale of approximately $3.46 million of Portus investment products to approximately 31 clients. None of the transactions were carried on for the account of Sterling or processed through the facilities of Sterling. 15. Sterling had not approved Portus investment products for sale by its Approved Persons and as described below, in June 2004, Sterling expressly directed its Approved Persons, including the Respondent, that they were not permitted to sell or refer them. 16. Companies that the Respondent controlled were paid sales commissions or referral fees in the amount of approximately 4% of the amounts invested as compensation for the involvement of the Respondent and his companies in the sale of Portus investment products to clients. Portus Referral Fee Statements indicate that the compensation paid by Portus to the Respondent or the companies that he controlled as compensation for involvement in the sale of Portus investment products to be approximately $136,100. The Respondent’s records indicate that he paid more than $70,000 of the compensation that was received from Portus to clients or to other individuals that processed their Portus transactions through companies that the Respondent controlled. 17. The Respondent acknowledges that since Xxxxxxxx became a Member of the MFDA in March 2002, MFDA Rules have prohibited him from making sales or referrals of securities that were not processed through the facilities of Sterling. The Respondent states that representatives of Xxxxxx told him that he could process sales of Portus products through the managing general agency (“MGA”) that he operated and through which he was authorized to process insurance business. That advice was in fact incorrect and the Respondent elected not to discuss the proposal from Portus with Xxxxxxxx. The Respondent now acknowledges that he cannot rely on advice from an issuer concerning his obligations as an Approved Person. All sales and referrals of securities must be approved by and processed through the facilities of his Member Sterling. 18. On June 3, 2004, Xxxxxxxx’s Vice-President and Chief Compliance Officer sent an e-mail entitled “Non Approved Product” to all Approved Persons, including the Respondent, which stated: Please note that you are not allowed to sell products which has (sic) not been approved by the dealer. Paradigm funds have changed their name to Portus Funds. They are not approved. The firm has been trying to by-pass dealer compliance by offering their product on a referral basis through MGA channels. This is not allowed under the MFDA. Any advisor attempting to do so will be suspended and reported to regulators.

AGREED FACTS Registration History. 6. The Respondent has been registered as a mutual fund salesperson in the province of Ontario with Sterling Mutuals Inc. (“Sterling”) since June 2002. 7. Prior From May 1989 to working at SterlingFebruary 2, 2005, the Respondent was registered in Ontario as a mutual fund salesperson with Fund Equity Plus Xxxxxxx Xxxxxxxx Inc. from April 2001 (“Clarica”). 7. From June 2005 to June 2002 and at Odyssey Capital from February 2000 to April 2001July 5, 2005, the Respondent was registered in Ontario as a mutual fund salesperson with Xxxxxxxxx & Xxxxxx Associates Inc. (“Xxxxxxxxx & Xxxxxx”). 8. Xxxxxxxx became From July 11, 2005 to May 17, 2006 the Respondent was registered in Ontario as a mutual fund salesperson with Legacy Investment Management Inc. (“Legacy”). The Respondent was terminated by Legacy as a result of the events described herein. The Respondent is not currently registered in the securities industry in any capacity. 9. Clarica has been a Member of the MFDA on March 8, since January 2002. 9. On March 14June 25, 20032007, Paradigm Asset Management Inc. which subsequently Clarica changed its name to Portus Alternative Asset Management Inc. Sun Life Financial Investment Services (“Portus”Canada) was registered as an Investment Counsel and Portfolio Manager (“IC/PM”) in all Canadian jurisdictions except Quebec (and became registered in Quebec when it changed its name). Portus developed certain principal-protected investment products that were distributed to retail investors by means of referrals from various sources, including Members of the MFDA. In total, approximately $792 million was invested in Portus principal-protected investment products.Inc. 10. On February 2, 2005, the Ontario Securities Commission (“OSC”) issued orders requiring Portus and its affiliates to cease trading in securities because of apparent breaches of the Securities Act, R.S.O. 1990, c. S.5 as amended (the “OSA”). Subsequently, the OSC commenced enforcement proceedings against Portus, its affiliates and certain officers and directors of Portus. Upon application of the OSC, KPMG Inc. (“KPMG”) was appointed as the Receiver of all of the assets of Portus and related entities. The Receiver later applied for, and obtained, a bankruptcy order, among other things, adjudging Portus bankrupt. In its most recently disclosed assessment, KPMG estimated that realizations would exceed 95% of Portus Customer Claims when final distributions are made. Prior to the issuance of the cease trade orders, the Respondent was not aware of the improper conduct that gave rise to the OSC enforcement proceedings and the cease trade orders against Xxxxxx. 