Proceedings

2.1.2       Robert Frederick Rose - Settlement Agreement


IN THE MATTER OF THE SECURITIES ACT,
R.S.O. 1990, c. S.5, AS AMENDED

AND

IN THE MATTER OF
ROBERT FREDERICK ROSE

SETTLEMENT AGREEMENT

I       INTRODUCTION
 
1. By notice of hearing dated August 27, 1996, (the "Notice of Hearing") the Ontario Securities Commission (the "Commission") announced that it proposed to hold a hearing to consider:
 
 
a.       whether it is in the public interest to order, pursuant to Clause 1 of section 127(1) of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act"), that the registration granted to Robert Frederick Rose ("Rose") under Ontario securities law be suspended or restricted for such period as is specified in the order or be terminated, or that terms and conditions be imposed on the registration; and
 
b. whether it is in the public interest to order pursuant to Clause 3 of section 127(1) of the Act, that any exemptions contained in Ontario securities law do not apply to Rose permanently or for such period as is specified in the order.
 
II. JOINT SETTLEMENT RECOMMENDATION
 
2. The Staff of the Commission ("Staff") agree to recommend the settlement of the proceeding initiated in respect of Rose by the Notice of Hearing in accordance with the terms and conditions set out hereinafter. Rose agrees to the settlement on the basis of the facts agreed to as hereinafter provided.
 
3. The Staff and Rose agree that only if, as and when the settlement is approved by the Commission, this Settlement Agreement and Schedule "A" attached hereto (the "Settlement Agreement") will be released to the public.
 
III. STATEMENT OF FACTS
 
 
A.       Introduction
 
4. Rose agrees with the facts set out in Part III of this Settlement Agreement, to the extent that he is directly aware of them and, to the extent that he does not have direct knowledge, they are not inconsistent with his understanding.
 
5. Staff acknowledge that the facts contained in Part III of this Settlement Agreement are consistent with its investigation
 
 
B.       Registration
 
6. At all material times Rose was a registered representative, registered trader and CATS attorney employed by Canaccord Capital Corporation ("Canaccord"), a registered broker and a member of The Toronto Stock Exchange ("TSE").
 
7. Rose has been registered as a salesperson since 1961 and was also a director of a registrant from 1971 to 1986 and from 1987 to 1991. Rose is currently a registered representative, registered trader and CATS attorney employed by Marleau, Lemire Securities Inc., a registered broker and a member of the TSE. Rose has held these positions with various other members of the TSE for 35 years.
 
8. In mid 1993, Rose began to take steps to become a Member of the TSE and a registrant under the Act. In October, 1993, Rose, through Robert F. Rose Investments Ltd., entered into an agreement to purchase a seat on the TSE. In January, 1994, Robert F. Rose Investments Ltd. applied for registration as a broker under the Act. On September 27, 1994, the TSE granted membership to Robert F. Rose Investments Ltd. subject to the outcome of its investigations.
 
9. On September 9, 1994, the TSE referred its investigation regarding Rose's trading activities to the Commission. The trading activities concerned Paragon and Goldpark, as more fully outlined herein.
 
10. On December 5, 1994, Staff advised Rose that they had recommended to the Director that the application by Robert F. Rose Investments Ltd. for registration as a broker be denied on the basis of some of the matters now raised in the Notice of Hearing.
 
11. As Rose was required by the TSE to set up as an operating broker for their inspection in June, 1994, he continued to pay the expenses associated with this set up pending the results of the investigation by the Commission. As a result of mounting expenses, Rose withdrew his application for registration as a broker in October, 1995, and withdrew as a member of the TSE in September, 1995.
 
