R.S.O. 1990, c. S.5, AS AMENDED



Re: Infinity Investment Counsel Ltd.



1. By Notice of Hearing dated February 10, 1999, (the "Notice of Hearing"), the OntarioSecurities Commission (the "Commission") announced that it proposed to hold a hearing toconsider whether, pursuant to section 127 of the Securities Act, R.S.O. 1990, c. S.5, asamended, (the "Act"), in the opinion of the Commission it is in the public interest for theCommission:

(a) to make an order that the registration of one or more of the Respondents beterminated or suspended or restricted for such period as the Commission may orderor that terms and conditions be imposed on their registration;

(b) to make an order that one or both of the Respondents, David Singh and/or JeffreyLipton cease trading in securities, permanently or for such time as the Commissionmay direct;

(c) to make an order that one or more of the Respondents be reprimanded; and/or

(d) to make such other order as the Commission may deem appropriate.


2. The Staff of the Commission ("Staff") agree to recommend the settlement of the proceedingsinitiated in respect of Infinity Investment Counsel Ltd. ("Infinity Investment Counsel") by theNotice of Hearing in accordance with the terms and conditions set out below. InfinityInvestment Counsel agrees to the settlement on the basis of the facts agreed to as set outbelow and consents to the making of an order against it in the form attached as Schedule "A"on the basis of those facts.

3. This settlement agreement, including the attached Schedule "A", will be released to the publiconly if and when the settlement is approved by the Commission.


(i) Acknowledgement

4. Staff and Infinity Investment Counsel agree with the facts set out in this Part III.

(ii) Factual Background

5. Infinity Investment Counsel is a corporation organized pursuant to the laws of Canada. Atall material times, Infinity Investment Counsel was the portfolio manager of Infinity CanadianFund and Infinity Income and Growth Fund (the "Infinity Funds") and was registered withthe Commission pursuant to the Act, as investment counsel and portfolio manager.

6. Lipton is an individual who resides in the Province of Ontario. At all material times, Liptonwas a director, the president and chief executive officer of Infinity Investment Counsel andwas registered with the Commission pursuant to the Act as a portfolio manager andinvestment counsel.

7. Singh is an individual who resides in the Province of Ontario. At all material times, Singh wasan indirect controlling shareholder and a director of Infinity Investment Counsel. During therelevant period, Singh was also registered with the Commission pursuant to the Act to sellsecurities.

8. A Notice of Hearing and Statement of Allegations were issued by the Commission on January12, 1999 against Singh, Lipton and Infinity Investment Counsel. The Statement ofAllegations alleged that Singh, Lipton and Infinity Investment Counsel caused or permittedan investment by the Infinity Funds which was contrary to the public interest and whichcontravened the Act, Regulation and National Policy 39.

9. On January 12, 1999, Singh, Lipton and Infinity Investment Counsel signed a settlementagreement (the "settlement agreement") with Staff in respect of the allegations referred to inparagraph 8 above. Upon issuance of the Notice of Hearing, a date of January 19, 1999 wasset for the Commission to consider the settlement agreement.

10. The investment which formed the basis of Staff's allegations was the purchase by two of theInfinity Funds of units of an issuer called Infinity Income Trust.

11. In negotiating the terms of the settlement agreement, Singh, Lipton and Infinity InvestmentCounsel wished to refer to the yield generated by the Infinity Income Trust. Staff took theposition that reference to the yield alone was misleading as it did not take into account thefact that the capital value of the investment had significantly decreased. Specifically, theInfinity Funds purchased the units of Infinity Income Trust for $10.00 per unit in April 1998,and as of January 15, 1999, the units had last traded on the Toronto Stock Exchange at $5.75per unit. As a result of these discussions, no reference to the yield or capital value of theInfinity Income Trust units was included in the settlement agreement.

12. Following the execution of the settlement agreement, Singh decided to create anadvertisement to run in the business press following the Commission's consideration of thesettlement agreement to send a positive message to investors.

13. During the week of January 12, 1999, draft advertisements were created internally by Singhand revised by a public relations firm retained by Infinity Investment Counsel. On Friday,January 15, 1999, space was reserved in the business press for an advertisement to bepublished on January 20, 1999, the day following the Commission's consideration of thesettlement agreement.

14. On January 18, 1999, Singh circulated a preliminary draft of an advertisement to the regularMonday morning meeting of officers of Infinity Investment Counsel and Fortune FinancialCorporation for review.

15. The advertisement was further revised on January 18, 1999 and submitted to the businesspress on January 18, 1999 for publication on January 20, 1999.

16. On January 19, 1999, the Commission approved the settlement agreement. On the same day,Infinity Fund Management Inc. issued a press release. The press release also referred to theyield of the Infinity Income Trust without making reference to the capital diminution of theinvestment.

17. As Staff considered the statement regarding the yield to be misleading, Staff advised counselfor Infinity Fund Management Inc. that the press release ought to be corrected. Later in theday on January 19, 1999, Infinity Fund Management Inc. issued a second press release whichreferred to the yield and added the following statement:

The yield is calculated based on an initial investment of $10. In assessing the valueof this investment it should be noted that the closing price of Infinity Income TrustUnits on the Toronto Stock Exchange on January 15, 1999 was $5.75.

18. On January 20, 1999, the advertisement was published in the business press. Theadvertisement made reference to the fact that its contents were a message from the "InfinityManagement Team".

