A settlement agreement was entered into between the Canadian Venture Exchange Inc. (the "Exchange") and Donald Raymond Evans ("Evans") effective June 16, 2000. Evans, at the time of the infraction, was employed by Pacific International Securities Inc. ("Pacific") as an investment adviser.

Rules Violated

Evans admitted violating the following Vancouver Stock Exchange ("VSE") Rules that provide in part:

Rule F.1.01(2)(a) - no approved person shall accept an order from a client without learning the essential facts relative to that client;

Rule F.1.02(3) - every member shall, prior to accepting orders from a third party have on file a trading authority signed by the client empowering the third party to enter orders on the account;

Rule F.2.22(1)(b) - approved persons shall not lead any client to believe that they would not suffer a loss as a result of any dealings in connection with their account; and

Rule F.2.22(2) - approved persons shall not, subject to Rule F.3.04, handle a discretionary order or exercise any discretion in the handling of a client of a member.

Penalty Assessed

Pursuant to the terms of the settlement agreement, Evans agrees to the following:

1. payment of a fine in the amount of $15,000;
2. withdrawal of Exchange approval for a period of 5 years, and
3. payment of $2,000 towards the costs of the Exchange’s investigation.

Summary of Facts

1. During the period September 1995 through July 1997, (the "Relevant Period") Evans exercised discretion in 15 client accounts (the "Client Accounts"). Evans executed 139 trades, primarily in the shares of US OTC BB quoted securities ACCYS Global Network Inc., Arklow Associates Inc., Life Industries Inc. and Alberta Stock Exchange listed International Wex Technologies Inc. valued at approximately $846,592 (collectively the "Discretionary Trades"). The majority of the Discretionary Trades were crosses between the Client Accounts. Evans had not received the clients’ authorization to exercise discretion over the Client Accounts and Pacific had not accepted the Client Accounts as discretionary.

Evans thereby violated VSE Rule F.2.22(2)

VSE Rule F.1.01

2. During the Relevant Period, Evans opened a corporate client account (the "Corporate Account"). Between May 1996 and June 1997, Evans executed 39 trades in the Corporate Account where the orders were received from a third party without the required written trading authorization provided by the client.
3. During the Relevant Period Evans opened a non-resident account (the "Non-Resident") as follows:

• the Non-Resident’s home address was in China, however the account had a mailing address at a drop-box on Denman Street, Vancouver, B.C.;

• the only identification for the Non-Resident account was an illegible People’s Republic of China identity card written in Chinese;

• Evans could not recall if the Non-Resident was male or female, whether the Non-Resident spoke English or whether he had ever met the Non-Resident;

• the marketing manager for Wex was provided trading authority, however Evans could not confirm that the trading authority purportedly signed by the Non-Resident was genuine; and

• there was extensive trading in the Non-Resident account prior to the date of the trading authorization.

1. Evans failed to learn the essential facts relative to the Non-Resident account and thereby violated VSE Rule F.1.01(2)(a).
2. During the Relevant Period, Evans accepted orders from a third party without having on file a trading authority signed by the client empowering the third party to enter orders on the account and thereby violated VSE Rule F.1.02(3)

Rule F.2.22

1. During the Relevant Period, Evans further guaranteed 3 clients that they would not suffer a loss as a result of trades conducted in their respective accounts.
2. By guaranteeing the 3 clients would not suffer a loss, Evans thereby violated VSE Rule F.2.22(1)(b).

No fault was attributed to the Member Firm.

For more information, please visit the Exchange’s website at www.cdnx.com.

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