Proceedings

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

AND

IN THE MATTER OF
VISIONS FINANCIAL GROUP INC.

SETTLEMENT AGREEMENT

 

I. INTRODUCTION

1. By notice of hearing dated May 3, 1999 (the "Notice of Hearing"), the Ontario SecuritiesCommission (the "Commission") announced that it proposed to hold a hearing to consider:

(a) whether, pursuant to section 127 of the Securities Act ("the Act"), it is in the publicinterest for the Commission to make an order:

(i) that the registration of the respondent Visions Financial Group Inc.("Visions") be suspended or restricted for such time as the Commission maydirect, or be terminated, or be subject to such terms and conditions as theCommission may order;

(ii) that Visions submit to a review of its practices and procedures and institutesuch changes as may be ordered by the Commission; and/or

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

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

II. JOINT SETTLEMENT RECOMMENDATION

2. (a) The Staff of the Commission ("Staff") agree to recommend settlement of theproceeding initiated in respect of Visions by the Notice of Hearing in accordance withthe terms and conditions set out below. Visions consents to the making of an orderagainst it in the form attached as Schedule 'A' on the basis of the facts set out below.

(b) Staff and Visions agree that this settlement agreement, including the attachedSchedule 'A', will be released to the public only if and when the settlement isapproved by the Commission.

III. STATEMENT OF FACTS

Acknowledgment

3. Visions agrees with the facts set out in this Part III.

Factual Background

4. At all material times, Visions was registered with the Commission as a mutual fund dealer andlimited market dealer, pursuant to section 25(1) of the Act.

5. Pursuant to subsection 21.10(4) of the Act, and sections 139 and 141 of the Regulation madeunder the Act, Visions is required to deliver to the Commission, within ninety days of eachfiscal year end, a copy of its audited financial statements for the previous fiscal year, and anaudited report prepared in accordance with Statement C of Form 9 of the Regulation.

6. At all material times, Visions' fiscal year end was December 31.

7. Visions was required to deliver its financial statements for the year ending December 31,1997, on or before March 31, 1998. Visions delivered those financial statements to theCommission on May 1, 1998.

8. Visions' financial statements for the year ending December 31, 1997 disclosed a capitaldeficiency. On July 2, 1998, pursuant to section 31 of the Act, the Director requested thatVisions file the following information with Commission on a monthly basis, beginning withthe month ended June 30, 1998:

(a) unaudited, interim financial statements at month end prepared in accordance withgenerally accepted accounting principles;

(b) a calculation of minimum required capital at month end;

(c) a calculation of adjusted liabilities prepared in accordance with Statement C; and

(d) a reconciliation of the trust account from the general ledger balance to the bankbalance with supporting attachments.

9. The monthly filings set out in paragraph 8 above were due within three weeks of the end ofeach month. The statements for June 30, July 31, August 31, September 30 and October 31,1998, were all delivered on December 15, 1998. The monthly filings for November 30, 1998,were delivered on April 11, 1999.

10. Visions' financial statements for the year ending December 31, 1998 were due on March 31,1999. Those financial statements were delivered to the Commission on May 6, 1999. Thestatements disclosed a capital deficiency and a qualified audit opinion.

11. Visions' monthly filing for March 31, 1999, were delivered to the Commission on May 11,1999. Those statements disclosed no capital deficiency.

12. Visions contravened Ontario securities law in that it:

(a) failed to deliver its audited financial statements and other filings as at December 31,1997 on or before March 31, 1998, as required;

(b) failed to comply with terms and conditions of its registration;

(c) failed to ensure that at all times it met the capital requirements prescribed by section107 of the Regulation made under the Act; and

(d) failed to deliver its audited financial statements and other filings as at December 31,1998 on or before March 31, 1999, as required.

IV. TERMS OF SETTLEMENT

13. The following terms and conditions will be imposed on Visions' registration:

1. The registrant is required to deliver to the Commission, beginning as at April 30,1999:

(a) unaudited, interim financial statements at month end prepared inaccordance with generally accepted accounting principles;

(b) a calculation of minimum free capital;

(c) a calculation of adjusted liabilities prepared in accordance with StatementC of Form 9; and

(d) a reconciliation of all trust bank accounts,

such documents to be delivered on or before May 26, 1999, in respect of themonth ending April 30, 1999, and to be delivered within three weeks of eachsubsequent month end. All such filings must be in a form satisfactory to Staff ofthe Commission.

2. The registrant is required to deliver to the Commission, on or before August 13,1999, and as at June 30, 1999:

(a) financial statements;

(b) a calculation of excess free capital;

(c) Statement C of Form 9; and

(d) the compliance report referred to in section 12.04 of National Policy 39;

all of which must be prepared and audited in accordance with Ontario securitieslaw, and must be accompanied by an audit opinion that is neither reserved norqualified.

3. If the registrant fails to comply with any element of either of the terms and conditionsset out in paragraphs 1 or 2 above, the registrant's registration will, at the instance ofthe Director and without any need for the Director to conduct a hearing, or any otherpre-condition, be automatically suspended pending full compliance.

14. Visions will be reprimanded by the Commission.

V. STAFF COMMITMENT

15. 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 Visions in relation to the facts set out in Part III of thisagreement.

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

VI. PROCEDURE FOR APPROVAL OF SETTLEMENT

17. Approval of the settlement set out in this agreement shall be sought at the public hearing ofthe Commission scheduled for May 13, 1999, or such other date as may be agreed to by Staffand Visions, in accordance with the procedures described in this agreement.

18. Staff and Visions agree that if this agreement is approved by the Commission, it willconstitute the entirety of the evidence to be submitted respecting Visions in this matter, andVisions agrees to waive its rights to a full hearing and appeal of the matter under the Act.

19. Staff and Visions agree that if this settlement is approved by the Commission, neither Staffnor Visions will make any public statement inconsistent with this agreement.

20. If, for any reason whatsoever, this settlement is not approved by the Commission or an orderin the form attached as Schedule 'A' is not made by the Commission:

(a) each of Staff and Visions will be entitled to all available proceedings, remedies andchallenges, including proceeding to a hearing of the allegations in the Notice ofHearing and Statement of Allegations, unaffected by this agreement or the settlementnegotiations;

(b) the terms of this agreement will not be referred to in any proceeding, or disclosed toany person, except with the written consent of both Staff and Visions or as may berequired by law; and

(c) Visions agrees that it will not, in any proceeding, refer to or rely upon this agreementor the negotiation or process of approval of this agreement as the basis for any attackon the Commission's jurisdiction, alleged bias, appearance of bias, alleged unfairnessor any other remedies or challenges that may otherwise be available.

VII. DISCLOSURE OF AGREEMENT

21. The terms of this agreement will be treated as confidential by all parties hereto until approvedby the Commission, and forever if, for any reason whatsoever, this settlement is not approvedby the Commission, except with the written consent of both Visions and Staff or as may berequired by law.

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

VIII. EXECUTION OF AGREEMENT

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

Dated this 13th day of May, 1999.

VISIONS FINANCIAL GROUP INC.

STAFF OF THE ONTARIO SECURITIES COMMISSION