Proceedings

IN THE MATTER OF THE SECURITIES ACT
R.S.O. 1990, c. S.5, as amended

AND

IN THE MATTER OF
A.C. MacPHERSON & CO. INC. and GENO DELLA ROCCA

SETTLEMENT AGREEMENT

I. INTRODUCTION

1. By notice of hearing dated March 28, 2000 (the "Notice of Hearing"), the Ontario SecuritiesCommission (the "Commission") announced that it proposed to hold a hearing to consider:

(a) whether, pursuant to subsection 127(1) of the Act, it is in the public interest for theCommission to make an order:

(i) that the registration of A.C. MacPherson & Co. Inc. ("A.C. MacPherson")and/or Geno Della Rocca ("Della Rocca") (together referred to as "therespondents") be suspended or restricted for such time as the Commissionmay direct, or be terminated, or be subject to such terms and conditions as theCommission may order;

(ii) that the respondents be reprimanded;

(iii) that the respondents pay costs to the Commission; and/or

(iv)such other order as the Commission may deem appropriate; and

(b) such other matters as the Commission considers appropriate.

II. JOINT SETTLEMENT RECOMMENDATION

2. Staff of the Commission ("Staff") agree to recommend settlement of the proceeding initiatedin respect of the respondents by the Notice of Hearing in accordance with the terms andconditions set out below. The respondents consent to the making of an order against themin the form attached as Schedule 'A' on the basis of the facts set out below.

III. STATEMENT OF FACTS

Acknowledgment

3. For the purposes of this proceeding, and of any other proceeding commenced by a securitiesregulatory agency, the respondents agree with the facts set out in this Part III.

Facts

4. A.C. MacPherson is registered under Ontario securities law as an investment dealer. DellaRocca is registered under Ontario securities law and is the president and chief executiveofficer of A.C. MacPherson.

5. During the years 1996 and 1997, virtually all of A.C. MacPherson's business consisted of itsacquiring stock for its own account and selling that same stock to its clients.

6. In 1996, more than two-thirds of A.C. MacPherson's revenue from principal trading wasderived from trading stock of seven issuers. In the following year, approximately 99% of itsrevenue from principal trading was derived from the same seven issuers, all of which tradedon the Canadian Dealing Network. Those issuers included the following two:

(a) Heartland Resources Inc.; and

(b) Complex Minerals Corp.

7. In the case of both of these issuers, A.C. MacPherson acquired stock at a significant discountto what was then the market price of the stock. A.C. MacPherson then resold that stock toits own clients at excessive markups.

Heartland Resources Inc.

8. Between October 19, 1995 and June 25, 1996, A.C. MacPherson acquired 5,000,000 sharesof Heartland Resources Inc. ("Heartland") at prices ranging from $0.215 to $0.32 per share.During the same time period, the market price of Heartland shares ranged from $0.55 to$0.90.

9. Between June 18 and July 25, 1996, A.C. MacPherson acquired a further 640,000 shares ofHeartland at prices ranging from $0.23275 and $0.32 per share. During the same time period,the market price ranged from $0.55 to $0.75 per share.

10. Between April 18 and June 27, 1997, A.C. MacPherson acquired an additional 4,000,000shares of Heartland at prices ranging from $0.16 to $0.20 per share. During the same timeperiod, the market price ranged from $0.50 to $0.67 per share.

11. During the period from November 7, 1995 to August 31, 1997, A.C. MacPherson soldsubstantially all of its Heartland shares to its own clients. A.C. MacPherson sold the sharesat prices ranging from $0.35 per share to $1.10 per share, and realized a gross profit ofseveral million dollars.

Complex Minerals Corp.

12. From December 29, 1995 to October 10, 1996, A.C. MacPherson acquired 7,700,000 sharesof Complex Minerals Corp. ("Complex") at prices up to $0.33 per share. The market priceranged from $0.40 to $1.00 per share. A.C. MacPherson subsequently acquired an additional500,000 shares.