12. This is the first time that Staff of the Commission have ever issued a Notice of Hearing concerning Rose.
 
 
C.       Paragon Entertainment Corporation ("Paragon")
 
13. At all material times, Paragon was a reporting issuer and its shares traded on the TSE.
 
14. In the spring of 1993, Rose participated in taking Paragon public by means of a reverse takeover resulting from the amalgamation of Paragon and Summit Gold Mines Inc. on June 4, 1993. Prior to the amalgamation Paragon was a private company and Summit Gold Mines Inc. was a reporting issuer whose shares traded over the counter and were quoted on the Canadian Dealing Network Inc. Prior to the amalgamation, Rose was president of Summit Gold Mines Inc. Following the amalgamation, Rose did not become an officer or director of Paragon.
 
15. In June, 1993, in conjunction with the reverse takeover, Paragon made a private placement of 2,000,000 special warrants at $1.75 per warrant for total proceeds of $3,500,000. Each warrant entitled the holder to one common share of Paragon. Canaccord was the exclusive agent for the private placement. Most of the warrants were placed by Rose with his clients. The majority of those investors continue to be clients of Rose.
 
16. In June, 1993, Rose applied to the TSE to be the Registered Trader for Paragon. On June 23, 1993, the TSE "deemed [another Registered Trader] more appropriate for [Paragon] in view of Mr. Rose's direct involvement with the issuer." The TSE did not establish the spread goal for the market maker of Paragon until July 7, 1994, when the spread goal was set at 25¢. Accordingly, during the relevant times, there was no formal spread goal set for the market maker of Paragon shares.
 
17. From June 28, 1993, when the amalgamated corporation, Paragon, was first listed for trading on the T.S.E., Rose had ongoing discussions with the principals of Paragon concerning further financing of Paragon. This continued throughout the summer of 1993. Paragon required additional financing for the purpose of expanding its business.
 
18. On August 17, 1993, at its regular board meeting, the Board of Directors of Paragon discussed various forms of future financing for Paragon including debt financing through certain banks, private financing from a strategic partner, and Rose's proposal to raise $3 to $4 million pursuant to the issuance of share purchase warrants. The Board did not reach any decision at this meeting regarding which proposal to pursue. However, Rose continued to have discussions with principals of Paragon concerning further financing.
 
19. On September 8, 1993, the Board of Directors of Paragon again met. The President reported on the various meetings he had had with Rose and the investment funds interested in participating in an offering of securities of the Corporation. It was resolved at the meeting that Paragon should make an offering which would result in $2.50 per share net to Paragon for an aggregate total of a maximum of $10,000,000 and that the Chairman and President should negotiate the terms of the offering with Rose. Immediately after this Board meeting, negotiation of the details of the transaction continued between Rose, acting on behalf of Canaccord, and representatives of Paragon. In addition, counsel for the parties exchanged draft documentation.
 
20. On September 22, 1993, Canaccord and Paragon signed an agreement by which Canaccord would sell on behalf of Paragon on a best efforts basis up to 3,000,000 special warrants of Paragon by way of private placement at a price of $2.75 per special warrant for aggregate proceeds of $8,250,000. Each special warrant would entitle the holder to acquire one common share of Paragon without further consideration.
 
21. On September 22, 1993, Paragon issued a press release announcing the agreement with Canaccord. At the time of the press release, shares of Paragon traded at $3.10. On September 28, 1993, Paragon filed with the Ontario Securities Commission a material change report giving a full description of this material change in the affairs of Paragon.
 
22. The majority of the private placement was placed by Rose primarily to institutional clients.
 
23. Throughout this time Rose purported to be making the market in securities of Paragon.
 
24. Inventory R is Rose's inventory trading account at Canaccord in which Rose has a 50% interest.
 
25. On September 23, 1993, Market Surveillance of the TSE noticed that Canaccord had entered a $3.00 bid for 1,000 Paragon shares and a $3.15 offering for 1,000 shares. Both orders were marked "n" for non-client. The TSE was aware that Canaccord had agreed to sell on a best effort basis, 3,000,000 special warrants at a price of $2.75 by way of private placement. The TSE contacted Rose to determine the nature of the orders. Rose stated that the orders were his. At this time Rose was made aware of the restrictions on trading by members involved in a distribution as prescribed by section 11.11 of the General By-law. This section prohibited bids or purchases at prices higher than the price of the distribution, that is at prices higher than $2.75. Rose agreed and cancelled his bid and offer. Rose further advised the TSE representative that he had entered the order because the Registered Trader was not fulfilling his responsibilities "to make a market" and asked if the TSE would contact the Registered Trader.
 
