September 29, 2009 Insurance Decisions and Freeze and cease trade orders

Montréal – On September 17, 2009, the Autorité des marchés financiers ("AMF") ordered the cancellation of the registration of First Canadian Financial Services, which operated in the sector of insurance of persons. Aware of a number of factors that were cause for concern, the AMF took action in the public interest.

The AMF noted numerous violations by the firm under An Act respecting the distribution of financial products and services (the "Act") and its regulations, in particular:

• The firm did not act with care and competence in dealings with clients. In November 2007, the responsible officer at the firm was notified by an insurer of suspicious transactions by the representative Saverina Cottone;
• The steps taken by the firm further to the insurer's communication were inadequate given the seriousness of the situation. The firm and its responsible officer should have carefully verified the files of consumers at risk and should have reviewed all transactions carried out on their behalf;
• The firm and its responsible officer failed to oversee the conduct of the representative Saverina Cottone;
• Although Saverina Cottone was not registered with the AMF, the firm allowed her to perform work reserved for duly registered representatives;
• Through misrepresentations, the firm tried to mislead the AMF.

The AMF believes the firm and its officer failed to act with honesty and loyalty in their dealings with clients and thereby violated provisions of the law. The registration of First Canadian Financial Services has therefore been cancelled in all sectors for which it was registered, and the firm is required to notify the AMF of the manner it intends to dispose of its client records, books and registers within 10 days.

Legal proceedings with respect to illegal practice and misrepresentations have been launched against Saverina Cottone by the AMF, which is seeking a prison term and fines totalling $483,500.

The Autorité des marchés financiers (AMF) is the regulatory and oversight body for Québec's financial sector.

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