Settlement Agreement

Settlement Agreement
File No. 200938




IN THE MATTER OF A SETTLEMENT HEARING
PURSUANT TO SECTION 24.4 OF BY-LAW NO. 1 OF
THE MUTUAL FUND DEALERS ASSOCIATION OF CANADA

Re: Bradley Monroe Gabrielson



SETTLEMENT AGREEMENT

I.
INTRODUCTION

1.
By Notice of Hearing dated May 10, 2010, the Mutual Fund Dealers Association of
Canada (the “MFDA”) announced that it proposed to hold a hearing concerning a disciplinary
proceeding commenced by the MFDA against Bradley Monroe Gabrielson (the “Respondent”).
Staff of the MFDA (“Staff”) and the Respondent propose to make a request to the hearing panel
of the Prairie Regional Council (the “Hearing Panel”) to consider whether, pursuant to section
24.4 of By-law No. 1, the Hearing Panel should accept the settlement agreement entered into
between Staff and the Respondent (the “Settlement Agreement”).

II.
JOINT SETTLEMENT RECOMMENDATION

2.
Staff conducted an investigation of the Respondent’s activities. The investigation
disclosed that the Respondent had engaged in activity for which the Respondent could be
penalized on the exercise of the discretion of the Hearing Panel pursuant to s. 24.1 of By-law
No.1.

Page 1 of 20

3.
Staff and the Respondent recommend settlement of the matters disclosed by the
investigation in accordance with the terms and conditions set out below. The Respondent agrees
to the settlement on the basis of the facts set out in Part IV herein and consents to the making of
an Order in the form attached as Schedule “A”.

4.
Staff and the Respondent agree that the terms of this Settlement Agreement, including the
attached Schedule “A”, will be released to the public only if and when the Settlement Agreement
is accepted by the Hearing Panel.

III.
ACKNOWLEDGEMENT

5.
Staff and the Respondent agree with the facts set out in Part IV herein for the purposes of
this Settlement Agreement only and further agree that this agreement of facts is without
prejudice to the Respondent or Staff in any other proceeding of any kind including, but without
limiting the generality of the foregoing, any proceedings brought by the MFDA (subject to Part
IX) or any civil or other proceedings which may be brought by any other person or agency,
whether or not this Settlement Agreement is accepted by the Hearing Panel.

IV.
AGREED FACTS

6.
Staff and the Respondent agree with the facts as set out in the Affidavit of Indira
Nadarajan sworn November 12, 2010 as revised, attached as Schedule “C”.

V.
CONTRAVENTIONS

7.
The Respondent admits that on or about October 25, 2004, the Respondent engaged in
securities related business that was not carried on for the account of the Member or through the
facilities of the Member by selling shares in a hotel project to a client, contrary to MFDA Rules
1.1.1 and 2.1.1.

8.
The Respondent admits that between December 23, 2002 and September 11, 2007, the
Respondent had and continued in another gainful occupation as the owner and an officer and a
Page 2 of 20

director of a hotel project that was not disclosed in writing to or approved by the Member,
contrary to MFDA Rules 1.2.1(d) and 2.1.1.

9.
The Respondent admits that commencing on August 6, 2008, the Respondent has failed
to provide information concerning a hotel project requested by Staff during the course of its
investigation, contrary to section 22.1 of MFDA By-law No. 1.

VI.
TERMS OF SETTLEMENT

10.
The Respondent agrees to the following terms of settlement:
(a) the Respondent shall be permanently prohibited from conducting securities
related business in any capacity while in the employ of, or in association with, any
MFDA Member, pursuant to section 24.1.1(e) of By-Law No. 1;
(b) the Respondent shall pay a fine of $10,000 upon acceptance of this Settlement
Agreement, pursuant to section 24.1.1(b) of By-law No. 1, payable as follows:
(i) $2,000, payable upon acceptance of this Settlement Agreement; and
(ii) $2,000, payable on the 18th of each and every month thereafter, commencing
on December 18, 2010 until paid in full;
(c) the Respondent shall pay $2,500 in respect of the costs of the investigation and
settlement of this matter upon the acceptance of this Settlement Agreement,
pursuant to section 24.2 of By-law No. 1;
(d) the Respondent will attend in person, on the date set for the Settlement Hearing;
(e) If the Respondent fails to honour the terms as outlined in paragraph 10(b)(ii), the
outstanding balance shall immediately become due and payable and Staff may, at
its own discretion and without further notice to the Respondent take such
measures as are available to it to collect the outstanding amount;
(f) the Respondent shall complete the undertakings as outlined in Schedule “B”.