26. Then on September 24, 1993, the TSE Market Surveillance Department noticed that Yorkton Inc. had simultaneously entered a client order to buy 1,000 shares of Paragon at $3.00 and a client order to sell 1,000 shares at $3.25. Due to the unusual nature of these orders, the TSE contacted Yorkton and was advised that the orders were for an account in the name of Olamor Investments Limited with the contact for that account being Mary-Lou Rose. The TSE then contacted Rose and asked him if he had any affiliation with the Olamor account. Rose advised of his connection with these orders. Olamor is owned by Rose's wife and the orders were entered by Rose's wife on Rose's instructions. Rose was advised that he was in violation of section 11.11 of the General By-law. Rose then agreed to cancel the bid and offer placed by the Olamor account. Rose advised the TSE that there was a large spread in the stock with no involvement from the Registered Trader.
 
27. On October 13, 1993, Paragon issued a press release announcing that it had completed the private placement of special warrants. Subsequently a prospectus was filed with the Commission and a receipt issued in respect of the underlying securities.
 
28. On November 1, 1993, Rose was interviewed by the Division of Investigative Services of the TSE. Rose cooperated fully, answered all questions and openly discussed the orders for Paragon shares on September 23, 1993, and September 24, 1993.
 
29. Rose traded securities of Paragon through the Inventory R account as follows:
 
Date
1993
Buy   Sell   Price Bal.
July
Opening
          -485
Jun. 28 2,400       3.15 1,915
29 500       3.30 2,415
29 500       3.10 2,915
29 200       3.15 3,115
29 300       3.20 3,415
29 500       3.35 3,915
29 1,600       3.97 5,515
Jul. 2 500       2.90 6,015
2 500       3.00 6,515
5 500       2.75 7,015
5 1,900       2.85 8,915
7     100   3.00 8,815
9 500       2.90 9,315
12 500       2.85 9,815
13 500       2.85 10,315
14     1,500   2.70 8,815
16 500       2.65 9,315
19 200       2.40 9,515
19 500       2.50 10,015
20     1,500   2.75 8,515
20     2,000   2.85 6,515
20     1,000   2.90 5,515
21     2,000   3.00 3,515
22     5,000   3.00 -1,485
26     100   3.05 -1,585
26     200   3.10 -1,785
Sub-Tot
for month
  12,100   13,400    
Aug.
Opening
          -1,785
Jul. 27 2,500       3.00 715
Aug. 4 500       2.85 1,215
5 1,000       2.70 2,215
9 100       2.65 2,315
10 4,100       2.50 6,415
11 6,000       2.50 12,415
18 2,800       2.50 15,215
20 1,000       2.45 16,215
23 1,100       2.30 17,315
23 900       2.40 18,215
23 1000       2.50 19,215
24 1000       2.30 20,215
25     17,800   2.25 2,415
25     1,000   2.30 1,415
25 500       2.30 1,915
Sub-Tot for month   22,500   18,800    
Sept.
Opening
          1,915
Aug. 26 100       2.40 2,015
26 12,800       2.40 14,815
26 1,000       2.50 15,815
27 1,000       2.60 16,815
30 2,300       2.50 19,115
30 200       2.60 19,315
30 1,000       2.70 20,315
30 2,500       2.75 22,815
31     100   2.90 22,715
Sept. 1 2,500       2.65 25,215
1 500       2.90 25,715
2 3,000       2.75 28,715
2 1,000       2.80 29,715
2 1,000       2.85 30,715
2 2,700       2.90 33,415
3 1,000       2.65 34,415
10 1,000       2.75 35,415
10 2,000       2.85 37,415
10 800       2.90 38,215
10     1,000   2.75 37,215
13 1,000       2.90 38,215
13 1,000       3.00 39,215
14 500       3.00 39,715
14 2,700       3.00 42,415
14 500       3.15 42,915
15 500       3.15 43,415
15     6,500   3.05 36,915
16 500       3.00 37,415
17 2,000       2.90 39,415
17 600       3.00 40,015
20 1,300       2.75 41,315
20 1,000       2.80 42,315
20 1,000       2.90 43,315
20 500       3.10 43,815
21     500   2.92 43,315
22 600       3.00 43,915
23 300       3.10 44,215
24     100   3.20 44,115
Sub-Tot for month   50,400   8,200    
October
Opening
          44,115
Oct. 4 200       2.90 44,315
5 1,400       2.90 45,715
6 1,000       3.00 46,715
6     4,000   3.00 42,715
7 1,000       3.10 43,715
12     2,000   2.90 41,715
12 2,000       3.00 43,715
12     4,600   3.00 39,115
14 1,500       3.00 40,615
15 1,500       3.05 42,115
15 1,500       3.20 43,615
Sub-Tot for month   10,100   10,600    
 
