IN THE MATTER OF DISCIPLINE PROCEEDINGS PURSUANT TO BY-LAW 20 OF THE INVESTMENT DEALERS ASSOCIATION OF CANADA RE: GUS ANASTASIO DIMAS

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1 IN THE MATTER OF DISCIPLINE PROCEEDINGS PURSUANT TO BY-LAW 20 OF THE INVESTMENT DEALERS ASSOCIATION OF CANADA RE: GUS ANASTASIO DIMAS NOTICE OF HEARING NOTICE is hereby given that a hearing will be held before the Alberta District Council ( the District Council ) of the Investment Dealers Association of Canada (the Association ), on December 6 and 7, 2004, at the offices of the Association located at 2300, th Avenue S.W. Calgary, Alberta, commencing at 10:00 a.m., or soon thereafter, as the hearing can be scheduled, regarding a disciplinary action brought by the Association concerning Gus Anastasio Dimas (the Respondent ). NOTICE is further given that the staff of the Association allege the following violations of the By-laws, Regulations or Policies of the Association: Count 1 The Respondent failed to act in accordance with the provisions of the Alberta Securities Act (R.S.A. 1996, c. 28; 2000, c. 17; and 2000, c. S-4), in that he participated in a distribution of securities of a U.S. private company, ThinWEB Technologies Inc. ( ThinWEB ), when ThinWEB was not a reporting issuer in Alberta and the ThinWEB securities were not otherwise qualified for distribution to Alberta residents, in contravention of Association By-law Count 2 The Respondent failed to act in accordance with the internal policies of his member firm, Merrill Lynch Canada Inc. ( Merrill ), and the standards for conduct prescribed in the Conduct and Practices Handbook ( CPH ), in that he failed to advise and obtain prior approval in respect of his outside business activities with ThinWEB, and failed to have the transactions involving ThinWEB recorded in the normal way on the books and records of Merrill, in contravention of Association By-law PARTICULARS NOTICE is further given that the following is a summary of the facts alleged and intended to be relied upon and the conclusions drawn by the Association at the said hearing: (a) Background 1. At all relevant times, the Respondent was an employee of Merrill, and a resident of the City of Calgary, in the Province of Alberta. His history as an approved person is as follows:

2 - 2 - Registration Issue Date June 21, 2002 February 7, 2003 Registration Termination Date Employer Registration Category Emerging Equities Inc. Registered November 19, 2001 November 22, 2001 ING Wealth Management Registered Mutual Funds May 11, 2000 November 19, 2001 Yorkton Securities Inc. Registered June 30, 1998 May 8, 2000 Midland Walwyn Capital Inc.* Registered March 9, 1995 June 30, 1998 Wood Gundy Inc.** Registered July 19, 1994 Wood Gundy Inc.** Registered Mutual Funds July 4, 1991 July 4, 1994 Investors Syndicate Limited Registered Mutual Funds * Subsequently Merrill Lynch Canada Inc. ** Subsequently CIBC World Markets Inc. 2. At all material times, the Registered, Kevin Letun, worked with the Respondent at Merrill. 3. At all material times, D. L. was the lawful spouse of Kevin Letun. 4. At all material times, C. L. was the sister of Kevin Letun. 5. The Association received letters of complaint from D.D. and R.L. dated January 24, 2001 and May 9, 2001, respectively. Both D.D. and R.L. alleged that the Respondent, while a Registered with a Calgary branch office of Merrill, solicited their investment in a U.S. private company, ThinWEB, on the basis that ThinWEB would be launching an Initial Public Offering ( IPO ), and the shares of the company would be worth many times the price offered to them of U.S. $7.00 per share. 6. D.D. and R.L. issued personal cheques to the Respondent to purchase shares of ThinWEB. They did not sign any agreements evidencing the contract and they did not receive share certificates for their investments. 7. Merrill was not aware of the trades/distribution in the shares of ThinWEB, as between the Respondent and D.D. and R.L., respectively. 8. ThinWEB never became a publicly traded company.

