Investor Presentaiton

To remedy such situations, there are proposals to expand the protection provided by the FISF. Others fear, however, that such an extension would incur additional costs that could be passed on to investors. The Autorité deems, for its part, "...that it is premature to expand compensation coverage to other industry operators such as managers. Indeed, any protection and compensation scheme must be based on representative experience. The situation over the past five, or even ten years must be thoroughly analyzed before the need for a supplementary compensation plan can be established. 21″ It recommends instead first tightening the regulatory requirements governing those operating in the mutual fund sector. Some experts, it should be noted, claim to be totally opposed to having compensation mechanisms cover the risk of fraud. Not only is it difficult to establish suitable rates for such coverage, they say, but it would encourage managers to deliberately take greater risks. Questions 8. Do you think that mutual fund investors have sufficient coverage under the various mechanisms in place in Québec and Canada? 9. Is it necessary to expand the FISF's coverage? 10. Is it desirable to set up a civil remedy regime on the secondary markets like the one adopted in Ontario? 3.4. Penalties Québec is one of the toughest provinces, along with Ontario and Alberta, in fighting white collar crime, particularly securities-related crime. The maximum sentences that may be imposed are five years in prison less one day and a fine of up to five million dollars. The Authorité may exact these penalties in cases of insider trading; predatory, abusive or fraudulent practices; and for any other financial crime covered by Section 208.1 of the Securities Act. Despite these provisions, some observers claim that the sentences imposed in Québec are not severe enough and don't have the desired deterrent effect. MEDAC, for one, takes this point of view. It proposes imposing a minimum sentence of 20 years in prison and the requirement to pay back the fraudulent gains in full. Other industry players 21 AUTORITÉ DES MARCHÉS FINANCIERS, Mémoire préparé dans le cadre des travaux préliminaires (brief drafted during the preliminary work), p. 57 Consultation paper Page 19

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