 
D.       Goldpark Mines and Investments Limited ("Goldpark")
 
30. At all material times Goldpark was a reporting issuer and its shares traded on the TSE.
 
31. In 1987, Rose, through his employer, was the agent for an $11,000,000 offering of securities of Goldteck Mines Limited (the predecessor to Goldpark), a junior mining exploration company. Rose placed the majority of the offering with his clients. Goldteck struggled financially during the next several years, largely as a result of mining exploration failures.
 
32. In 1992, after the death of the then Chairman and in an effort to facilitate a recovery by Goldteck, Rose became the Chairman and President of Goldteck. Goldteck sold most of its mining interests and purchased Park Photo Protection Systems Limited, a company with the rights and patent to a security product called the "Silent Policeman". In August, 1992, Goldteck Mines Limited changed its name to Goldpark Mines and Investments Limited.
 
33. On February 24, 1993, Goldpark advised its shareholders that production of its "Silent Policeman" product by its subsidiary, Park Photo, had commenced on January 2, 1993.
 
34. Esden Limited was the distributor of the "Silent Policeman" product. Electrocon Corporation manufactured some components for the "Silent Policeman" product.
 
35. In the Spring of 1993, Goldpark commenced negotiations to acquire control of Esden and Electrocon. By the end of the Spring, 1993, Goldpark had verbally agreed to acquire both Esden and Electrocon, subject to performing due diligence. At all times, Rose, as President and Chairman of Goldpark, had full knowledge of the negotiations.
 
36. On July 16, 1993, Goldpark issued a press release announcing it had signed a letter of intent to acquire all of the outstanding shares of Esden Limited, in exchange for up to 1,489,482 shares of Goldpark. On October 5, 1993, Goldpark issued a press release announcing the completion of this transaction. On October 12, 1993, Goldpark filed a material change report fully describing this material change in its affairs. The material change report stated that the consideration for the purchase was the issuance of 1,489,482 treasury shares of Goldpark.
 
37. There was no public announcement of the agreement to acquire all of the issued and outstanding shares of Electrocon until Goldpark issued a press release on September 23, 1993. On September 27, 1993, Goldpark filed a material change report fully describing this material change in its affairs. The material change report stated that the consideration for the purchase was the issuance of 450,000 treasury shares of Goldpark.
 
38. The purpose of these transactions was to facilitate a recovery by Goldpark. Goldpark continued to have difficulty overcoming the financial difficulties it had experienced from 1987 to 1991.
 