VII.
STAFF COMMITMENT

11.
If this Settlement Agreement is accepted by the Hearing Panel, Staff will not initiate any
proceeding under the By-laws of the MFDA against the Respondent in respect of the
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contraventions described in Part V of this Settlement Agreement, subject to the provisions of
Part IX below. Nothing in this Settlement Agreement precludes Staff from investigating or
initiating proceedings in respect of any contraventions that are not set out in Part V of this
Settlement Agreement or in respect of conduct that occurred outside the specified date ranges of
the contraventions set out in Part V, whether known or unknown at the time of settlement.
Furthermore, nothing in this Settlement Agreement shall relieve the Respondent from fulfilling
any continuing regulatory obligations.

VIII. PROCEDURE FOR APPROVAL OF SETTLEMENT

12.
Acceptance of this Settlement Agreement shall be sought at a hearing of the Prairie
Regional Council of the MFDA on a date agreed to by counsel for Staff and the Respondent.

13.
Staff and the Respondent may refer to any part, or all, of the Settlement Agreement at the
settlement hearing. Staff and the Respondent also agree that if this Settlement Agreement is
accepted by the Hearing Panel, it will constitute the entirety of the evidence to be submitted
respecting the Respondent in this matter, and the Respondent agrees to waive his rights to a full
hearing, a review hearing before the Board of Directors of the MFDA or any securities
commission with jurisdiction in the matter under its enabling legislation, or a judicial review or
appeal of the matter before any court of competent jurisdiction.

14.
Staff and the Respondent agree that if this Settlement Agreement is accepted by the
Hearing Panel, then the Respondent shall be deemed to have been penalized by the Hearing
Panel pursuant to s. 24.1.2 of By-law No. 1 for the purpose of giving notice to the public thereof
in accordance with s. 24.5 of By-law No. 1.

15.
Staff and the Respondent agree that if this Settlement Agreement is accepted by the
Hearing Panel, neither Staff nor the Respondent will make any public statement inconsistent with
this Settlement Agreement. Nothing in this section is intended to restrict the Respondent from
making full answer and defence to any civil or other proceedings against him.

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IX.
FAILURE TO HONOUR SETTLEMENT AGREEMENT

16.
If this Settlement Agreement is accepted by the Hearing Panel and, at any subsequent
time, the Respondent fails to honour any of the Terms of Settlement set out herein, Staff reserves
the right to bring proceedings under the By-laws of the MFDA against the Respondent based on,
but not limited to, the facts set out in Part IV of the Settlement Agreement, as well as the breach
of the Settlement Agreement. If such additional enforcement action is taken, the Respondent
agrees that the proceeding(s) may be heard and determined by a hearing panel comprised of all
or some of the same members of the hearing panel that accepted the Settlement Agreement, if
available.

X.
NON-ACCEPTANCE OF SETTLEMENT AGREEMENT

17.
If, for any reason whatsoever, this Settlement Agreement is not accepted by the Hearing
Panel or an Order in the form attached as Schedule “A” is not made by the Hearing Panel, each
of Staff and the Respondent will be entitled to any available proceedings, remedies and
challenges, including proceeding to a disciplinary hearing pursuant to sections 20 and 24 of By-
law No. 1, unaffected by this Settlement Agreement or the settlement negotiations.

18.
Whether or not this Settlement Agreement is accepted by the Hearing Panel, the
Respondent agrees that he will not, in any proceeding, refer to or rely upon this Settlement
Agreement or the negotiation or process of approval of this Settlement Agreement as the basis
for any allegation against the MFDA of lack of jurisdiction, bias, appearance of bias, unfairness,
or any other remedy or challenge that may otherwise be available.