3 - 3 - (b) Statement of Facts Background of transaction 9. During the period February 19, 1999 to May 31, 2000, ThinWEB prepared and filed seven (7) registration and amended registration statements (the prospectus ) with the U.S. Securities and Exchange Commission ( SEC ). 10. On September 26, 2000, ThinWEB filed a Certification and Notice of Termination form with the SEC. ThinWEB did not engage in any subsequent registration activity with the SEC and, to the knowledge of the Association, ThinWEB is now a defunct company. 11. In the prospectus certain identified selling security holders are authorized to sell 6,262,500 shares of ThinWEB common stock. D. L. is listed as one of the selling security holders and shown as the owner of 100,000 ThinWEB common shares. 12. The ThinWEB SEC prospectus disclosed the following additional relevant information, inter alia: (i) (ii) listed selling security holders are authorized to sell shares, provided the shares are sold in U.S. states where the shares had been registered or qualified for sale, or an exemption from such requirements had been satisfied; identified selling security holders are subject to trading restrictions; prohibiting the sale, in any thirty (30) day period, of more than 10% of the original number of shares held. 13. Further, the ThinWEB SEC prospectus disclosed that ThinWEB had entered into a Private Placement Agreement with Lines Overseas Management Limited ( Lines Overseas ). Specifically, it indicated that Lines Overseas had agreed to use it s best efforts to bring to market an offering of a minimum of 1,000,000 shares at a price of $5.00 US per unit; each unit consisting of one share of common stock and one warrant to purchase an additional share for a two year period at $7.00 US. It was stated that the private placement was expected to commence shortly after the ThinWEB registration statement became effective. 14. The private placement with Lines Overseas was never completed. 15. Kevin Letun participated in a purchase of seed shares of ThinWEB in and around late 1998 or early He purchased 100,000 seed shares of ThinWEB at a price of U.S. $0.50 per share ( the ThinWEB shares ). Kevin Letun received and reviewed a copy of the ThinWEB prospectus filed with the SEC. 16. The ThinWEB shares were registered in D. L. s name, however, the ThinWEB shares were jointly owned by Kevin Letun and D. L. Kevin Letun had authority to sell some or all of the ThinWEB shares on his wife s behalf.

4 Merrill was not aware of Kevin Letun s purchase of the ThinWEB shares. 18. D. L. was identified in the prospectus as one of the selling security holders subject to trading restrictions, (as referenced in paragraph 12(ii) herein). 19. In and around late summer 1999, Kevin Letun advised the Respondent of his ownership of the ThinWEB shares and of his desire to sell 10,000 of those shares. Kevin Letun offered to sell 10,000 ThinWEB shares to the Respondent, at a price of $7.00 US per share. 20. In and around the Fall of 1999, the Respondent agreed to purchase 10,000 ThinWEB shares from Kevin Letun and D. L. 21. Kevin Letun provided the Respondent with a copy of the ThinWEB prospectus. The Respondent did not receive a share certificate for the purchase of the 10,000 ThinWEB shares. 22. The Respondent did not purchase all of the 10,000 ThinWEB shares as a single investor. The Respondent purchased 1,000 shares for an approximate price of $10, Cdn. The remaining approximately 9,000 shares were purchased by eight (8) other individuals (the other investors ), in the approximate amounts and prices, as listed below: Name Shares (approx.) $ Cdn. Invested (approx.) TD 1,000 $10,500 RH 500 $5,180 CD 500 $5,180 AL 800 $8,288 BL 1,000 $10,360 DD 2,500 $25,700 KD 2,500 $25,700 CP 500 $5, Some, or all, of the other investors were not provided with copies of the ThinWEB prospectus and/or share certificates and/or any other documentation evidencing their purchases of ThinWEB shares. 24 At all material times, Kevin Letun was aware that the Respondent had not purchased the 10,000 shares of ThinWEB as a single investor and that other investors had and/or would be participating in the purchase of the 10,000 ThinWEB shares. 25. A Share Trust Agreement relating to the purchase of the 10,000 ThinWEB shares purports to have been executed by the Respondent and D. L. on January 31, The

5 - 5 - Share Trust Agreement discloses that the total purchase price of $70,000 US for the 10,000 shares of ThinWEB was to be paid to the Vendor (D. L.) by the Purchaser (the Respondent) at the time of execution of the agreement. 26. The Respondent issued four (4) cheques to D. L. and two (2) cheques to C. L. in the total amount of $107, Cdn. over the approximate period October 1999 to March 2000, in payment of the 10,000 ThinWEB shares. The payments were irregular in amount and time of receipt, as illustrated below: Date of Receipt of Amount Date of investment Invested Cheque Name monies by Dimas CDN. $ (approx.) from Dimas Amount CDN. $ Payable to GD N.A. $10, Oct-99 $20,000 C. L. TD Unknown $10,500 4-Nov-99 $10, C. L. RH Unknown $5, Nov-99 $15,180 D. L. CD 12-Oct-99 $5,180 6-Dec-99 $10,360 D. L. AL 26-Oct-99 $8, Mar-00 $25,700 D. L. BL 2-Dec-99 $10, Mar-00 $25,700 D. L. DD 23-Mar-00 $25,700 KD Unknown $25,700 CP Unknown $5, Kevin Letun made representations directly, or indirectly, to the Respondent and/or some, or all, of the other investors that by the Fall of 2000 ThinWEB would become a publicly traded company, trading on the Nasdaq OTC Bulletin Board, at a starting price of at least U.S. $7.00 per share. Merrill Policy 28. During the period October 1999 to March 2000, Kevin Letun and D. L. sold 10% of their holding of ThinWEB shares; the limit prescribed by the prospectus term addressing selling security holders resale of shares. 29. At all material times, Merrill maintained a written policy with respect to the outside business activities of its registered representatives, which policy mandated that all outside business activities were to be reported and reviewed by the Office of General Counsel of Merrill.