39. In September, 1993, Goldpark was approached by UNIPEC Canada Limited, a joint venture established by two state agencies in the People's Republic of China. UNIPEC expressed interest in purchasing a controlling interest in Goldpark. Goldpark and UNIPEC entered into negotiations during the latter part of September and beginning of October. Rose was involved in the negotiations on behalf of Goldpark. On October 5, 1993, UNIPEC advised that the maximum price per share that it was willing to pay for a private placement was 25¢ per share less the maximum allowable discount under TSE rules of 25%, being 18.75¢.
 
40. On October 6, 1993, Olamor Investments Ltd. sold 94,000 shares of Goldpark.
 
 
a.       Olamor is a company owned by Rose's wife;
b. Rose instructed his wife to enter the order;
c. Olamor entered a limit order to sell 94,000 shares at 26¢ at 3:56 p.m.
 
41. On October 7, 1993, Talisker Holdings Ltd. through an account at Midland Walwyn sold 52,000 shares of Goldpark. As of that date:
 
 
a.       Talisker was a company of Bermuda;
b. Talisker's address was c/o a management company in Bermuda;
c. The persons authorized to trade for the Talisker account were individuals employed by the management company in Bermuda;
d. The management company was not the beneficial owner of Talisker;
e. Rose's personal assistant states that he thinks that the beneficial owner of the Talisker account was either Rose's wife or Rose and his wife jointly;
f. Talisker had an account with Rose in 1992, which account held 375,000 shares of Goldteck and no other securities;
g. There had been only two payments out of the Talisker account at Midland Walwyn, one payment on December 10, 1992, of $17,535.60 to the management company in Bermuda and one payment on December 15, 1992, of $38,000 to Rose's wife.
h. A friend of Rose says that Rose advised him that he maintained an account out of the country and that he had more Goldpark shares than the number reported in his insider report.
i. Talisker entered an order to sell 12,000 shares at 27¢ at 12:54 p.m.
j. Talisker entered an order to sell 40,000 shares at 25¢ at 3:21 p.m.
k. The registered representative, who took the orders to sell 52,000 shares on October 7, 1993, dealt with an individual from the management company in Bermuda and did not know who the beneficial owner of Talisker was.
 
42. Inventory R is Rose's inventory account at Canaccord in which Rose has a 50% interest. On October 7, 1993, in three trades, the Inventory R account sold 10,000 shares of Goldpark at prices from 27¢ to 25¢.
 
43. As a result of the sales by Olamor, Talisker and the Inventory R accounts the price of Goldpark shares fell from 31¢ on October 6 to close at 25¢ on October 7, 1993.
 
44. On October 8, 1993, Goldpark issued a press release announcing that it had entered into a letter of intent whereby UNIPEC would acquire control of Goldpark through a private placement of 22,909,727 shares of Goldpark at a price of 18.75¢ per share for gross proceeds of $4,295,574. On November 1, 1993, Goldpark filed a material change report fully describing this material change in its affairs.
 
45. From the date of the announcement of the UNIPEC transaction to the end of November, the price of shares of Goldpark rose from 25¢ to $3.50.
 
46. Rose was not the Registered Trader for Goldpark. The TSE had set a spread goal of 5¢ for Goldpark's Registered Trader. Throughout this time, Rose purported to be making the market in securities of Goldpark.
 
47. On November 30, 1993, just prior to the completion of the private placement agreement, UNIPEC advised Rose that it would not complete the transaction unless Rose purchased the mine owned by Goldpark in Chile for $2.85 million. Notwithstanding that there was little or no value to the mine, Rose agreed to purchase the mine for $2.85 million to facilitate the completion of the transaction.
 
48. The UNIPEC private placement was then completed on November 30, 1993.
 
49. On January 3, 1995, Goldpark agreed to amend the purchase agreement in that Rose would purchase the mineral interests in Chile for $1 million and 1 million Goldpark shares and Goldpark would repurchase the mineral interests in Chile for a consideration of $1.
 
