Securities Law & Instruments



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







(Sections 127 and 127.1)

WHEREAS on May 1, 2003, the Ontario SecuritiesCommission (the "Commission") issued a Notice of Hearingpursuant to section 127 of the Securities Act, R.S.O.1990, c. S.5, as amended (the "Act") respecting TrafalgarAssociates Limited ("Trafalgar") and Edward Furtak("Furtak");

AND WHEREAS Trafalgar and Furtak enteredinto a Settlement Agreement with Staff of the Commission (the"Settlement Agreement") in which they agreed to aproposed settlement of the proceedings, subject to the approvalof the Commission;

AND UPON reviewing the Settlement Agreementand the Statement of Allegations of Staff of the Commissionand upon hearing submissions from counsel for Trafalgar andFurtak and from Staff of the Commission;

AND WHEREAS Trafalgar undertakes to theCommission that it will not apply for registration, or pursueits pending application for registration, for four months commencingon the date of this Order;

AND WHEREAS the Commission is of theopinion that it is in the public interest to make this Orderpursuant to subsection 127(1) and section 127.1 of the Act;


1. the attached Settlement Agreement is approved;

2. pursuant to subsection 127(1), paragraph2, trading in any securities by Furtak cease for six monthscommencing on the date of this Order;

3. pursuant to subsection 127(1), paragraph6, Trafalgar and Furtak are reprimanded; and

4. pursuant to section 127.1, Trafalgar andFurtak will pay costs to the Commission in the amount of $5,000and $2,500 respectively.

May 15, 2003.

"H. Lorne Morphy"
"Robert L. Shirriff"
"Kerry D. Adams"



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







1. By Notice of Hearing, the Ontario SecuritiesCommission (the "Commission") will convene a hearingto consider the approval of this proposed settlement betweenStaff of the Commission ("Staff") and the respondentsTrafalgar Associates Limited ("Trafalgar") and EdwardFurtak ("Furtak") including the making of an Orderpursuant to subsection 127(1) and section 127.1 of the SecuritiesAct, R.S.O. 1990, c. S.5 (the "Act").


2. Staff agrees to recommend settlement ofthe proceeding respecting Trafalgar and Furtak initiated bythe Notice of Hearing in accordance with the terms and conditionsset out below. Trafalgar and Furtak consent to the makingof an Order against them in the form attached as Schedule"A" based on the facts set out in Part III of thisSettlement Agreement.



3. Solely for the purposes of this proceeding,and of any other proceeding commenced by a securities regulatoryagency, Staff, Trafalgar and Furtak agree with the facts setout in paragraphs 4 through 25 of this Settlement Agreement.


(a) The Respondents

4. Trafalgar is a company incorporated underthe laws of Ontario. On April 15, 1998, Trafalgar was grantedregistration with the Commission as a limited market dealer.Trafalgar's registration was suspended in May 1999 due tonon-renewal of its registration.

5. Furtak is a Canadian citizen residing inBermuda. Furtak is the President of the Trafalgar Group ofCompanies. Trafalgar is a wholly owned subsidiary of thisGroup. Furtak is Trafalgar's President.

6. Furtak is also the Chair and Presidentof Conexys Corporation Limited, formerly FaxForward InternationalLtd. ("Conexys"). Conexys trades on the BermudaStock Exchange under the symbol CXYS.BH.

7. During the material time, Furtak was notregistered with the Commission.

(b) Distributions of FFWD-1998 LimitedPartnership Units

8. FFWD-98 Limited Partnership ("FFWD-98")was established in or about April 1998. FFWD-98 entered intoa services agreement with Conexys. Conexys was developingfax technology that it intended to market to corporationsin Bermuda and Canada.

9. Units in FFWD-98 were offered exclusivelyto residents of Ontario through an Offering Memorandum datedApril 30, 1998 (the "OM"). According to the OM,a maximum of 1,000 units was offered at $5,000 per unit.

10. Units in FFWD-98 were sold to ten Ontarioinvestors for a total amount sold of $220,000. Trafalgar,through Furtak, sold $150,000 worth of the FFWD-98 units toone client (the "Client"). The remaining investorspurchased between $5,000 and $10,000 worth of FFWD-98 fromregistered salespeople who were not employees of Trafalgar.

11. FFWD-98 did not file a preliminary prospectusor prospectus with the Commission. Trafalgar and Furtak tradedin securities, which trades were distributions, without aprospectus being filed or receipted by the Commission andwith no exemption from the prospectus requirements of Ontariosecurities law being available for the vast majority of suchdistributions.

12. The FFWD-98 units offering was advertisedon the Trafalgar Group's website and in at least one Torontonewspaper. Selling commissions relating to the sale of FFWD-98units to the Client and promotional expenses were paid toTrafalgar.

13. Although Form 20's respecting the saleof FFWD-98 units ultimately were filed with the Commission,they were not filed in accordance with the Act.

(c) Conversion of FFWD-98 Units

14. The FFWD-98 units ultimately were convertedto shares of Conexys. In May 1999, the General Partner ofFFWD-98 gave notice to all the FFWD-98 investors (the "Investors")that Conexys had elected to terminate its services agreementwith FFWD-98. Accordingly, Conexys was obliged to, and did,purchase the units held by the Investors at the price of 2,300Conexys shares for each FFWD-98 unit.

15. In converting the FFWD-98 units to Conexysshares, Trafalgar and Furtak sold securities in a publiclylisted company when they were not registered by the Commissionto do so.

16. Further, no preliminary prospectus andprospectus was filed and receipted by the Commission and noprospectus exemption was available for the vast majority ofthese distributions.