XI.
DISCLOSURE OF AGREEMENT

19.
The terms of this Settlement Agreement will be treated as confidential by the parties
hereto until accepted by the Hearing Panel, and forever if, for any reason whatsoever, this
Settlement Agreement is not accepted by the Hearing Panel, except with the written consent of
both the Respondent and Staff or as may be required by law.

Page 5 of 20

20.
Any obligations of confidentiality shall terminate upon acceptance of this Settlement
Agreement by the Hearing Panel.

XII.
EXECUTION OF SETTLEMENT AGREEMENT

21.
This Settlement Agreement may be signed in one or more counterparts which together
shall constitute a binding agreement.

22.
A facsimile copy of any signature shall be effective as an original signature.

Dated: November 18, 2010
“Dana I. Carlson”
“Bradley
Gabrielson”

Witness – Signature
Bradley Monroe Gabrielson

Dana I. Carlson

Witness – Print name

“Michelle
Pong”
for

Staff of the MFDA
Per:
Mark
T.
Gordon
Executive
Vice-President
Page 6 of 20

Schedule “A” Order
File No. 200938

IN THE MATTER OF A SETTLEMENT HEARING
PURSUANT TO SECTION 24.4 OF BY-LAW NO. 1 OF
THE MUTUAL FUND DEALERS ASSOCIATION OF CANADA

Re: Bradley Monroe Gabrielson


ORDER


WHEREAS on May 10, 2010, the Mutual Fund Dealers Association of Canada (the
“MFDA”) issued a Notice of Hearing pursuant to section 20 of By-law No. 1 in respect of
Bradley Monroe Gabrielson (the “Respondent”);

AND WHEREAS the Respondent entered into a settlement agreement with Staff of the
MFDA, dated November 18, 2010 (the “Settlement Agreement”), in which the Respondent
agreed to a proposed settlement of matters for which the Respondent could be disciplined
pursuant to sections 20 and 24.1 of By-law No. 1;

AND WHEREAS the Hearing Panel is of the opinion that the Respondent:

(i)
on or about October 25, 2004, engaged in securities related business that was not carried
on for the account of the Member or through the facilities of the Member by selling
shares in a hotel project to a client, contrary to MFDA Rules 1.1.1 and 2.1.1;

Page 7 of 20

(ii)
between December 23, 2002 and September 11, 2007, had and continued in another
gainful occupation as the owner and an officer and a director of a hotel project that was
not disclosed in writing to or approved by the Member, contrary to MFDA Rules 1.2.1(d)
and 2.1.1; and

(iii)
commencing on August 6, 2008, has failed to provide information concerning a hotel
project requested by Staff during the course of its investigation, contrary to section 22.1
of MFDA By-law No. 1.

IT IS HEREBY ORDERED THAT the Settlement Agreement is accepted, as a
consequence of which:

1. If at any time a non-party to this proceeding requests production of or access to exhibits in
this proceeding that contain intimate financial or personal information, then the MFDA
Corporate Secretary shall not provide copies of or access to the requested exhibits to the non-
party without first redacting from them any and all intimate financial or personal information,
pursuant to Rules 1.8(2) and (5) of the MFDA Rules of Procedure;

2. The Respondent shall be permanently prohibited from conducting securities related business
in any capacity while in the employ of, or in association with, any MFDA Member, pursuant to
section 24.1.1(e) of By-Law No. 1;

3. The Respondent shall pay a fine of $10,000, pursuant to section 24.1.1(b) of By-law No. 1,
payable as follows:
a. $2,000, payable upon acceptance of this Settlement Agreement; and
b. $2,000, payable on the 18th of each and every month thereafter, commencing on
December 18, 2010 until paid in full;

4. The Respondent shall pay $2,500 in respect of the costs of the investigation and settlement of
this matter, pursuant to section 24.2 of By-law No. 1;

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5. If the Respondent fails to honour the terms as outlined in paragraph 10(b)(ii) of the
Settlement Agreement, the outstanding balance shall immediately become due and payable and
Staff may, at its own discretion and without further notice to the Respondent take such measures
as are available to it to collect the outstanding amount;

6. The Respondent shall complete the undertakings as outlined in Schedule “B” to the
Settlement Agreement.

DATED this 18th day of November, 2010.