11. Xxxxxxxx never authorized the sale of Portus investment products by its Approved Persons and did not enter into a referral arrangement with Portus. In fact, as described below, Sterling expressly directed its Approved Persons, including the Respondent that they were not permitted to sell or refer clients to Portus investment products. 12. In approximately January 2006, mutual fund dealers and investment dealers that were registered in Ontario and referred clients to Portus (the “Ontario Dealers”), voluntarily agreed to terms and conditions on their registration stipulating that the Ontario Dealers would repay clients all referral fees received from Portus (the “OSC Terms Xxxxxxxxx & Conditions”). As part of that process, many of the Ontario Dealers, in turn, subsequently clawed back from Approved Persons any compensation that had Xxxxxx has been paid to them in respect of such referrals. Taking into account the OSC Terms & Conditions, the OSC, the Investment Dealers Association of Canada and the MFDA agreed not to pursue enforcement proceedings against the Ontario Dealers for shortcomings in the due diligence and supervision of their Portus referral programs. 13. In light of the fact that Xxxxxxxx never had a referral arrangement with Xxxxxx and did not receive referral fees from Portus, Sterling was not subject to the OSC Terms & Conditions and was not expected to repay any referral fees to its clients. Consequently, unlike the clients of the Ontario Dealers, prior to the commencement of this proceeding, individuals who had purchased Portus investment products through the Respondent or the companies that he controlled were not repaid the referral fees that had been paid by Portus to the Respondent or his companies (approximately $136,100 as described below). 14. Between January 2004 and January 2005, the Respondent or companies that he controlled sold, referred or facilitated the sale of approximately $3.46 million of Portus investment products to approximately 31 clients. None of the transactions were carried on for the account of Sterling or processed through the facilities of Sterling. 15. Sterling had not approved Portus investment products for sale by its Approved Persons and as described below, in June 2004, Sterling expressly directed its Approved Persons, including the Respondent, that they were not permitted to sell or refer them. 16. Companies that the Respondent controlled were paid sales commissions or referral fees in the amount of approximately 4% of the amounts invested as compensation for the involvement of the Respondent and his companies in the sale of Portus investment products to clients. Portus Referral Fee Statements indicate that the compensation paid by Portus to the Respondent or the companies that he controlled as compensation for involvement in the sale of Portus investment products to be approximately $136,100. The Respondent’s records indicate that he paid more than $70,000 of the compensation that was received from Portus to clients or to other individuals that processed their Portus transactions through companies that the Respondent controlled. 17. The Respondent acknowledges that since Xxxxxxxx became a Member of the MFDA since January 2002. 11. Legacy has been a Member of the MFDA since June 2002. 12. Commonwealth Capital Corporation (“Commonwealth”) was a company incorporated pursuant to the laws of Ontario. Commonwealth described itself as a “private wealth management service organization”. Commonwealth was dissolved in March 2002, MFDA Rules have prohibited him from making sales or referrals of securities that were not processed through the facilities of SterlingApril 2006. 13. The Respondent states that representatives was introduced to Commonwealth by BH, the sole director and officer of Xxxxxx told him that he could process sales Commonwealth and an acquaintance of Portus products through the managing general agency (“MGA”) that he operated Respondent. 14. RF and through which he was authorized to process insurance business. That advice was in fact incorrect LF are spouses and the Respondent elected not to discuss the proposal from Portus with Xxxxxxxxwere clients of Clarica. The Respondent now acknowledges that he cannot rely was the mutual fund salesperson responsible for their accounts. 15. In February 2002, the Respondent facilitated a loan of $50,000 from RF and LF to Commonwealth for a term of 5 years. The loan bore interest at 8% per annum calculated semi-annually. Interest payments were to be paid annually from the date of the commencement of the loan. Attached to the application form was a promissory note to be completed and executed by BH on advice behalf of Commonwealth upon approval of the application. 16. Shortly thereafter, RF and LF received a certificate from an issuer concerning his obligations as an Approved PersonCommonwealth entitled “Private Loan Placement Program” confirming the principal amount, term and the interest rate of the loan. 17. All sales Between February 2002 and referrals of securities must be approved by and processed through the facilities of his Member Sterling. 18. On June 3, July 2004, Xxxxxxxx’s Vice-President and Chief Compliance Officer sent an e-mail entitled “Non Approved Product” to all Approved Persons, including the Respondent, which stated: Please note that you are not allowed to sell products which has (sic) not been approved Respondent facilitated loans by the dealer. Paradigm funds have changed their name to Portus Funds. They are not approved. The firm has been trying to by-pass dealer compliance by offering their product on a referral basis through MGA channels. This is not allowed under the MFDA. Any advisor attempting to do so will be suspended and reported to regulators.fifteen