50. On February 14, 1994, Rose was interviewed by the Division of Investigative Services of the TSE. Rose cooperated fully, answered all questions and openly discussed Goldpark and his selling of Goldpark shares on October 6 and 7, 1993, through Canaccord's inventory account. In particular, Rose said that he was concerned about the buying that came into the market on October 6 and 7, 1993, and that the buying could jeopardize the deal with UNIPEC. Rose stated that in response to this undue pressure on the share price, he sold the shares of Goldpark to ensure the proper pricing for the deal with UNIPEC. With respect to the selling of Goldpark shares by Talisker on October 7, 1993, Rose said that he had no knowledge of why Talisker was selling Goldpark shares. With respect to the selling of Goldpark shares by Olamor on October 6, 1993, Rose stated that he helps his wife in all decisions.
 
51. Rose reported trades in securities of Goldpark in his insider reports as follows:
 
Date 1993 Buy   Sell   Price Bal.
July
Opening
          239,100
19 5,000       .34 244,100
20 5,000       .34 249,100
27 2,500       .30 251,600
28 9,500       .30 261,100
30 3,000       .33 264,100
Sub-Tot
for month
  25,000   000    
August
Opening
          264,100
3     92,000   .35 172,100
5 1,000       .30 173,100
13 1,000       .35 174,100
20 2,000       .35 176,100
24 1,000       .35 177,100
25 2,000       .37 179,100
25 7,000       .40 186,100
27 3,000       .33 189,100
Sub-Tot
for month
  17,000   92,000    
Sept.
Opening
          189,100
1     6,000   .39 175,100
2 5,000       .32 180,100
13     10,000   .33 170,100
16 5,000       .35 175,100
22 4,500       .35 179,600
23 5,000       .35 184,600
24 1,000       .35 185,600
29     500   .31 185,100
Sub-Tot
for month
  20,500   16,500    
Oct.
Opening
          185,100
5     4,000   .33 181,100
5     9,500   .31 171,600
5     5,000   .32 166,600
6     6,000   .31 160,600
7     3,000   .28 157,600
7     1,000   .27 156,600
7     5,000   .30 151,600
7     1,000   .25 150,600
8     50,000   .55 100,600
8     40,000   .65 60,600
12 5,000       1.08 65,600
12     15,000   1.04 50,600
13     25,000   .82 25,600
13     15,000   1.05 10,600
14     5,000   1.44 5,600
14 5,000       1.43 10,600
14 2,000       1.58 12,600
18 20,000       1.20 32,600
18     4,500   1.20 28,100
18 5,000       1.25 33,100
19     10,000   1.55 23,100
19 2,000       1.35 25,100
21 5,000       1.75 30,100
21 1,100       1.70 31,200
25 5,000       1.60 36,200
26     1,000   1.52 35,200
26     2,000   1.60 37,200
26 8,700       1.52 45,900
27     20,000   1.90 25,900
27     5,000   1.87 30,900
28     4,000   2.00 26,900
29     3,700   2.45 23,200
29     10,000   2.55 13,200
Sub-Tot
for month
  58,800   244,700    
Personal Trading
for October
           
Escrowed   94,500     .0324  
Freed   300,000        
Oct. 21       60,000 1.76  
 
 
E.       Disciplinary History
 
52. By Settlement Offer dated December 10, 1984, Rose agreed to the imposition by the TSE of a fine of $10,000 for failure to comply with section 8(1) of TSE Policy XXVIII (the "Policy") and to pay the costs of the investigation. The Settlement Offer was accepted by the TSE on December 19, 1984. The Policy prohibited purchases of shares of an issuer making a normal course issuer bid at prices higher than the last independent board lot trade of the shares. The Policy was published by the TSE on September 30, 1983. The prior policy did not prohibit such share purchases. Rose was not aware of the Policy until he was contacted by the TSE on September 24, 1984.
 
53. On April 14, 1992, the TSE sent Rose a warning letter in connection with a number of technical violations of TSE regulations.
 