Per: __________________________
Daniel
Ish,
Chair

Per: _________________________

Nada Israeli, Industry Representative

Per: _________________________

Elaine Bradley, Industry Representative
Page 9 of 20

Schedule “B” Undertakings
File No. 200938

IN THE MATTER OF A SETTLEMENT HEARING
PURSUANT TO SECTION 24.4 OF BY-LAW NO. 1 OF
THE MUTUAL FUND DEALERS ASSOCIATION OF CANADA

Re: Bradley Monroe Gabrielson


UNDERTAKINGS


UNDERTAKINGS to be completed on or before the close of business December 17.
2010:
a.
Provide copies of all Alberta Securities Commission filings up to, and including,
proof of exemption in relation to the securities at issue; and

b.
Provide a letter from the Respondent’s responsible securities lawyer, addressed to
the MFDA, advising the Respondent not to disclose the information requested of
the Respondent identified in paragraphs 1 and 2 of the MFDA’s letter dated
August 29, 2008.
Page 10 of 20

Schedule
“C”
Affidavit
File No. 200938




IN THE MATTER OF A DISCIPLINARY HEARING
PURSUANT TO SECTIONS 20 AND 24 OF BY-LAW NO. 1 OF
THE MUTUAL FUND DEALERS ASSOCIATION OF CANADA

Re: Bradley Monroe Gabrielson


AFFIDAVIT OF INDIRA NADARAJAN

I, INDIRA NADARAJAN, of the city of Vancouver, in the province of British Columbia,
MAKE OATH AND SAY:

1.
I am employed as the Investigations Manager of the Pacific Region of the Enforcement
Department of the Mutual Fund Dealers Association of Canada (“MFDA”) and have held this
position since February 2010. Prior to my promotion to my current position, I held the positions
of Investigations Manager of the Pacific and Prairie Regions from July 2008 to February 2010,
Senior Investigator from July 2006 to June 2008, and Investigator from December 2002 to June
2006. In October 2007, I was assigned the investigation of the conduct of Bradley Monroe
Gabrielson (the “Respondent”) and as such have knowledge of the matters to which I hereinafter
depose. Where I do not have direct knowledge of the matters to which I depose, I have identified
the source of my information and I believe the information to be true.

The Investigation of the Respondent

2.
On August 29, 2007, the MFDA Enforcement Department’s Case Assessment Group
opened a file with respect to the conduct of the Respondent following receipt of a complaint
Page 11 of 20

about the Respondent filed by RM on behalf of her son, SE on or about July 22, 2007. Attached
and marked as Exhibit “A” to my affidavit is a copy of the complaint form dated July 22, 2007
filed by RM on behalf of SE. David Liptrott, who is now a Manager of the Case Assessment
Group, was a case assessment officer at that time and was assigned the file.

3.
The Respondent was registered in Alberta and British Columbia as a mutual fund
salesperson with Assante Financial Management Ltd. (“Assante” or the “Member”) from
September 2001 to October 9, 2007 and in Alberta as a branch manager with Assante from June
6, 2006 to October 9, 2007. The Respondent was registered in Alberta and British Columbia as a
mutual fund salesperson and a branch manager with FPC Investments Inc. (“FPC”) from January
1993 to September 2001. Attached and marked as Exhibit “B” to my affidavit is a copy of
Form 33-109F4, Registration Information of Individuals and Review of Permitted Individuals for
Bradley Monroe Gabrielson obtained from the National Registration Database on October 25,
2010.

4.
When the Respondent was registered as an Approved Person of Assante in December
2001, he signed an Agreement of Approved Person dated December 15, 2001, which stated
among other things that he agreed to be bound by, observe and comply with the MFDA Rules as
they are from time to time amended or supplemented and that he agreed to submit to the
jurisdiction of the MFDA. A copy of the Agreement of Approved Person which was signed by
the Respondent and dated December 15, 2001 is attached and marked as Exhibit “C” to my
affidavit.