AGREED FACTS Registration History. 6. The Respondent Xxxxx has been registered in Ontario as a mutual fund salesperson and in the province of Ontario with Sterling Mutuals Inc. (“Sterling”) other capacities as described more particularly below since June 2002May 1997. 7. Prior to working at SterlingCommencing November 13, the Respondent 2006, Xxxxx was registered as a mutual fund salesperson with Fund Equity Plus Inc. from April 2001 to June 2002 and at Odyssey Capital from February 2000 to April 2001. 8. Xxxxxxxx became a Member of the MFDA on March 8, 2002. 9. On March 14, 2003, Paradigm Asset Management Inc. which subsequently changed its name to Portus Alternative Asset Management Agora Financial Services Inc. (“PortusAgora”) was registered as an Investment Counsel and Portfolio Manager (“IC/PM”) in all Canadian jurisdictions except Quebec (and became registered in Quebec when it changed its name). Portus developed certain principal-protected investment products that were distributed to retail investors by means of referrals from various sources, including Members a Member of the MFDA. In totalMarch 2007, approximately $792 million holding companies owned and controlled by Xxxxx and his brother-in-law RT, acquired Agora and changed its name to PDQ. 8. Commencing April 11, 2007, Xxxxx was invested registered in Portus principal-protected investment productsOntario as an officer (President), director, designated compliance officer and shareholder of PDQ, in addition to his registration as a mutual fund salesperson. During the period when PDQ was operating as a mutual fund dealer, Xxxxx was also the Chief Executive Officer (“CEO”) of PDQ. 9. Commencing on February 18, 2010, Xxxxx was registered as a dealing representative (formerly “mutual fund salesperson”) and as the Ultimate Designated Person (“UDP”) and Chief Compliance Officer (“CCO”) of PDQ. 10. On February 2November 23, 20052010, the PDQ was registered in Ontario Securities Commission as an exempt market dealer (“OSC”) issued orders requiring Portus and in addition to its affiliates to cease trading in securities because of apparent breaches of the Securities Act, R.S.O. 1990, c. S.5 registration as amended (the “OSA”a mutual fund dealer). Subsequently, the OSC commenced enforcement proceedings against Portus, its affiliates and certain officers and directors of Portus. Upon application of the OSC, KPMG Inc. (“KPMG”) was appointed as the Receiver of all of the assets of Portus and related entities. The Receiver later applied for, and obtained, a bankruptcy order, among other things, adjudging Portus bankrupt. In its most recently disclosed assessment, KPMG estimated that realizations would exceed 95% of Portus Customer Claims when final distributions are made. Prior to the issuance of the cease trade orders, the Respondent was not aware of the improper conduct that gave rise to the OSC enforcement proceedings and the cease trade orders against Xxxxxx. 11. Xxxxxxxx never authorized Xxxxx ceased to be registered as the sale President of Portus investment products by its PDQ on April 19, 2012 when another Approved Persons Person, PS, became registered as the President. Xxxxx continued to be registered as a dealing representative, UDP and did not enter into a referral arrangement with Portus. In fact, as described below, Sterling expressly directed its Approved Persons, including the Respondent that they were not permitted to sell or refer clients to Portus investment productsCCO of PDQ. 12. In approximately January 2006August 2012, mutual fund dealers MFDA Staff informed the Respondents that MFDA Staff was contemplating the commencement of an application for an interim order of a Hearing Panel pursuant to s. 24.3 of MFDA By-law No. 1 in light of serious concerns, described in greater detail below, about the financial and investment dealers that were registered in Ontario and referred clients to Portus (the “Ontario Dealers”), voluntarily agreed to terms and conditions on their registration stipulating that the Ontario Dealers would repay clients all referral fees received from Portus (the “OSC Terms & Conditions”). As part operating condition of that process, many of the Ontario Dealers, in turn, subsequently clawed back from Approved Persons any compensation that had been paid to them in respect of such referrals. Taking into account the OSC Terms & Conditions, the OSC, the Investment Dealers Association of Canada and the MFDA agreed not to pursue enforcement proceedings against the Ontario Dealers for shortcomings in the due diligence and supervision of their Portus referral programsPDQ. 13. In light On August 29, 2012, MFDA Staff and the Respondents signed an Agreement and Undertaking, pursuant to which, among other requirements, all expenses, payments and withdrawals made from the bank accounts of the fact that Xxxxxxxx never PDQ had a referral arrangement with Xxxxxx to be pre-approved by PS and did not receive referral fees from Portus, Sterling was not subject PS became responsible for all financial filings to the OSC Terms & Conditions and was not expected MFDA, including PDQ’s monthly Form 1 filings. PDQ also agreed that within 14 days it would provide a plan to repay any referral fees restore its minimum required capital or arrange for the orderly transfer of accounts to its clients. Consequently, unlike the clients of the Ontario Dealers, prior to the commencement of this proceeding, individuals who had purchased Portus investment products through the Respondent or the companies that he controlled were not repaid the referral fees that had been paid by Portus to the Respondent or his companies (approximately $136,100 as described below)another MFDA Member. 