13. During the period from February 5, 1996 to August 31, 1997, A.C. MacPherson soldsubstantially all of its Complex shares to its own clients. A.C. MacPherson sold the sharesat prices ranging from $0.30 to $0.95 per share, and realized a gross profit of several milliondollars.

Conduct of the Respondents

14. In engaging in the conduct set out above, A.C. MacPherson may have placed itself in aconflict of interest with its clients. Its conduct was therefore contrary to the public interest.

15. In allowing A.C. MacPherson to engage in the conduct set out above, Della Rocca, as aregistrant under Ontario securities law, acted in a manner contrary to the public interest.

IV. TERMS OF SETTLEMENT

16. The respondents agree to the following terms of settlement:

(a) the respondents will be reprimanded by the Commission;

(b) within ten days of the date of approval of this settlement, A.C. MacPherson will sendto each of its clients a letter substantially in the form attached as Schedule 'B';

(c) the registration of A.C. MacPherson will be suspended effective July 5, 2000;

(d) the following terms and conditions will be imposed upon the registration of A.C.MacPherson, effective on the date of approval of this settlement agreement andcontinuing for the duration of A.C. MacPherson's registration:

1. the registrant shall not act as principal in the sale of any securities to a clientof the registrant;

2. effective April 30, 2000, the registrant shall not act as agent in the purchaseof any securities by a client of the registrant;

3. the registrant shall, by July 5, 2000, cease to carry on its activities as aninvestment dealer;

4. the registrant shall limit its activities to the orderly wind-up of its business andaffairs, including the return of all clients' securities and free credit balances,or the transfer of those securities and balances to a firm that is a member ofthe Investment Dealers' Association ("IDA"), upon the request of the client;

5. subject to paragraph 7 of these terms and conditions, the registrant shallprepare and file with the Manager of Investigations of the Ontario SecuritiesCommission ("the Manager"):

(i) a balance sheet of the registrant reported thereon by the registrant'sindependent auditor without qualification as at July 5, 2000, or suchother date as may be agreed upon between the registrant and theManager, which balance sheet shall indicate that the registrant hasliquid assets sufficient to meet all its liabilities other than subordinatedloans, if any; or

(ii) a report from the registrant's independent auditor withoutqualification that in the auditor's opinion the registrant has liquidassets sufficient to meet all its liabilities other than subordinated loans,if any;

6. in the course of transferring client accounts to any firm, the registrant shallmake its best efforts to transfer all of the registrant's books and recordsnecessary to record properly its business transactions and financial affairsrelating to those client accounts, whether or not such books and records arekept by means of mechanical, electronic or other devices;

7. if the whole or substantial part of the registrant's business and assets is beingacquired by one transferee, then the registrant need not comply withparagraph 5 of these terms and conditions, provided that the registrant ispermitted by the IDA to proceed in accordance with IDA By-Law 8.3 and thetransferee provides the Manager with a copy of the letter to the IDA requiredby By-Law 8.3; and

8. for greater certainty, in the course of the wind-up of its activities, theregistrant shall comply with all of its obligations as a member of the IDA,including complying with IDA By-Law No. 8.

(e) Della Rocca will undertake to the Commission that:

(i) he will not, for a period of fifteen years, apply for registration in any capacityunder Ontario securities law;

(ii) he will not, at any time in the future, be involved directly in the managementof a registrant;

(iii) he will not, at any time in the future, own, directly or indirectly, greater thana 20% interest in any registrant; and

(iv) he will not, for a period of fifteen years from the date of the approval of thesettlement, become or act as an officer or director of a reporting issuer; and

(f) the respondents will make a payment of $25,000 to the Commission in respect of aportion of the Commission's costs with respect to this matter.

V. STAFF COMMITMENT

17. If this settlement is approved by the Commission, Staff will not initiate any complaint to theCommission or request the Commission to hold a hearing or issue any other order in respectof any conduct or alleged conduct of the respondents in relation to the facts set out in PartIII of this agreement.