5.
The Respondent also signed an Advisor Agreement with Assante dated December 15,
2001, a copy of which is attached and marked as Exhibit “D” to my affidavit. Requirement
number 8 of the “MFDA Requirements – Conditions of Membership” of the Agreement, states
that “The Advisor shall not conduct mutual fund or other securities related business with or in
respect of any person other than [Assante].” Requirement number 9 provides, among other
things, that “While the Advisor is an advisor with [Assante], the Advisor shall not engage in or
carry on any Outside Activity, including any business or activity which is subject to regulation
by any regulatory authority other than a securities commission, unless:
Page 12 of 20

(i)
the Advisor is permitted by Applicable Rules, to engage in or carry on such Outside
Activity; and
(ii)
[Assante] has agreed in writing that the Advisor may engage in or carry on such
Outside Activity.
The Advisor acknowledges and agrees that the terms or basis on which the Advisor may be
engaged in or carry on any Outside Activity shall not, and that any Outside Activity engaged in
or carried on by the Advisor does not, prevent or impair the ability of:
(i)
[Assante], the MFDA, or any applicable regulatory authority from monitoring and
enforcing compliance by the Advisor with the terms of the Agreement(s) or the
Applicable Rules; and
(ii)
[Assante] from monitoring and enforcing compliance with [Assante] policies and
procedures.”

6.
According to MFDA records, Assante has been a Member of the MFDA since April 12,
2002.

7.
Mr. Liptrott conducted an initial review of the complaint and requested, by letter dated
August 30, 2007, that Assante provide assistance and conduct an investigation in respect of the
complaint. Attached and marked as Exhibit “E” to my affidavit is a copy of the letter dated
August 30, 2007 from Mr. Liptrott to Assante.

Allegations #1 and #2

8.
The investigations conducted by the MFDA Enforcement Department’s Case Assessment
Group and Assante determined that on or about October 25, 2004, the Respondent engaged in
securities related business that was not carried on for the account of Assante or through the
facilities of Assante by selling shares in a hotel project to a client, WE.

9.
The investigations also revealed that between December 23, 2002 and September 11,
2007, the Respondent had and continued in another gainful occupation as the owner and an
officer and a director of a hotel project that was not disclosed to or approved by Assante.
Page 13 of 20

10.
WE was a client of FPC (which was subsequently acquired by Assante). The Respondent
was the Approved Person responsible for servicing WE’s accounts. This is confirmed in a letter
from the Respondent to WE dated October 24, 1994, a copy of which is attached and marked as
Exhibit “F” to my affidavit; and a letter dated September 20, 2007 from Assante to Mr. Liptrott,
a copy of which is attached and marked as Exhibit “G” to my affidavit.

11.
On December 23, 2002, the Respondent incorporated Squirrel Inn Inc. (“Squirrel”) in
Alberta. Squirrel was a hotel project. The Respondent was the owner as well as an officer and a
director of Squirrel and held 100% of the voting shares in Squirrel. Attached and marked as
Exhibit “H” to my affidavit is a copy of the data obtained from the official records of the
Alberta Corporate Registry on June 20, 2007 for Squirrel Inn Inc.

12.
The hotel project was completed using the proceeds of shares sold by the Respondent by
way of an offering memorandum and currently operates as Comfort Inn & Suites, Red Deer,
Alberta. The Respondent promoted the share offering as an officer and the director of Squirrel.
This is confirmed in a letter dated September 14, 2007 from the Respondent to Assante, a copy
of which is attached and marked as Exhibit “I” to my affidavit; and Assante’s Internal
Investigation Report dated January 23, 2008, a copy of which is attached and marked as Exhibit
“J” to my affidavit.

13.
On September 20, 2004, WE submitted a request to transfer his locked-in retirement
account (“LIRA”) in cash from B2B Trust to Olympia Trust Company (“Olympia”) and
designated his son, SE as the beneficiary. On the same day, WE also instructed Olympia to
subscribe for 27 shares of Squirrel for the aggregate price of $27,000 and authorized Olympia to
provide any information on the account to the Respondent. This is confirmed by a Transfer
Authorization for Registered Investments dated September 20, 2004 from WE; a Registered Plan
Application dated September 20, 2004 from WE; a Letter of Indemnity & Direction dated
September 20, 2004 from WE to Olympia; and a letter dated September 20, 2004 from WE to
Olympia, copies of which are attached and marked as Exhibit “K” to my affidavit.