6 Further, at all material times, Merrill maintained a policy whereby each of its registered representative employees was required to complete an Employee Activity Review System ( EAR ) on a yearly basis, disclosing all of the employee s outside business activities. 31. Kevin Letun s EAR form dated March 1, 1999, was completed and indicated that he did not have any outside employment, business interests, investments or trusteeships. 32. On or about May 2, 2000, Merrill registered representative employees were requested to complete the EAR form for The Respondent did not complete the EAR form before leaving Merrill in May Kevin Letun did not complete the EAR form before leaving Merrill in October At all material times, Jim Sorenson ( Sorenson ) was the branch manager for Merrill. 36. Merrill, including Sorenson, were not approached by the Respondent or Kevin Letun in respect of their outside business activities with ThinWEB and did not provide the Respondent or Kevin Letun with written, or any, approval to trade/distribute ThinWEB securities to members of the public and, in particular, to Alberta residents, outside of the normal course for such business activities and off the books of Merrill. 37. Sorenson, on behalf of Merrill, signed Kevin Letun s Uniform Termination Notice dated October 23, 2000, indicating that Kevin Letun was terminated from Merrill for failing to disclose his outside business activities with ThinWEB. 38. The Respondent has admitted that he did not disclose and/or obtain prior written, or any, approval from Merrill in respect of his outside business activities with ThinWEB. Summary 39. ThinWEB was not registered as a reporting issuer, in accordance with the provisions of the Alberta Securities Act (supra). 40. The ThinWEB securities were not registered for distribution to Alberta residents and an exemption from prospectus requirements was not obtained, in accordance with the provisions of the Alberta Securities Act (supra). 41. The other investors were not informed, or not properly informed, of the nature and risks associated with their investments in ThinWEB, in accordance with the provisions addressing requirements for exemptions from prospectus filing of the Alberta Securities Act (supra). 42. The Respondent by facilitating and participating in the distribution of ThinWEB securities, with knowledge that nine (9) investors were taking part in the purchase of the 10,000 ThinWEB shares and that the other investors could not be qualified as sophisticated investors, pursuant to the provisions of the

7 - 7 - Alberta Securities Act, acted in contravention to Policy 5.1 (2.34(4)) of the Alberta Securities Act (supra), the rule against syndication. 43. The Respondent by his acts in participating in a distribution of ThinWEB securities to Alberta residents with deliberate, or reckless, disregard of the provisions of the Alberta Securities Act (supra), engaged in conduct unbecoming a registered representative contrary to Association By-law Further, the Respondent by his acts in participating in a distribution of ThinWEB shares to Alberta residents outside of the normal course of such business activities and off the books of Merrill and, in particular, by failing to disclose and obtain the prior written approval from Merrill for his outside business activities with ThinWEB, breached the standards of conduct set out in the CPH and as required by Merrill s internal policy for such activities, and thereby engaged in conduct unbecoming a registered representative contrary to Association By-law NOTICE is further given that the Respondents shall be entitled to appear and be heard and be accompanied by counsel or agent at the hearing and to call, examine and cross-examine witnesses. NOTICE is further given that Association By-laws provide that if, in the opinion of the District Council, the Respondent(s) has (have) failed to comply with or carry out the provisions of any applicable federal or provincial statute relating to trading or advising in respect of securities or commodities or of any regulation or policy made pursuant thereto; has (have) failed to comply with or carry out the provisions of any By-law, Regulation, Ruling or Policy of the Association; has (have) engaged in any business conduct or practice which such District Council in its discretion considers unbecoming or not in the public interest; or is (are) otherwise not qualified whether by integrity, solvency, training or experience, the District Council has the power to impose any one or more of the following penalties: (a) (b) a reprimand; a fine not exceeding the greater of: (i) (ii) $1,000, per offence; and an amount equal to three times the pecuniary benefit which accrued to such person as a result of committing the violation; (c) (d) (e) suspension of approval of the person for such specific period and upon such terms as such District Council may determine; revocation of approval of such person; prohibition of approval of the person in any capacity for any period of time; and

8 - 8 - (f) such conditions of approval or continued approval as may be considered appropriate by the District Council. NOTICE is further given that the District Council may, in its discretion, require that the Respondent(s) pay the whole or part of the costs of the proceedings before the District Council and any investigation relating thereto. NOTICE is further given that the District Council may accept as having been proven any facts alleged or conclusions drawn by the Association in the Notice of Hearing and Particulars that are not specifically denied, with a summary of the facts alleged and conclusions drawn based on those alleged facts, in a Reply. NOTICE is further given that the Respondents have ten (10) days from the date on which this Notice of Hearing and Particulars was served, to serve a Reply upon: Investment Dealers Association of Canada Suite th Avenue SW Calgary, AB T2P 0J1 Attention: Charlene McLaughlin, Enforcement Counsel A Reply may either: (i) (ii) specifically deny (with a summary of the facts alleged and intended to be relied upon by the Respondents, and the conclusions drawn by the Respondents based on all the alleged facts) any or all of the facts alleged or the conclusions drawn by the Association in the Notice of Hearing and Particulars; or admit the facts alleged and conclusions drawn by the Association in the Notice of Hearing and Particulars and plead circumstances in mitigation of any penalty to be assessed. DATED this day of September, Warren Funt Vice-President, Western Canada, Member Regulation