18. If this settlement is approved by the Commission, Staff will not initiate any other proceedingagainst the respondents in relation to the facts set out in Part III of this agreement.

VI. PROCEDURE FOR APPROVAL OF SETTLEMENT

19. Approval of the settlement set out in this agreement shall be sought at the public hearing ofthe Commission scheduled for April 6, 2000, or such other date as may be agreed to by Staffand the respondents, in accordance with the procedures described in this agreement.

20. Staff and the respondents agree that if this agreement is approved by the Commission, it willconstitute the entirety of the evidence to be submitted respecting the respondents in thismatter, and the respondents agree to waive their rights to a full hearing and appeal of thematter under the Act.

21. Staff and the respondents agree that if this settlement is approved by the Commission, noparty to this agreement will make any public statement inconsistent with this agreement.

22. If, at the conclusion of the settlement hearing, and for any reason whatsoever, this settlementis not approved by the Commission or an order in the form attached as Schedule 'A' is notmade by the Commission:

(a) each of Staff and the respondents will be entitled to all available proceedings,remedies and challenges, including proceeding to a hearing of the allegations in theNotice of Hearing and Statement of Allegations, unaffected by this agreement or thesettlement negotiations;

(b) the terms of this agreement will not be referred to in any subsequent proceeding, ordisclosed to any person, except with the written consent of Staff and the respondentsor as may be required by law; and

(c) the respondents agree that they will not, in any proceeding, refer to or rely upon thisagreement or the negotiation or process of approval of this agreement as the basis forany attack on the Commission's jurisdiction, alleged bias, appearance of bias, allegedunfairness or any other remedies or challenges that may otherwise be available.

VII. DISCLOSURE OF AGREEMENT

23. Counsel for Staff or for the respondents may refer to any part or all of this agreement in thecourse of the hearing convened to consider this agreement. Otherwise, this agreement andits terms will be treated as confidential by all parties to the agreement until approved by theCommission, and forever if, for any reason whatsoever, this settlement is not approved by theCommission, except with the written consent of all parties or as may be required by law.

24. Any obligations of confidentiality shall terminate upon approval of this settlement by theCommission.

VIII. EXECUTION OF AGREEMENT

25. This agreement may be signed in one or more counterparts which together shall constitute abinding agreement.

Dated this 28th day of March, 2000.

A.C. MacPHERSON & CO. INC.

GENO DELLA ROCCA

STAFF OF THE ONTARIO SECURITIES COMMISSION

SCHEDULE 'A'


IN THE MATTER OF THE SECURITIES ACT
R.S.O. 1990, c. S.5, as amended

AND

IN THE MATTER OF
A.C. MacPHERSON & CO. INC. and GENO DELLA ROCCA

ORDER
(Subsection 127(1))


WHEREAS on March 28, 2000, the Ontario Securities Commission (the "Commission")issued a notice of hearing pursuant to subsection 127(1) of the Securities Act (the "Act") in respectof A.C. MacPherson & Co. Inc. ("A.C. MacPherson") and Geno Della Rocca ("Della Rocca");

AND WHEREAS A.C. MacPherson and Della Rocca entered into a settlement agreementdated March 28, 2000 (the "Settlement Agreement") in which they agreed to a proposed settlementof the proceeding, subject to the approval of the Commission;

AND UPON reviewing the Settlement Agreement and the statement of allegations of Staffof the Commission, and upon hearing submissions from counsel for A.C. MacPherson and DellaRocca and from Staff of the Commission;

AND WHEREAS the Commission is of the opinion that it is in the public interest to makethis Order;

IT IS ORDERED THAT:

(1) the Settlement Agreement dated March 28, 2000, attached to this Order, is herebyapproved;

(2) pursuant to clause 6 of subsection 127(1) of the Act, A.C. MacPherson and DellaRocca are hereby reprimanded;