19. Despite the position of Staff that reference to the yield of the Infinity Income Trust wasmisleading in the absence of a reference to the capital diminution, the advertisement containedthe following statement:

One of the investments we included in two of our funds was the Infinity IncomeTrust. It is similar to the now obsolete, highly desirable mutual fund limitedpartnerships. In 1998, the Infinity Income Trust yielded an annualized return of 9%.We believe that this investment is an excellent fit to our long term objectives andcontinue to hold it for the long term.

20. The advertisement contained the following statement regarding the settlement of theCommission proceedings:

The Ontario Securities Commission has alleged that this investment violated the spiritof Securities Act [sic] - We disagree, and so does our legal counsel - but we havereached an agreement with the Commission to avoid prolonging this matter.

21. The statement referred to in paragraph 20 was misleading for three reasons:

a. Staff alleged not only that the investment violated the spirit of the Securities Act butalso that it violated provisions of the Act, Regulation and Policy;

b. the statement was contrary to the admissions made by Singh, Lipton and InfinityInvestment Counsel in the settlement agreement respecting their conduct inconnection with the investment; and

c. the statement suggested that Singh, Lipton and Infinity Investment Counsel did nottake responsibility for the conduct for which they were sanctioned by the Commission,but simply entered the settlement agreement to bring closure to Staff's allegations.

22. Paragraph 51 of the settlement agreement provides as follows:

If this Settlement Agreement is approved by the Commission, none of the parties tothis Settlement Agreement will make any public statement that is inconsistent with thisSettlement Agreement.

23. The advertisement was a public statement that was inconsistent with the settlementagreement.

24. Upon reviewing the advertisement in the business press, Staff expressed concerns to counselfor Infinity Investment Counsel, Singh and Lipton that the advertisement was misleading andcontrary to the terms of the settlement agreement. Infinity Investment Counsel decided topublish a retraction in the business press. The wording of the retraction was reviewed byStaff prior to publication.

25. On January 26, 1999, the retraction was published in the business press. The retraction wassignificantly less prominent than the original advertisement.


26. Infinity Investment Counsel agrees that its conduct was contrary to the public interest as itpermitted the publication of an advertisement which was misleading, contained statementsinconsistent with the settlement agreement and contravened the prohibition against misleadingsales communications set out in section 16 of National Policy 39.


27. Infinity Investment Counsel agrees that pursuant to clause 6 of subsection 127(1) of the Act,it will be reprimanded by the Commission.



28. If this Settlement Agreement is approved by the Commission, Staff will not initiate anycomplaint to the Commission or request the Commission to hold a hearing or issue any orderin respect of any conduct or alleged conduct of Infinity Investment Counsel in relation to thefacts set out in Part III of this Settlement Agreement.


29. The approval of the settlement as set out in the Settlement Agreement shall be sought at apublic hearing before the Commission scheduled for such date as is agreed to by Staff andInfinity Investment Counsel in accordance with the procedures described herein and suchfurther procedures as may be agreed upon between Infinity Investment Counsel and Staff.

30. If this Settlement Agreement is approved by the Commission, it will constitute the entiretyof the evidence to be submitted respecting Infinity Investment Counsel in this matter andInfinity Investment Counsel agrees to waive its right to a full hearing and appeal of this matterunder the Act.

31. If this Settlement Agreement is approved by the Commission, neither of the parties to thisSettlement Agreement will make any statement that is inconsistent with this SettlementAgreement.

32. If, for any reason whatsoever, this settlement is not approved by the Commission, or the orderset forth in Schedule "A" is not made by the Commission:

a. each of Staff and Infinity Investment Counsel will be entitled to proceed to a hearingof the allegations in the Notice of Hearing and related Statement of Allegationsunaffected by the Settlement Agreement or the settlement negotiations;

b. the terms of the Settlement Agreement will not be raised in any other proceeding ordisclosed to any person except with the written consent of Infinity InvestmentCounsel and Staff or as may be otherwise required by law; and

c. Infinity Investment Counsel further agrees that it will not raise in any proceeding theSettlement Agreement or the negotiation or process of approval thereof as a basis forany attack on the Commission's jurisdiction, alleged bias, appearance of bias, allegedunfairness or any other challenge that may otherwise be available.

33. If, prior to the approval of this Settlement Agreement by the Commission, there are new factsor issues of substantial concern, in the view of Staff, regarding the facts set out in Part III ofthis Settlement Agreement, Staff will be at liberty to withdraw from this SettlementAgreement. Notice of such intention will be provided to Infinity Investment Counsel inwriting. In the event of such notice being given, the provisions of paragraph 32 in this partwill apply as if this Settlement Agreement had not been approved in accordance with theprocedures set out herein.


34. The terms of the Settlement Agreement will be treated as confidential by both parties heretountil approved by the Commission and forever if for any reason whatsoever, the SettlementAgreement is not approved by the Commission.

35. Any obligation as to confidentiality shall terminate upon the approval of this SettlementAgreement by the Commission.


36. This Settlement Agreement may be signed in one or more counterparts which shall constitutea binding agreement and a facsimile copy of any signature shall be as effective as an originalsignature.

DATED this 1st day of March, 1999.


Infinity Investment Counsel Ltd.

"Charlie Macfarlane"