Page 14 of 20

14.
On October 19, 2004, B2B Trust transferred the amount of $26,301.71 into a LIRA at
Olympia. This is confirmed in Section E of the Transfer Authorization for Registered
Investments dated September 20, 2004 from WE, previously attached and marked as Exhibit
“K” to my affidavit; and a Locked-In Confirmation form dated October 18, 2004 from B2B
Trust, a copy of which is attached and marked as Exhibit “L” to my affidavit.

15.
On October 25, 2004, WE purchased 27 Class E non-voting Preferred shares in Squirrel
(the “Shares”) for $27,000 with funds from WE’s Olympia LIRA. The Shares were held in
WE’s Olympia LIRA. This is confirmed in a letter dated October 25, 2004 from Olympia to
Squirrel; a Subscription for Preferred Shares of Squirrel dated September 30, 2004 from WE;
and a Certificate of 27 Class E Preferred Squirrel Shares held by Olympia in trust for WE dated
September 30, 2004, copies of which are attached and marked as Exhibit “M” to my affidavit.

16.
Assante did not have a carrying dealer or services agreement in place with Olympia. The
Shares were not approved for sale by Assante, the transaction was not processed through the
facilities or recorded on the records of Assante, and the Shares were never held by WE in any
Assante account. This is confirmed in the letter dated September 20, 2007 from Assante to Mr.
Liptrott, previously attached and marked as Exhibit “G” to my affidavit; a letter dated October
2, 2007 from the Respondent to Assante; and a letter dated October 9, 2007 from Assante to Mr.
Liptrott., copies of which are marked as Exhibit “N” to my affidavit.

17.
The Respondent’s Advisor Agreement with Assante, which was executed on December
15, 2001, stipulated that the Respondent was not to conduct mutual fund or other securities
related business with or in respect of any person other than for the account and through the
facilities of Assante. A copy of the Respondent’s Advisor Agreement with Assante dated
December 15, 2001 was previously attached and marked as Exhibit “D” to my affidavit.

18.
On April 14, 2005, WE died intestate. Attached and marked as Exhibit “O” to my
affidavit is a copy of the Funeral Directors Statement of Death dated May 27, 2005. The Shares
became the property of WE’s estate. Attached and marked as Exhibit “P” to my affidavit is a
copy of the Statement of the Estate of WE dated February 14, 2007. Although SE was the
Page 15 of 20

beneficiary of WE’s Olympia LIRA, SE was unable to sell or redeem the Shares because of
conditions pertaining to the LIRA. This is confirmed in a letter from SE to Olympia dated
March 28, 2007, a copy of which is attached and marked as Exhibit “Q” to my affidavit; a letter
from Gurevitch Headon & Associates (“Gurevitch”) to SE dated March 28, 2007 re: Estate of
WE, a copy of which is attached and marked as Exhibit “R” to my affidavit; and a letter from
Gurevitch to the Respondent dated March 28, 2007 re: Estate of WE, a copy of which is attached
and marked as Exhibit “S” to my affidavit.

19.
I am advised by Mr. Liptrott that he was informed by SE and RM that in or about May
2005, SE and RM asked the Respondent to transfer ownership of the Squirrel shares to SE so that
he could redeem the Shares.

20.
The Respondent advised SE and RM that they would get paid out in full on November
30, 2008, but if they wanted their payment earlier then they would have to accept a discounted
amount of $12,000. SE and RM declined the Respondent’s offer for an early payment. This is
confirmed in a letter dated September 14, 2007 from the Respondent to Assante, a copy of which
is attached and marked as Exhibit “T” to my affidavit.

21.
In or about November 2006, the Respondent offered to redeem the Shares for $15,000
and for $17,000 two weeks later. Both offers were rejected by SE and RM. This was provided
in the complaint form dated July 22, 2007 filed by RM on behalf of SE, previously attached and
marked as Exhibit “A” to my affidavit.