IV. THE POSITION OF ROSEN
 
54. With respect to Paragon, Rose believed that the Registered Trader had failed to abide by his obligations, specifically his obligation to contribute to market liquidity and his obligation to maintain a continuous two-sided market with an appropriate spread goal. As a result of this, Rose states that he traded in Paragon shares to maintain an appropriate market with a spread narrower than was being maintained by the Registered Trader. Rose believed he was acting in the best interests of his clients and acting to fulfil the responsibility he felt he owed to these clients to call an appropriate market.
 
55. With respect to the bids and offers on September 23, 1993 and September 24, 1993, Rose states that he was continuing his past pattern in maintaining what he saw as an appropriate market in Paragon shares.
 
56. With respect to the sale of Goldpark shares on October 6 and 7, 1993, Rose believed that there was undue pressure on the buy side and that this unusual market activity could jeopardize the transaction with UNIPEC. Although Rose now understands that he should have refrained from selling Goldpark shares, he believed he was acting in the best interests of his clients and of the company in ensuring that the transaction with UNIPEC went through. Rose states that he acted against his own personal interest in engaging in the sale of Goldpark shares and in agreeing to purchase the mineral interests from UNIPEC to ensure that the transaction was completed.
 
57. Rose denies the conclusions of Staff as set out in Part V.
 
V. CONDUCT CONTRARY TO THE PUBLIC INTEREST
 
58. Staff states that the conduct of Rose was contrary to the public interest in that:
 
 
a.       In acting as a market maker in the securities of Paragon at the same time as he was discussing and negotiating the private placement, Rose placed himself in a conflict of interest that was not in the public interest and engaged in insider trading contrary to section 76 of the Act.
 
b. In instructing his wife to place an order for her account, after he had been told by the TSE that such an order was prohibited by TSE by-laws, Rose deliberately attempted to circumvent the requirements of the TSE and to flout requirements put in place for the protection of investors.
 
c. In acting as a market maker in the securities of Goldpark at the same time as he was Goldpark's Chairman and President, Rose placed himself in a conflict of interest that was not in the public interest and, prior to the announcement of the Electrocon transaction, engaged in insider trading contrary to section 76 of the Act.
 
d. The sale of securities of Goldpark through his wife's account on October 6, 1993, and through an offshore account and his inventory account on October 7, 1993, for the purpose of moving the price of Goldpark shares down to 25¢ was contrary to the public interest in that it constituted market manipulation.
 
59. Staff states that Rose's belief that the Registered Traders of Paragon and Goldpark failed to abide by their obligations to maintain a proper market is not supported by the evidence. Staff also state that Rose's belief that, on October 6 and 7, 1993, there was buying pressure in trading in the shares of Goldpark is not supported by the evidence and that the only pressure on the market was the selling pressure from the sales of shares by Rose, Olamor and Talisker.
 
VI. TERMS OF SETTLEMENT
 
60. Rose agrees to the following terms of settlement:
 
 
a.     Rose's registration as a securities salesperson will be suspended from February 1, 1997, until the later of August 1, 1997, or the date that Rose passes the examination based upon the Conduct and Practices Manual.
 
b.     Upon his registration being reinstated, Rose will be subject to the following term of supervision (in addition to normal supervision) for a period of two years from the date of reinstatement: daily review by his employer of trades by Rose in the inventory account.
 
c.     If Rose applies for registration as an officer of a registrant, he will not be exempted from any educational requirements that must be completed before the registration is granted and satisfactory procedures for his supervision must be put in place before the registration is granted.
 
d.     As long as Rose is registered under the Act, he will not be an insider nor act as a promoter of a reporting issuer.
 
e.     From February 1, 1997, to February 1, 1999, Rose will not trade in securities, directly or indirectly, for his own account or the account of any person associated with him provided that, upon reinstatement of his registration, Rose may trade through his employer's inventory accounts.
 
