July 20, 2000

Commission Approves Significant Sanctions in RT Capital High Closing Case

Toronto - At a hearing today, the Ontario Securities Commission approved a settlement agreement entered between staff of the Commission and RT Capital Management Inc., K. Michael Edwards, Timothy K. Griffin, Donald E. Webster, Jennifer I. Lederman, Peter B. Larin, Peter A. Rodrigues, Gary N. Baker, Patrick Shea and Marion Gillespie.

The respondents admitted that they acted in a manner contrary to the public interest and specifically RT Capital also admitted that it failed to establish written procedures for dealing with clients with respect to high-closings that conformed with prudent business practice and enabled RT Capital to serve its clients adequately, contrary to section 1.2 of Rule 31-505 under the Securities Act.

The settlement approved by the Commission includes the following sanctions:

• Edwards, Lederman, Rodrigues, Baker and Griffin agreed not to be, or act as, a director or officer of any market participant for varying periods of time ranging from one month to three years and in the case of Larkin permanently;
• Larkin's registration is terminated permanently;
• Baker's registration is suspended for a period of three years;
• Gillespie, Shea, and Baker cease trading in all securities, with limited exceptions, for varying periods of time ranging from one year to three years and in the case of Larkin permanently, again with limited exceptions;
• RT Capital, Edwards, Griffin, Webster, Lederman and Rodrigues are reprimanded;
• RT Capital is submitting to a review of its practices and procedures and will institute such changes as may be required;
• Baker, Shea and Gillespie are required to take courses prior to their registration being reinstated.
• Shea and Gillespie are required to work under close supervision for a period of two years upon their reinstatement;
• the respondents were to pay in total, a sum of $143,000 towards the Commission's cost of the investigation;
• RT Capital also agreed to re-configure its telephone taping system so that all calls between an RT Capital portfolio manager and an RT Capital order executioner are recorded.

In the settlement agreement entered into the respondents also admitted, among other things, that:

• The high-closing activity occurred on 53 occasions over eight dates between October 1998 and March 1999;
• Larkin was responsible on forty-three occasions for trades or engaging in a trading strategy, designed to create or maintain an uptick, or prevent or rectify a downtick, in the closing price of a security;
• On ten high-closings, Baker was responsible for trades or a trading strategy that created or maintained an uptick, or prevented or rectified a downtick, in the closing price of a security;
• On each of the fifty-three occasions, either Larkin or Baker discussed the high-closing with either Shea or Gillespie, who was then responsible for instructing a broker to execute a trade, or a trading strategy, which created or maintained an uptick, or prevented or rectified a downtick, in the closing price of a security;
• On eight occasions, Larkin instructed Shea to carry out cross-trades of that nature involving RT Capital client accounts in order to effect the desired closing price;
• Larkin, Baker, Shea and Gillespie were able to effect high-closings of securities on month-, quarter-, and year-end dates which affected the appearance of portfolio performance.
• The high-closing activities described above were not detected by RT Capital because of a lack of procedures to monitor trading activities to check for high-closings. Due to the failure to detect the high closings, none of the fifty-three high-closings was ever "red flagged" or made the subject of scrutiny by RT Capital;

Copies of the Notice of Hearing, Statement of Allegations, Settlement Agreements, Order and Reasons for Decision are available at www.osc.gov.on.ca. or from the Commission, 19^th floor, 20 Queen Street West, Toronto.

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