14. Between January 2004 and January 2005, Following the Respondent or companies that he controlled sold, referred or facilitated the sale of approximately $3.46 million of Portus investment products to approximately 31 clients. None execution of the transactions were carried on for Agreement and Undertaking, PDQ submitted a letter of intention to resign from membership in the account MFDA and requested approval to transfer its Approved Persons and client accounts to Portfolio Strategies Corporation, a Member of Sterling or processed through the facilities of SterlingMFDA. That process was completed in November 2012, at which time PDQ ceased to operate as a going concern. 15. Sterling had not approved Portus investment products for sale by its Approved Persons and as described belowSince November 2012, in June 2004, Sterling expressly directed its Approved Persons, including the Respondent, that they were not permitted to sell or refer them. 16. Companies that the Respondent controlled were paid sales commissions or referral fees in the amount of approximately 4% of the amounts invested as compensation for the involvement of the Respondent and his companies in the sale of Portus investment products to clients. Portus Referral Fee Statements indicate that the compensation paid by Portus to the Respondent or the companies that he controlled as compensation for involvement in the sale of Portus investment products to be approximately $136,100. The Respondent’s records indicate that he paid more than $70,000 of the compensation that was received from Portus to clients or to other individuals that processed their Portus transactions through companies that the Respondent controlled. 17. The Respondent acknowledges that since Xxxxxxxx became a Member of the MFDA in March 2002, MFDA Rules have prohibited him from making sales or referrals of securities that were not processed through the facilities of Sterling. The Respondent states that representatives of Xxxxxx told him that he could process sales of Portus products through the managing general agency (“MGA”) that he operated and through which he was authorized to process insurance business. That advice was in fact incorrect and the Respondent elected not to discuss the proposal from Portus with Xxxxxxxx. The Respondent now acknowledges that he cannot rely on advice from an issuer concerning his obligations as an Approved Person. All sales and referrals of securities must be approved by and processed through the facilities of his Member Sterling. 18. On June 3, 2004, Xxxxxxxx’s Vice-President and Chief Compliance Officer sent an e-mail entitled “Non Approved Product” to all Approved Persons, including the Respondent, which stated: Please note that you are not allowed to sell products which has (sic) not been approved by the dealer. Paradigm funds have changed their name to Portus Funds. They are not approved. The firm Xxxxx has been trying to by-pass dealer compliance by offering their product on registered in Ontario as a referral basis through MGA channels. This is not allowed under the MFDA. Any advisor attempting to do so will be suspended and reported to regulatorsdealing representative (only) with Portfolio Strategies Corporation.

AGREED FACTS Registration History. 6. The From March 14, 2007 until he resigned on June 4, 2007, the Respondent has been was registered in Ontario as a mutual fund salesperson with ASL Direct Inc. 7. From July 7, 1997 until March 9, 2007, the Respondent was registered in the province of Ontario as a mutual fund salesperson with Sterling Mutuals Inc. (“Sterling”) since June 2002. 7. Prior to working at Sterling, the Respondent was registered as a mutual fund salesperson with Fund Equity Plus Inc. from April 2001 to June 2002 and at Odyssey Capital from February 2000 to April 2001). 8. The Respondent is no longer registered in the securities industry in any capacity. 9. The Respondent has no previous disciplinary record. 10. Xxxxxxxx became a Member of the MFDA on March 8, 2002. 911. On March 14, 2003, Paradigm Asset Management Inc. which subsequently changed its name to Portus Alternative Asset Management Inc. (“Portus”) was registered as an Investment Counsel and Portfolio Manager (“IC/PM”) in all Canadian jurisdictions except Quebec (and became registered in Quebec when it changed its name). Portus developed certain principal-protected investment products that were distributed to retail investors by means of referrals from various sources, including Members of the MFDA. In total, approximately $792 million was invested in Portus principal-protected investment products. 