22.
On March 15, 2007, the Respondent offered to redeem the Shares for $17,000. This is
confirmed in the letter dated March 28, 2007 from Gurevitch to SE re: Estate of WE, previously
attached and marked as Exhibit “R” to my affidavit. SE and RM declined the Respondent’s
offer. This is confirmed in the letter dated March 28, 2007 from Gurevitch to the Respondent re:
Estate of WE, previously attached and marked as Exhibit “S” to my affidavit.

23.
Assante’s investigation determined, however, that the terms and conditions of the
subscription agreement for the Shares provided that the Shares could only be redeemed by the
Page 16 of 20

issuer following the third year from the date of issue and at the discretion of the issuer. There
was no market for the Shares and thus, there was no way to determine what their redemption
value was other than what the issuer was willing to pay for them. This is confirmed in a letter
from Assante to SE and RM dated October 12, 2007, a copy of which is attached and marked as
Exhibit “U” to my affidavit.

24.
Assante states that it became aware of the Respondent’s involvement with Squirrel on
September 11 and 12, 2007 while Assante was interviewing the Respondent about the complaint.
This is confirmed in the letter dated September 20, 2007 from Assante to Mr. Liptrott, previously
attached and marked as Exhibit “G” to my affidavit.

25.
I am advised by Michelle Pong that in a letter delivered by e-mail on April 26, 2010, the
Respondent claimed that he disclosed his involvement with Squirrel to Assante during Assante’s
compliance branch review of its branch located in Red Deer in August 2005. Attached and
marked as Exhibit “V” to my affidavit is a copy of the letter delivered by e-mail on April 26,
2010 from the Respondent to Ms Pong. However, in his response to Assante’s Outside Business
Activity Questionnaire on August 18, 2005, the Respondent disclosed only his involvement as
the President of a business named “Canadian Asset Management Inc.” that provided tax
preparation and insurance services. Attached and marked as Exhibit “W” to my affidavit is a
copy of Assante’s Outside Business Activity Questionnaire completed by the Respondent on
August 18, 2005. The results of Assante’s compliance branch review were subsequently
summarized and issued to the Respondent in a report dated September 30, 2005. In the report,
under the heading, “Outside Business Activity”, the Respondent was informed that, “The branch
is using an unapproved Trade/Style Name known as ‘Canadian Asset Management’. Brad
Gabrielson, Branch Manager, has completed the OBA Acknowledgement form and submitted to
the Registrations Department for approval.” MFDA Rule 1.2.1(d) was listed under the heading,
“Regulatory Requirement.” Under the heading, “Compliance Reference”, the Respondent was
informed that “A Representative shall not engage in any such outside activity until they have
obtained the approval of the Compliance Department.” Attached and marked as Exhibit “X” to
my affidavit is a copy of Assante’s Branch Review Report dated September 30, 2005.

Page 17 of 20

26.
On October 5, 2007, the Respondent resigned from his position as an Approved Person of
Assante. Attached and marked as Exhibit “Y” to my affidavit is a copy of a letter of resignation
dated October 5, 2007 from the Respondent to Assante.

27.
On October 15, 2007, Mr. Liptrott recommended escalation of the matter to the MFDA
Enforcement Department’s Investigation Group. I was assigned carriage of the matter.

Allegation #3

28.
On August 6, 2008, a process server, retained by Staff of the MFDA (“Staff”), attempted
to personally deliver a letter from Staff to the Respondent at his office located at #200, 4928 – 53
Avenue, Red Deer, Alberta. The Respondent was not present. The receptionist telephoned the
Respondent for the process server. The process server advised the Respondent that he had a
letter from the MFDA and was directed by the Respondent to return the letter. This is confirmed
in an e-mail dated August 6, 2008 from Prairie Bailiff Services to me, a copy of which is
attached and marked as Exhibit “Z” to my affidavit.

29.
By letter dated August 29, 2008, I requested that the Respondent provide a statement and
copies of specified documents relating to his involvement with Squirrel by September 5, 2008. I
also requested that the Respondent contact me to schedule an interview for the purposes of
providing a statement concerning the circumstances surrounding his termination by Assante by
September 5, 2008. I advised the Respondent that Staff was prepared to initiate disciplinary
proceedings against him pursuant to section 22.1 of MFDA By-law No. 1 should he fail to satisfy
Staff’s requests. The letter was sent to Comfort Inn & Suites Red Deer, 6846 – 66th Street, Red
Deer, Alberta by registered mail and regular mail. Attached and marked as Exhibit “AA” is a
copy of my letter dated August 29, 2008 to the Respondent.