f.     As long as Rose is registered under the Securities Act, Rose will not trade in securities directly or indirectly except through accounts with his employer, a registered dealer, and Rose will advise his employer, in writing, of all accounts in which he has a direct or indirect interest or over which he exercises direction or control.
 
g.     Rose will not act as a market maker except in respect of securities for which he has been approved by the TSE as the Registered Trader and, if so approved, he will submit to regular reviews by the TSE of his market making activities and will comply with all TSE requirements. Failure to comply with any requirement of the TSE is grounds for the TSE to revoke his approval as a Registered Trader, without prior notice.
 
h.     On or before August 1, 1998, Rose will pay $30,000 to the Minister of Finance as a contribution towards the costs of the investigation.
 
Items b, d, e, and g will be made terms and conditions on Mr. Rose's registration.
 
VII. CONSENT
 
61. Rose hereby consents to an order of the Commission incorporating the provisions of clauses a, b, d, e and g of paragraph 42 in the form annexed hereto as Schedule "A".
 
VIII. STAFF COMMITMENT
 
62. If this Settlement Agreement is approved by the Commission, Staff will not initiate any complaint to the Commission or request the Commission to hold a hearing or issue any order or initiate any other proceeding or prosecution in respect of any conduct or alleged conduct of Rose in relation to the facts set out in Part III of this Settlement Agreement.
 
IX. PROCEDURE FOR APPROVAL OF THE SETTLEMENT
 
63. The approval of the settlement as set out in the Settlement Agreement shall be sought at a public hearing before the Commission in January 7, 1997, in accordance with the procedures described herein and such further procedures which may be agreed upon between Rose and the Staff.
 
64. Staff and Rose agree that if the Settlement Agreement is approved by the Commission, it will constitute the entirety of the evidence to be submitted respecting Rose in this matter and Rose agrees to waive his right to a full hearing and appeal of this matter under the Act.
 
65. Staff and Rose agree that if the Settlement Agreement is approved by the Commission, they will not make statements that are inconsistent with the Settlement Agreement.
 
66. If, for any reason whatsoever, the Settlement Agreement is not approved by the Commission, or the Order set forth in Schedule "A" is not made by the Commission:
 
 
a.       Staff and Rose will each be entitled to proceed to a hearing of the allegations in the Notice of Hearing and related Statement of Allegations unaffected by the Settlement Agreement or the settlement negotiations;
 
b. The terms of the Settlement Agreement will not be raised in any other proceeding or disclosed to any person except with the written consent of Rose and Staff or as may be otherwise required by law; and
 
c. Rose further agrees that he will not raise in any proceeding the Settlement Agreement or the negotiation or process of approval thereof as a basis for any attack on the Commission's jurisdiction, alleged bias or appearance of bias, alleged unfairness or any other challenge that may otherwise be available.
 
67. If, prior to the approval of this Settlement Agreement by the Commission, there are new facts or issues of substantial concern, in the view of Staff, regarding the facts set out in Part III of the Settlement Agreement, Staff and Rose will be at liberty to withdraw from the Settlement Agreement. Notice of such intention will be provided to the other in writing. In the event of such notice being given, the provisions of the preceding paragraph in this Part will apply as if the Settlement Agreement had not been approved in accordance with the procedures set out herein.
 
X. DISCLOSURE OF SETTLEMENT AGREEMENT
 
68. The terms of the Settlement Agreement will be treated as confidential by both parties hereto until approved by the Commission and forever if for any reason whatsoever, the Settlement Agreement is not approved by the Commission.
 
69. Any obligation as to confidentiality shall terminate upon the approval of this Settlement Agreement by the Commission.
 
IX. EXECUTION OF SETTLEMENT AGREEMENT
 
70. This Settlement Agreement may be signed in one or more counterparts which shall constitute a binding agreement and a facsimile copy of any signature shall be as effective as an original signature.
 
 
  DATED this 7th day of January, 1997

SIGNED IN THE PRESENCE OF:

"Robert Frederick Rose"

"Brenda Eprile"