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





1. The respondent, Noram Capital Management, Inc. ("Noram") is a corporation registeredpursuant to Ontario securities law as an adviser, investment counsel portfolio manager.

2. Section 139 of the Regulation (the "Regulation") under the Securities Act (the "Act")provides that every adviser shall deliver to the Commission, within ninety days after the endofits financial year, a copy of its audited financial statements for the financial year.

3. Pursuant to section 107 of the Regulation, Noram is required at all times to maintain aprescribed amount of minimum free capital.

4.Noram's audited financial statement for the year ending June 30, 1998 were received late atthe Commission on November 10, 1998. A note to the financial statements indicated thatsubsequent to Noram's year end, $520,000 had been injected into Noram through an issuanceof shares.

5. A calculation of Noram's minimum free capital disclosed a deficiency in the amount of$829,561. Accordingly, Noram was not in compliance with its obligation to meet itsminimum free capital requirements under Ontario securities law.

6. By November 17, 1998, Staff had been provided with two bank deposit slips which indicatedthat $830,000 had been deposited to the account of Noram. Staff, however, requiredevidence of the issuance of shares to Mr. Willman and copies of the personal loan agreements,in order to be satisfied that the capital deficiency had been rectified.

7. By letter dated November 20, 1998, Staff formally advised Noram that it was deficient inmeeting its minimum capital requirement by $829,561 as at its year end of June 30, 1998.Staff acknowledged that it was aware that financing arrangements were being made toprovide the required capital to Noram. Staff requested documentation evidencing the capitalinjection, including a copy of the newly issued common share certificates and a copy of thepersonal loan agreement(s). In addition to specific auditing requirements, Staff placed Noramon monthly capital monitoring effective the month ending November 30, 1998. This requiredNoram to submit the following to the Commission no later than three weeks after month end(the "Monthly Reporting"):

(a) unaudited, interim financial statements at month end prepared in accordance withGenerally Accepted Accounting Principles ("GAAP"); and

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

8. By letter dated December 3, 1998, Staff formally notified Noram of its intention to imposeconditions of registration on Noram, pursuant to section 105 of the Regulation, in accordancewith the terms and conditions set out in its letter dated November 20, 1998 (the "Terms andConditions").

9. The Terms and Conditions of registration were accepted by Noram on December 14, 1998.

10. On December 3, 1998, Staff received copies of the documentation evidencing the issuanceof 830,000 common shares of the capital stock of Noram to Mr. Willman in consideration for$830,000. The documentation provided by Noram also indicated that Noram had purchaseda mutual fund from the Royal Bank in the amount of $830,000 (the "Mutual Fund").

11. On December 28, 1998, Staff received a copy of Noram's unaudited interim financialstatements for the period ended November 30, 1998. A calculation of Noram's minimum freecapital disclosed a deficiency in the amount of $538.

12. On January 5, 1999, Noram provided documentation establishing that it had rectified itscapital deficiency.

13. The Monthly Reportings for the period November, 1998 to May, 1999 disclosed no capitaldeficiency.

14. By letter dated July 5, 1999, Staff advised Noram that a Personal Property Security Act(Ontario) search identified five claims for liens against the assets of Noram (the "PPSAClaims"). Staff requested that Noram provide documentation identifying the nature of thePPSA Claims.

15. The Monthly Reporting for the period ended June 30, 1999, received at the Commission onJuly 23, 1999, revealed that Noram had a working capital deficiency in the amount of$933,909. The Monthly Reporting enclosed a copy of Noram's letter of July 20, 1999advising that it was taking steps to rectify its working capital deficiency by dissolving itshealth and welfare trust. Noram did not, however, respond to Staff's inquiries regarding thePPSA Claims and has not done so to date.

16. As of June 30, 1999, Noram was capital deficient in the amount of $948,909.

17. Noram's Monthly Reporting for the month ended July 31, 1999 again revealed a workingcapital deficiency in the amount of $927,974.

18. As of July 31, 1999, Noram was capital deficient in the amount of $942,974.

19. By letter dated August 26, 1999, Staff advised Noram that it had a capital deficiency in theamount of $948,909 as at July 31, 1999. Noram was requested to rectify the deficiency bythe close of business on Monday August 30, 1999, failing which steps would be taken tosuspend Noram's registration. Noram did not rectify the deficiency as requested.

20. On or around September 10, 1999, Staff received loan documentation (the "LoanDocumentation") from Noram which establishes that Noram guaranteed the Loan of Mr.Willman from the Royal Bank, pursuant to a Guarantee and Postponement of Claim, andthat Noram granted a security interest in and a pledge of the Mutual Fund, and income fromthe Mutual Fund, to the Royal Bank pursuant to a Security and Pledge Agreement.

21. The Loan Documentation establishes that Noram does not have control over access to the$830,000 Mutual Fund or any income from that Mutual Fund. Control over access to thebenefits of an asset is one of the essential characteristics of an asset. Accordingly, the MutualFund does not qualify as an asset under GAAP.

22. As a result of Noram failing to take into account the impact of the Loan Documentation onits capital, Noram's minimum free capital has been overstated since June, 1998, creating amisleading impression as to Noram's financial condition. Noram has therefore haddeficiencies in its minimum free capital in amounts ranging up to $948,909 since June, 1998to date. The Monthly Reportings since November 1998 are therefore misstated and notprepared in accordance with the Terms and Conditions of Noram's registration.

23. As at July 31, 1999, Noram was deficient in its obligations to meet minimum capitalrequirements under Ontario securities law in the amount of $948,909. In addition, Noram hasbeen capital deficient since June 30, 1998 in the amount of at least $829,561.

Conduct Contrary to the Public Interest

24. The conduct of Noram in failing to meet minimum capital requirements and in failing to abideby its Terms and Conditions of Registration is contrary to the public interest.

25. Such other allegations as Staff may make and the Commission may permit.

DATED at Toronto this 22nd day of September, 1999.