17. Investors were not provided with accessto substantially the same information concerning the Conexysshares that a prospectus filed under the Act would provide.Although the OM referenced a potential conversion, it providedno information about Conexys' business and financial condition.Trafalgar and Furtak did not supplement this information fortheir clients.

(d) Advertising and Holding Out

18. Contrary to section 44 of the Act, Trafalgaradvertised on its website that it was registered as a limitedmarket dealer with the Commission. Once notified by EnforcementStaff of this contravention of the Act, Trafalgar immediatelyremoved the impugned reference.

19. In the Spring of 2000, Trafalgar helditself out as being registered with the Commission when itwas not registered contrary to section 45 of the Act. Trafalgarinforms Staff that, at the time, it was unaware that its registrationhad lapsed.

(e) Unregistered Selling by Furtak

20. Although he was not registered to do so,Furtak sold $150,000 worth of the FFWD-98 units to the Clientin May 1998. At the time of the investment, the Client wasin his early 80's.

21. Subsequently, Furtak sold to the Clientan interest in a software licensing agreement, the cost ofwhich was $90,000 cash and a $210,000 promissory note. Thelicensing agreement locked in the octogenarian's money forten years.

22. In Staff's view, the investments describedin paragraphs 20 and 21 above were unsuitable for the Client.

(f) Conduct Contrary to Ontario SecuritiesLaw and the Public Interest

23. Trafalgar's and Furtak's conduct was contraryto Ontario securities law and the public interest.

(g) Rescission

24. On or about February 17, 2003, Trafalgarredeemed the Investors' investment in FFWD-98 (now Conexysshares). The purchase price represented the full value paidfor the FFWD-98 units by the Investors.

25. Furtak redeemed the Client's $90,000 investmentin the software licensing agreement and effected the dischargeof the $210,000 promissory note on or about February 17, 2003and February 21, 2003 respectively.


26. Trafalgar agrees to the following termsof settlement:

(a) the making of an Order:

(i) approving this settlement; and

(ii) reprimanding Trafalgar;

(b) Trafalgar will undertake in writingto the Commission that it will not apply to the Commissionfor registration for 4 months; and

(c) Trafalgar will pay costs to the Commissionin the amount of $5,000.

27. Furtak agrees to the following terms ofsettlement:

(a) the making of an Order:

(i) approving this settlement;

(ii) that trading in any securities byFurtak cease for 6 months;

(iii) reprimanding Furtak; and

(iv) Furtak will pay costs to the Commissionin the amount of $2,500.


28. If this settlement is approved by theCommission, Staff will not initiate any complaint to the Commissionor any other proceeding under the Act against Trafalgar orFurtak respecting the facts set out in Part III of this SettlementAgreement.


29. Approval of the settlement set out inthis Settlement Agreement shall be sought at the public hearingof the Commission scheduled for May 15, 2003 or such otherdate as may be agreed to by Staff, Trafalgar and Furtak (the"Settlement Hearing"). Furtak will attend the SettlementHearing in person.

30. Counsel for Staff or for Trafalgar/Furtakmay refer to any part, or all, of this Settlement Agreementat the Settlement Hearing. Staff, Trafalgar and Furtak agreethat this Settlement Agreement will constitute the entiretyof the evidence to be submitted at the Settlement Hearing.

31. If this settlement is approved by theCommission, Trafalgar and Furtak agree to waive their rightsto a full hearing, judicial review or appeal of the matterunder the Act.

32. Staff, Trafalgar and Furtak agree thatif this settlement is approved by the Commission, they willnot make any public statement inconsistent with this SettlementAgreement.

33. If, for any reason whatsoever, this settlementis not approved by the Commission, or an order in the formattached as Schedule "A" is not made by the Commission;

(a) this Settlement Agreement and its terms,including all discussions and negotiations between Staff,Trafalgar and Furtak leading up to its presentation at theSettlement Hearing, shall be without prejudice to Staff,Trafalgar and Furtak;

(b) Staff, Trafalgar and Furtak shall beentitled to all available proceedings, remedies and challenges,including proceeding to a hearing of the allegations inthe Notice of Hearing and Statement of Allegations of Staff,unaffected by this Settlement Agreement or the settlementdiscussions/negotiations;

(c) the terms of this Settlement Agreementwill not be referred to in any subsequent proceeding, ordisclosed to any person except with the written consentof Staff, Trafalgar and Furtak, or as may be required bylaw; and

(d) Trafalgar and Furtak agree that theywill not, in any proceeding, refer to or rely upon thisSettlement Agreement, the settlement discussions/negotiationsor the process of approval of this Settlement Agreementas the basis of any attack on the Commission's jurisdiction,alleged bias or appearance of bias, alleged unfairness orany other remedies or challenges that may otherwise be available.


34. Subject to paragraph 30 above, this SettlementAgreement and its terms will be treated as confidential byStaff, Trafalgar and Furtak until approved by the Commission,and forever if, for any reason whatsoever, this settlementis not approved by the Commission, except with the writtenconsent of Staff, Trafalgar and Furtak, or as may be requiredby law.

35. Any obligations of confidentiality shallterminate upon approval of this settlement by the Commission.


36. This Settlement Agreement may be signedin one or more counterparts which together shall constitutea binding agreement.

37. A facsimile copy of any signature shallbe as effective as an original signature.

March 26, 2003.
"Trafalgar Associates Limited"
Trafalgar Associates Limited
March 27, 2003.
"Edward Furtak"
Edward Furtak
May 13, 2003.
"Michael Watson"
Staff of the Ontario Securities Commission
Per: Michael Watson