1012. On February 2, 2005, the Ontario Securities Commission (“OSC”) issued orders requiring Portus and its affiliates to cease trading in securities because of apparent breaches of the Securities Act, R.S.O. 1990, c. S.5 as amended (the “OSA”). Subsequently, the OSC commenced enforcement proceedings against Portus, its affiliates and certain officers and directors of Portus. Upon application of the OSC, KPMG Inc. (“KPMG”) was appointed as the Receiver of all of the assets of Portus and related entities. The Receiver later applied for, and obtained, a bankruptcy order, among other things, adjudging Portus bankrupt. In its most recently disclosed assessment, KPMG estimated that realizations would exceed 9590% of Portus Customer Claims when final distributions are made. Prior to the issuance of the cease trade orders, the Respondent was not aware of the improper conduct that gave rise to the OSC enforcement proceedings and the cease trade orders against Xxxxxx. 1113. Xxxxxxxx never authorized the sale of Portus investment products by its Approved Persons and did not enter into a referral arrangement with Portus. In fact, as described in more detail below, Sterling expressly directed its Approved Persons, including the Respondent that they were not permitted to sell or refer clients to Portus investment products. 1214. In approximately January 2006, mutual fund dealers and investment dealers that were registered in Ontario and referred clients to Portus (the “Ontario Dealers”), voluntarily agreed to terms and conditions on their registration stipulating that the Ontario Dealers would repay clients all referral fees received from Portus (the “OSC Terms & Conditions”). As part of that process, many of the Ontario Dealers, in turn, subsequently clawed back from Approved Persons any compensation that had been paid to them in respect of such referrals. Taking into account the OSC Terms & Conditions, the OSC, the Investment Dealers Association of Canada and the MFDA agreed not to pursue enforcement proceedings against the Ontario Dealers for shortcomings in the due diligence and supervision of their Portus referral programs. 1315. In light of the fact that Xxxxxxxx never had a referral arrangement with Xxxxxx and did not receive referral fees from Portus, Sterling was not subject to the OSC Terms & Conditions and was not expected to repay any referral fees to its clients. Consequently, unlike the clients of the Ontario Dealers, prior to the commencement of this proceeding, individuals who had purchased Portus investment products through the Respondent or the companies that he controlled were not repaid all of the referral fees that had been paid by Portus to the Respondent or his companies (approximately $136,100 36,000 as described below). 1416. Between January April 2004 and January 2005, the Respondent or companies that he controlled sold, referred or facilitated the sale of approximately $3.46 1.8 million of Portus investment products to approximately 31 clients44 clients (the “Clients”). None of the transactions were carried on for the account of Sterling or processed through the facilities of Sterling. 1517. Sterling had not approved Portus investment products for sale by its Approved Persons and as described below, in June 2004, Sterling expressly directed its Approved Persons, including the Respondent, that they were not permitted to sell or refer them. 16. Companies that the The Respondent controlled were was paid a sales commissions or referral fees commission in the amount of approximately 4% of the amounts invested as compensation for the ($72,000) in connection with his involvement of the Respondent and his companies in the sale of Portus investment products to clients. Portus Referral Fee Statements indicate that the compensation paid by Portus to the Respondent or the companies that he controlled as compensation for involvement in the sale of Portus investment products to be approximately $136,100. The Respondent’s records indicate that he paid more than $70,000 of the compensation that was received from Portus to clients or to other individuals that processed their Portus transactions through companies that the Respondent controlled. 17. The Respondent acknowledges that since Xxxxxxxx became a Member of the MFDA in March 2002, MFDA Rules have prohibited him from making sales or referrals of securities that were not processed through the facilities of Sterling. The Respondent states that representatives he rebated to the Clients approximately one-half (i.e. $36,000) of Xxxxxx told him the sales commissions that he could process sales of Portus products through was paid at the managing general agency (“MGA”) time that he operated and through which he was authorized to process insurance business. That advice was in fact incorrect and received the Respondent elected not to discuss the proposal monies from Portus with XxxxxxxxPortus. The Respondent now acknowledges retained the balance of the sales commissions that he candid not rely on advice from an issuer concerning his obligations as an Approved Person. All sales and referrals of securities must be approved by and processed through rebate to the facilities of his Member SterlingClients which amounted to approximately $36,000. 18. On June 3, 2004, Xxxxxxxx’s Vice-President and Chief Compliance Officer Xxxxxxxx sent an e-mail entitled “Non Approved Product” to all Approved Persons, including the Respondent, which stated: Please note that you are not allowed to sell products which has (sic) not been approved by the dealer. Paradigm funds have changed their name to Portus Funds. They are not approved. The firm has been trying to by-pass dealer compliance by offering their product on a referral basis through MGA channels. This is not allowed under the MFDA. Any advisor attempting to do so will be suspended and reported to regulators.