(3) A.C. MacPherson shall, on or before April 16, 2000, send to each of its clients aletter substantially in the form attached as Schedule 'B' to the SettlementAgreement;

(4) pursuant to clause 1 of subsection 127(1) of the Act, the registration of A.C.MacPherson is hereby suspended effective July 5, 2000;

(5) pursuant to clause 1 of subsection 127(1) of the Act, the following terms andconditions are hereby imposed upon the registration of A.C. MacPherson:

1. the registrant shall not act as principal in the sale of any securities to a clientof the registrant;

2. effective April 30, 2000, the registrant shall not act as agent in the purchaseof any securities by a client of the registrant;

3. the registrant shall, by July 5, 2000, cease to carry on its activities as aninvestment dealer;

4. the registrant shall limit its activities to the orderly wind-up of its business andaffairs, including the return of all clients' securities and free credit balances,or the transfer of those securities and balances to a firm that is a member ofthe Investment Dealers' Association ("IDA"), upon the request of the client;

5. subject to paragraph 7 of these terms and conditions, the registrant shallprepare and file with the Manager of Investigations of the Ontario SecuritiesCommission ("the Manager"):

(i) a balance sheet of the registrant reported thereon by the registrant'sindependent auditor without qualification as at July 5, 2000, or suchother date as may be agreed upon between the registrant and theManager, which balance sheet shall indicate that the registrant hasliquid assets sufficient to meet all its liabilities other than subordinatedloans, if any; or

(ii) a report from the registrant's independent auditor withoutqualification that in the auditor's opinion the registrant has liquidassets sufficient to meet all its liabilities other than subordinated loans,if any;

6. in the course of transferring client accounts to any firm, the registrant shallmake its best efforts to transfer all of the registrant's books and recordsnecessary to record properly its business transactions and financial affairsrelating to those client accounts, whether or not such books and records arekept by means of mechanical, electronic or other devices;

7. if the whole or substantial part of the registrant's business and assets is beingacquired by one transferee, then the registrant need not comply withparagraph 5 of these terms and conditions, provided that the registrant ispermitted by the IDA to proceed in accordance with IDA By-Law 8.3 and thetransferee provides the Manager with a copy of the letter to the IDA requiredby By-Law 8.3; and

8. for greater certainty, in the course of the wind-up of its activities, theregistrant shall comply with all of its obligations as a member of the IDA,including complying with IDA By-Law No. 8.

(6) pursuant to clause 127.1(2)(b) of the Act, the respondents are ordered to pay$25,000 to the Commission.

April 6th, 2000.

"Howard I. Wetston"

"Morely P. Carscallen"

"Robert W. Davis"

SCHEDULE 'B'

[on letterhead of A.C. MacPherson]

Dear [client]:

As you may be aware, A.C. MacPherson & Co. Inc. has entered into an agreement with Staff ofthe Ontario Securities Commission. Under that agreement, which was approved by theCommission on April 6, 2000, A.C. MacPherson has agreed that it will no longer carry onbusiness effective July 5, 2000.

A.C. MacPherson wishes to avoid inconveniencing you during this period of transition and so thepurpose of this letter is to tell you about the two options available to you regarding your accountwith A.C. MacPherson:

(A) You receive your cash and securities - If you choose option 'A' on the formattached, A.C. MacPherson will deliver to you by mail to your address of recordthe cash and/or securities currently held in your account.

(B) We transfer your account - If you choose option 'B' on the form attached, A.C.MacPherson will transfer your account to any firm, designated by you, that is amember of the Investment Dealers' Association.

Please choose your preferred option and return the attached form to A.C. MacPherson in theenclosed postage-paid envelope. Please be advised that if you do nothing or if we do not receiveyour instructions by May 15, 2000, your account will automatically be transferred to [firm].

Should you have any questions, you should feel free to call our offices in Toronto at 416 3644486.

Thank you very much.

Yours truly,