30.
The copy of my letter dated August 29, 2008 that was sent by registered mail was picked
up and signed for by Glenda Couture on September 2, 2008. A copy of Canada Post’s scanned
delivery date and signature of the recipient of my letter from Canada Post’s website is attached
and marked as Exhibit “BB” to my affidavit.
Page 18 of 20

31.
The Respondent did not deliver a statement or copies of the specified documents to me or
contact me by September 5, 2008.

32.
By letter dated September 12, 2008, I advised the Respondent that he had not satisfied
Staff’s requests and that he was required by section 22.1 of MFDA By-law No. 1 to cooperate
with Staff’s investigation, failing which disciplinary proceedings may be commenced against
him. The letter was sent to Comfort Inn & Suites Red Deer, 6846 – 66th Street, Red Deer,
Alberta by registered mail and regular mail. Attached and marked as Exhibit “CC” to my
affidavit is a copy of my letter dated September 12, 2008 to the Respondent.

33.
The copy of my letter dated September 12, 2008 that was sent by registered mail was
picked up and signed for by Marilyn Blair on September 17, 2008. A copy of Canada Post’s
scanned delivery date and signature of the recipient of my letter from Canada Post’s website is
attached and marked as Exhibit “DD” to my affidavit.

34.
By voice-mail on September 17, 2008, the Respondent advised me that his lawyer was
going to provide a written response. No contact information for the lawyer was provided.

35.
By letter dated September 30, 2008, I requested that the Respondent provide a statement
and copies of specified documents relating to his involvement with Squirrel and his lawyer’s
contact information. I advised the Respondent that he was required by section 22.1 of MFDA
By-law No. 1 to cooperate with Staff’s investigation and that Staff was seeking authorization to
commence disciplinary proceedings against him for failing to satisfy Staff’s requests. The letter
was sent to Comfort Inn & Suites Red Deer, 6846 – 66th Street, Red Deer, Alberta by registered
mail and regular mail. Attached and marked as Exhibit “EE” to my affidavit is a copy of my
letter dated September 30, 2008 to the Respondent.

36.
The copy of my letter dated September 30, 2008 that was sent by registered mail was
picked up and signed for by Brandean Ravnsborg on October 2, 2008. A copy of Canada Post’s
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scanned delivery date and signature of the recipient of my letter from Canada Post’s website is
attached and marked as Exhibit “FF” to my affidavit.

37.
By e-mail on October 7, 2008, the Respondent replied that he was going to send SE his
money but could not as long as the MFDA matter remained unresolved and that it was his
understanding that everything was fine and addressed a year ago. Attached and marked as
Exhibit “GG” to my affidavit is a copy of the Respondent’s e-mail dated October 7, 2007 to me.

38.
By e-mail on October 8, 2008, I advised the Respondent that his failure to cooperate with
the investigation and any other allegations that may be made at the completion of Staff’s
investigation will be referred to MFDA’s Litigation Department for review. I requested that the
Respondent provide Staff with the specified documents previously requested, provide his
lawyer’s contact information or have his lawyer contact Staff, should the Respondent wish to
engage in the process. Attached and marked as Exhibit “HH” to my affidavit is a copy of my e-
mail dated October 8, 2008 to the Respondent.

39.
The Respondent did not respond to or satisfy any of Staff’s requests.

40.
In or about June 2009, SE received $27,000 for the Shares from the Respondent. This is
confirmed in a letter dated November 10, 2009 from SE & RM to the MFDA, a copy of which is
attached and marked as Exhibit “II” to my affidavit.

41.
I make this affidavit in support of the MFDA disciplinary proceeding against the
Respondent and for no other or improper purpose.

Sworn before me at

)
the City of Vancouver,

)
in the Province of British Columbia, )

“Indira Nadarajan”

this 12th day of November, 2010.
)

INDIRA NADARAJAN

)
“Sarah Hentschel”

)
A Commissioner of oaths, etc.

Doc 234115
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