AGREED FACTS Registration History. 6. The Respondent has been Keybase is registered as a mutual fund salesperson in the province of Ontario with Sterling Mutuals Inc. (“Sterling”) since June 2002as a Mutual Fund Dealer and Limited Market Dealer and in the provinces of Alberta, British Columbia, New Brunswick, Nova Scotia and Xxxxxx Xxxxxx Island as a Mutual Fund Dealer. 7. Prior to working at Sterling, the Respondent was registered as a mutual fund salesperson with Fund Equity Plus Inc. from April 2001 to June 2002 and at Odyssey Capital from February 2000 to April 2001. 8. Xxxxxxxx Keybase became a Member of the MFDA on March May 29, 2003. 8. Xxxxxxx is a shareholder, 2002the President, sole Director and controlling mind of Keybase. 9. On March 14, 2003, Paradigm Asset Management Inc. which subsequently changed its name to Portus Alternative Asset Management Inc. (“Portus”) SB was registered as an Investment Counsel and Portfolio the Chief Compliance Officer of Keybase from 2003 to September 2004 at which time he became the Alternate Compliance Officer. Commencing in November 2004, SB became the Branch Manager (“IC/PM”) in for all Canadian jurisdictions except Quebec (and became registered in Quebec when it changed its name). Portus developed certain principal-protected investment products that Approved Persons who were distributed reporting directly to retail investors by means of referrals from various sources, including Members of the MFDA. In total, approximately $792 million was invested in Portus principal-protected investment productsKeybase’s Head Office. 10. On February 2RT was registered as the Chief Compliance Officer of Keybase from September 2004 to April 2006. 11. XX was registered as the Chief Compliance Officer of Keybase from November 2006 to March 2008. 12. PR was registered as a salesperson with Keybase from September 2005 to September 2006. 13. In 2001, 2005, Keybase was subject to a field review by the Ontario Securities Commission (“OSC”) issued orders requiring Portus and its affiliates ), pursuant to cease trading in securities because of apparent breaches section 20 of the Securities Act, R.S.O. 1990, c. S.5 as amended Act (the “OSA”). Subsequently, the OSC commenced enforcement proceedings against Portus, its affiliates and certain officers and directors of Portus. Upon application of the OSC, KPMG Inc. (“KPMG”Ontario) was appointed as the Receiver of all of the assets of Portus and related entities. The Receiver later applied for, and obtained, a bankruptcy order, among other things, adjudging Portus bankrupt. In its most recently disclosed assessment, KPMG estimated that realizations would exceed 95% of Portus Customer Claims when final distributions are made. Prior to the issuance of the cease trade orders, the Respondent was not aware of the improper conduct that gave rise to the OSC enforcement proceedings and the cease trade orders against Xxxxxx. 11. Xxxxxxxx never authorized the sale of Portus investment products by its Approved Persons and did not enter into a referral arrangement with Portus. In fact, as described below, Sterling expressly directed its Approved Persons, including the Respondent that they were not permitted to sell or refer clients to Portus investment products. 12. In approximately January 2006, mutual fund dealers and investment dealers that were registered in Ontario and referred clients to Portus (the “Ontario Dealers”), voluntarily agreed to terms and conditions on their registration stipulating that the Ontario Dealers would repay clients all referral fees received from Portus (the “OSC Terms & ConditionsExamination”). As part of that process, many of the Ontario Dealers, in turn, subsequently clawed back from Approved Persons any compensation that had been paid to them in respect of such referrals. Taking into account the OSC Terms & Conditions, the OSC, the Investment Dealers Association of Canada and the MFDA agreed not to pursue enforcement proceedings against the Ontario Dealers for shortcomings in the due diligence and supervision of their Portus referral programs. 13. In light of the fact that Xxxxxxxx never had a referral arrangement with Xxxxxx and did not receive referral fees from Portus, Sterling was not subject to the OSC Terms & Conditions and was not expected to repay any referral fees to its clients. Consequently, unlike the clients of the Ontario Dealers, prior to the commencement of this proceeding, individuals who had purchased Portus investment products through the Respondent or the companies that he controlled were not repaid the referral fees that had been paid by Portus to the Respondent or his companies (approximately $136,100 as described below). 14. Between January 2004 and January 2005The OSC Examination included an assessment of Keybase’s compliance with relevant sections of Ontario securities law for the period from September 1, the Respondent or companies that he controlled sold2000 to August 31, referred or facilitated the sale of approximately $3.46 million of Portus investment products to approximately 31 clients20011. None The findings of the transactions field review were carried on for reported to Keybase in the account OSC’s Compliance Field Review Report dated December 13, 2001 (the “2001 OSC Report”). The 2001 OSC Report identified deficiencies in Keybase’s procedures and policies including but not limited to: (a) Branch Managers responsibilities regarding approval of Sterling or processed through the facilities new accounts and trade supervision; (b) Opening of Sterlingnew accounts and completeness of Know Your Client (“KYC”) information; (c) Review and approval of marketing materials; and (d) Written policies and procedures regarding new accounts and trading and sales practices. 15. Sterling had 1 The Respondent did not approved Portus investment products for sale by its Approved Persons become subject to the By-laws, Rules and as described below, in June 2004, Sterling expressly directed its Approved Persons, including the Respondent, that they were not permitted to sell or refer them. 16. Companies that the Respondent controlled were paid sales commissions or referral fees in the amount of approximately 4% Policies of the amounts invested as compensation for the involvement of the Respondent and his companies in the sale of Portus investment products to clients. Portus Referral Fee Statements indicate that the compensation paid by Portus to the Respondent or the companies that he controlled as compensation for involvement in the sale of Portus investment products to be approximately $136,100. The Respondent’s records indicate that he paid more than $70,000 of the compensation that was received from Portus to clients or to other individuals that processed their Portus transactions through companies that the Respondent controlled. 17. The Respondent acknowledges that since Xxxxxxxx MFDA until it became a Member of the MFDA in March on May 29, 2003. 15. On February 11, 2002, MFDA Rules have prohibited him from making sales or referrals of securities that were not processed through Keybase provided the facilities of Sterling. The Respondent states that representatives of Xxxxxx told him that he could process sales of Portus products through OSC with a response to the managing general agency (“MGA”) that he operated and through 2001 OSC Report in which he was authorized to process insurance business. That advice was in fact incorrect it outlined the various actions it had taken and the Respondent elected not to discuss timeline for addressing the proposal from Portus with Xxxxxxxx. The Respondent now acknowledges that he cannot rely on advice from an issuer concerning his obligations as an Approved Person. All sales and referrals of securities must be approved by and processed through deficiencies identified in the facilities of his Member Sterling. 18. On June 3, 2004, Xxxxxxxx’s Vice-President and Chief Compliance Officer sent an e-mail entitled “Non Approved Product” to all Approved Persons, including the Respondent, which stated: Please note that you are not allowed to sell products which has (sic) not been approved by the dealer. Paradigm funds have changed their name to Portus Funds. They are not approved. The firm has been trying to by-pass dealer compliance by offering their product on a referral basis through MGA channels. This is not allowed under the MFDA. Any advisor attempting to do so will be suspended and reported to regulators2001 OSC Report.

