R.S.0. 1990, c. S.5, AS AMENDED
IN THE MATTER OF
NUCAP INVESTMENTS INC.
WILLIAM A. DRESSING
1. By Notice of Hearing dated July 24, 1997, the Ontario Securities Commission (the "Commission") announced that it proposed to hold a hearing to considerwhether, in the opinion of the Commission, it is in the public interest for the Commission to make an Order:
a) pursuant to clause 1 of section 127 of the Securities Act R.S.O. 1990, c. S.5, (the "Act"), that the registration granted to Nucap Investments Inc. ("Nucap") asa mutual fund dealer be terminated;
b) pursuant to clause 1 of section 127 of the Act, that the registration granted to William A. Dressing ("Dressing") as a trading officer be terminated;
c) pursuant to clause 3 of section 127 of the Act, that any exemptions contained in Ontario securities law do not apply to Dressing permanently or for suchperiod of time as specified in the Order; and
d) such further and other Order as the Commission considers appropriate.
II SETTLEMENT AGREEMENT
2. Staff of the Commission ("Staff") agrees to recommend the settlement of the proceedings initiated in respect of Nucap and Dressing (the "Respondents") byNotice of Hearing dated July 24, 1997 in accordance with the terms and conditions set out hereinafter (the "Settlement Agreement"). The Respondents agree tothe making of an order as against them as hereinafter provided.
III STATEMENT OF FACTS
3. Staff and the Respondents agree with the facts set out in paragraphs 4 to 23 of this Settlement Agreement (hereinafter referred to as the "Statement of Facts").
4. Nucap was incorporated in Ontario on December 18, 1987 and had its head office in Markham, Ontario until May, 1997.
5. Nucap has been registered as a mutual fund dealer under the Act since May 25, 1988.
6. Dressing is the president, secretary and sole director of Nucap.
7. Dressing was a registered salesperson under the Act by virtue of being a trading officer of Nucap.
Failure to File Financial Statements
8. On September 25, 1989, Nucap was requested to file certain financial information on a monthly basis as a result of Staff's concerns with Nucap's financialstatements.
9. Nucap filed financial information on a monthly basis until 1994.
10. Nucap last submitted audited financial statements with the Commission for the fiscal year ending November 30, 1993.
11. On several occasions prior to and including November 24, 1994, Nucap was advised by Staff of the Commission that Nucap had failed to file the financialinformation required on a monthly basis.
12. Nucap failed to submit audited financial statements for the fiscal years ending November 30, 1994 and November 30, 1995.
Suspension of Nucap's Registration
13. Staff suspended Nucap's registration as of April 25, 1996 as a result of Nucap's failure to file financial statements and a Statement C of Form 9 with theCommission.
14. Mutual fund dealers are required to file audited financial statements with the Commission within 90 days after the end of its financial year pursuant tosections 139 to 142 of Regulation 1015.
15. The Respondents were informed of the suspension by letter from Staff dated May 15, 1996.
16. Dressing did not inform any of the eight salespersons sponsored by Nucap of Nucap's suspension.
Mutual Fund Sales after April 25, 1996
17. Dressing and the salespersons sponsored by Nucap sold mutual funds to the public subsequent to Nucap's suspension.
18. Nucap's salespersons stopped selling mutual funds to their clients when they learned of Nucap's suspension on or before April 28, 1997.
19. After Nucap's suspension on April 25, 1996, Nucap processed approximately $1.5 million in mutual fund sales by Dressing and Nucap's salespersons.
Redemptions of Mutual Funds
20. On March 22, 1996, the Respondents approved two redemptions of mutual funds totalling $31,000 belonging to a Nucap client.
21. On September 18, 1996, the Respondents approved two redemptions totalling $25,100 approximately five days after the death of the Nucap client.
22. Nucap has not paid $56,100 to the estate of the Nucap client pursuant to the redemptions of the mutual funds on March 22, 1996 and September 18, 1996.
Conduct Contrary to the Public Interest
23. The Respondents acknowledge that their conduct in selling mutual funds after Nucap's suspension was contrary to the public interest and contrary to section25(1) of the Act.
24. The Respondents acknowledge that they have failed to deal fairly, honestly and in good faith with Nucap's salespersons and clients.
25. Counsel for the Respondents have advised Staff that Dressing, throughout the material time, was suffering from significant emotional problems whichincluded bouts of depression. Dressing is currently under psychiatric care and takes prescriptive medication. It is the Respondent's position that the psychologicalcondition of Dressing significantly contributed to his conduct.
IV TERMS OF SETTLEMENT
26. The Respondents agree to the following terms of settlement:
(i) pursuant to clause 1 of section 127(1) of the Act, Nucap's registration as a mutual fund dealer is terminated; and
(ii) pursuant to clause 1 of section 127(1) of the Act, Dressing's registration as a trading officer of Nucap is terminated.
27. The Respondents hereby consent to an order of the Commission incorporating the provisions of Part IV above in the form annexed hereto as Schedule "A".
VI STAFF COMMITMENT
28. If this Settlement Agreement is approved by the Commission, Staff will not initiate any complaint to the Commission or request the Commission to hold ahearing or issue an order in respect of the conduct of the Respondents in relation to the facts set out in Part III of this Settlement Agreement and in the Notice ofHearing issued on July 24, 1997.
29. If, subsequent to the approval of this Settlement Agreement by the Commission, there are new facts that come to the attention of Staff regarding this matter,Staff will be at liberty to initiate a complaint to the Commission or request that the Commission hold a hearing or issue an order in respect of the conduct oralleged conduct of the Respondents.
VII PROCEDURE FOR APPROVAL OF SETTLEMENT
30. The approval of the settlement as set out in this Settlement Agreement shall be sought at a public hearing of the Commission scheduled on October 28, 1997.
31. Staff and the Respondents agree that if the Settlement Agreement is approved by the Commission, it will constitute the entirety of the evidence to besubmitted with respect to the Respondents in this matter and the Respondents agree to waive their rights to a full hearing and appeal of this matter under the Act.
32. If, for any reason whatsoever, the settlement is not approved by the Commission:
(a) The Respondents and Staff will be entitled to proceed to a hearing for the allegations in the Notice of Hearing herein, unaffected by this SettlementAgreement or the settlement negotiations;
(b) The terms of this Settlement Agreement will not be raised in any other proceeding or disclosed to any person except with the written consent of theRespondents and the Staff or as may be otherwise required by law; and
(c) The Respondents further agree that they will not raise in any proceeding this Settlement Agreement or the negotiation or process of approval thereof as abasis for any attack on the Commission's jurisdiction, alleged bias, alleged unfairness or any other challenge that may otherwise be available.
IX DISCLOSURE OF SETTLEMENT AGREEMENT
33. The terms of this Settlement Agreement will be treated as confidential by all parties hereto until the Settlement Agreement is presented for approval to theCommission, and forever if, for any reason whatsoever, the Settlement Agreement is not approved by the Commission.
34. Any obligation as to confidentiality of the Settlement Agreement shall terminate when the Settlement Agreement is presented for approval to the Commissionor continue forever if, for any reason whatsoever, the Settlement Agreement is not approved by the Commission.
EXECUTION OF SETTLEMENT AGREEMENT
35. This Settlement Agreement may be signed in one or more counterparts which together shall constitute a binding agreement and a facsimile copy of anysignature shall be as effective as an original signature.
October 28th, 1997.
SIGNED IN THE PRESENCE OF:
"Nucap Investments Inc."
"William A. Dressing"