AGREED FACTS Registration History. 67. The Respondent Between September 12, 1995 and October 23, 1996, ICM was registered as a limited market dealer in Ontario. Since October 23, 1996, ICM has been registered as a mutual fund salesperson dealer and limited market dealer / exempt market dealer1 in the province of Ontario with Sterling Mutuals Inc. (“Sterling”) since June 2002Ontario. 78. Prior to working at SterlingSince February 8, 2002, ICM has been a Member of the Respondent was MFDA. 9. Since February 6, 2013, ICM has also been registered as a mutual fund salesperson with Fund Equity Plus Inc. from April 2001 to June 2002 and at Odyssey Capital from February 2000 to April 2001. 8. Xxxxxxxx became a Member of the MFDA on March 8, 2002. 9. On March 14, 2003, Paradigm Asset Management Inc. which subsequently changed its name to Portus Alternative Asset Management Inc. (“Portus”) was registered as an Investment Counsel and Portfolio Manager (“IC/PM”) dealer in all Canadian jurisdictions except Quebec (and became registered in Quebec when it changed its name). Portus developed certain principal-protected investment products that were distributed to retail investors by means of referrals from various sources, including Members of the MFDA. In total, approximately $792 million was invested in Portus principal-protected investment productsAlberta. 10. On February 2After a hearing panel of the Central Regional Council issued an order in a related interim proceeding commenced pursuant to s. 24.3 of MFDA By-law No. 1 imposing requirements and restrictions on the Respondents as interim relief to address the conduct described in this Settlement Agreement (see MFDA File No. 2016107), 2005on December 28, 2016, terms and conditions were placed on ICM’s registration prohibiting ICM from facilitating trades in securities exempt from prospectus requirements. 11. In January 2018, ICM agreed to a voluntary suspension of its membership in the MFDA as a term and condition of the approval of a sale of its client list and the transfer of its client accounts to a portfolio manager registered in the securities industry. In November 2017 and again in January 2018, the Ontario Securities Commission (the “OSC”) issued orders requiring Portus and its affiliates the MFDA, respectively, approved the sale transaction and the transfer of client accounts from ICM to cease trading the portfolio manager. The voluntary suspension of ICM’s membership in securities because of apparent breaches the MFDA took effect on April 2, 2018. As a consequence of the Securities Actvoluntary suspension of ICM’s membership in the MFDA, R.S.O. 1990, c. S.5 as amended (the “OSA”). Subsequently, ICM’s registration with the OSC commenced enforcement proceedings against Portus, its affiliates and certain officers and directors of Portus. Upon application of the OSC, KPMG Inc. (“KPMG”) as a mutual fund dealer was appointed as the Receiver of all of the assets of Portus and related entities. The Receiver later applied for, and obtained, a bankruptcy order, among other things, adjudging Portus bankrupt. In its most recently disclosed assessment, KPMG estimated that realizations would exceed 95% of Portus Customer Claims when final distributions are made. Prior to the issuance of the cease trade orders, the Respondent was not aware of the improper conduct that gave rise to the OSC enforcement proceedings and the cease trade orders against Xxxxxx. 11. Xxxxxxxx never authorized the sale of Portus investment products by its Approved Persons and did not enter into a referral arrangement with Portus. In fact, as described below, Sterling expressly directed its Approved Persons, including the Respondent that they were not permitted to sell or refer clients to Portus investment productsalso suspended. 12. In approximately January 2006ICM is and always has been jointly owned by Xxxx and Xxxxxx who are brothers. 1 On September 28, mutual fund dealers and investment dealers that were registered 2009, with the implementation of National Instrument 31-103, the Limited Market Dealer registration category in Ontario and referred clients was changed to Portus (the “Ontario Dealers”), voluntarily agreed to terms and conditions on their registration stipulating that the Ontario Dealers would repay clients all referral fees received from Portus (the “OSC Terms & Conditions”). As part of that process, many of the Ontario Dealers, in turn, subsequently clawed back from Approved Persons any compensation that had been paid to them in respect of such referrals. Taking into account the OSC Terms & Conditions, the OSC, the Investment Dealers Association of Canada and the MFDA agreed not to pursue enforcement proceedings against the Ontario Dealers for shortcomings in the due diligence and supervision of their Portus referral programsExempt Market Dealer. 13. In light Since March 16, 1989, Xxxx has been registered in Ontario as a mutual fund salesperson (now known as a dealing representative2). Since December 9, 1996, Xxxx has been registered with ICM and has been the President, a director and the primary directing mind of the fact that Xxxxxxxx never had a referral arrangement with Xxxxxx and did not receive referral fees from PortusICM. From November 6, Sterling 2001 to September 28, 2009, Xxxx was not subject to the OSC Terms & Conditions registered in Ontario as an officer (trading resident) and was not expected to repay any referral fees to its clientsapproved as a director of ICM. ConsequentlySince December 18, unlike 2009, Xxxx has also been the clients Ultimate Designated Person (“UDP”) of the Ontario Dealers, prior to the commencement of this proceeding, individuals who had purchased Portus investment products through the Respondent or the companies that he controlled were not repaid the referral fees that had been paid by Portus to the Respondent or his companies (approximately $136,100 as described below)ICM. 14. Between January 2004 Since February 8, 2002, Xxxx has also been an Approved Person and January 2005, the Respondent designated compliance officer or companies that he controlled sold, referred or facilitated the sale Chief Compliance Officer (“CCO”) of approximately $3.46 million of Portus investment products to approximately 31 clients. None of the transactions were carried on for the account of Sterling or processed through the facilities of SterlingICM. 15. Sterling had not approved Portus investment products for sale by its Approved Persons Since February 14, 2013, Xxxx has also been registered in Alberta as a mutual fund salesperson / dealing representative, officer, director, CCO and as described below, in June 2004, Sterling expressly directed its Approved Persons, including the Respondent, that they were not permitted to sell or refer themUDP of ICM. 16. Companies that the Respondent controlled were paid sales commissions or referral fees Since March 17, 1994, Xxxxxx has been registered in the amount Ontario as a mutual fund salesperson (now known as a dealing representative). Since December 9, 1996, Xxxxxx has been registered with ICM and has been Vice-President and a director of approximately 4% ICM. He has been registered as an officer of the amounts invested as compensation for the involvement of the Respondent and his companies in the sale of Portus investment products to clients. Portus Referral Fee Statements indicate that the compensation paid by Portus to the Respondent or the companies that he controlled as compensation for involvement in the sale of Portus investment products to be approximately $136,100. The Respondent’s records indicate that he paid more than $70,000 of the compensation that was received from Portus to clients or to other individuals that processed their Portus transactions through companies that the Respondent controlledICM since January 25, 2006. 17. The Respondent acknowledges that since Xxxxxxxx became Since February 8, 2002, Xxxxxx has also been an Approved Person of ICM and has been designated as a Member branch manager and alternative CCO of ICM. 18. Since April 2, 2018, as a consequence of the MFDA voluntary suspension of its membership in March 2002the MFDA, MFDA Rules have prohibited him from making sales or referrals the registration of securities that were not processed through ICM with the facilities OSC as a mutual fund dealer and the registration of Sterling. The Respondent states that Xxxx and Xxxxxx as dealing representatives of Xxxxxx told him that he could process sales of Portus products through ICM has also been suspended. 19. At all material times, the managing general agency (Respondents conducted business at ICM’s head office located in Toronto, Ontario. 2 In September 2009, National Instrument 31-103 changed the registration category “MGA”) that he operated and through which he was authorized to process insurance business. That advice was in fact incorrect and the Respondent elected not to discuss the proposal from Portus with Xxxxxxxx. The Respondent now acknowledges that he cannot rely on advice from an issuer concerning his obligations as an Approved Person. All sales and referrals of securities must be approved by and processed through the facilities of his Member Sterling. 18. On June 3, 2004, Xxxxxxxx’s Vice-President and Chief Compliance Officer sent an e-mail entitled “Non Approved Productmutual fund salesperson” to all Approved Persons, including the Respondent, which stated: Please note that you are not allowed to sell products which has (sic) not been approved by the dealer. Paradigm funds have changed their name to Portus Funds. They are not approved. The firm has been trying to by-pass dealer compliance by offering their product on a referral basis through MGA channels. This is not allowed under the MFDA. Any advisor attempting to do so will be suspended and reported to regulators“dealing representative”.