World Stock Exchange (Re)

IN THE MATTER OF The Securities Act (S.A. 1981, C. S-6.1.,
as amended) (the "Act")
AND IN THE MATTER OF World Stock Exchange (the "Corporate
Respondent") and Thomas Kim Seto and Orest Rusnak
(the "Individual Respondents") (all collectively referred to
as the "Respondents")

Notice of Hearing
(Subsections 165(1) and 167.1(1) and (2))

D.C. Linder

October 6, 1998

NOTICE OF HEARING

1.

TAKE NOTICE that pursuant to subsection 165(3) of the Act, the Alberta Securities Commission (the "Commission") will convene at its Hearing Room, located on the 19th Floor, 10025 Jasper Avenue, Edmonton, Alberta on Thursday, the 22nd day of October, 1998, at the hour of 9:30 o'clock in the forenoon, to arrange a date for a hearing of the allegations contained in this Notice of Hearing (the "Hearing") and to deal with any other preliminary matters.  At the Hearing the Commission will consider:


1.1

whether, pursuant to subsection 165(1)(b) of the Act, the Commission should order that the Respondents cease trading in all securities as defined in the Act;

1.2

whether, pursuant to Section 165(1)(c) of the Act, the Commission should order that any or all of the exemptions contained in Sections 65, 66, 66.1, 107, 115, 116, 132 and 133 of the Act or in the Alberta Securities Commission Rules (the "Rules") shall not apply to the Respondents;

1.3

whether, pursuant to Sections 165(1)(d) and (e) of the Act, the Commission should order that the Individual Respondents resign one or more positions that they may hold as a director or officer or both of any issuer and be prohibited from becoming or acting as a director or officer or both of any issuer;

1.4

such further or other order, ruling or decision as the Commission considers appropriate;

      all for a period of time as deemed proper by the Commission.

2.

AND FURTHER TAKE NOTICE that the Staff of the Commission (the "Staff") alleges that:


2.1

Thomas Kim Seto ("Seto") and Orest Rusnak ("Rusnak") are businessmen residing in the City of Edmonton, in the Province of Alberta;

2.2

on or about October 24, 1997, the Individual Respondents created a facility which they called the World Stock Exchange, which facility was intended to act as an exchange operating over the Internet, accepting listings from companies whose shares would then be bought and sold by individuals throughout the world;

2.3

in furtherance of this intention, the Individual Respondents created a web site for the World Stock Exchange which web site was hosted by Internet Connect Inc., a service provider located in the City of Edmonton, in the Province of Alberta;

2.4

this web site hosted by Internet Connect Inc. could be visited by any Internet user who had its address, which was available, inter alia, from the Individual Respondents;

2.5

none of the Respondents made application or caused application to be made to the Commission to have the World Stock Exchange recognized as an exchange;

2.6

by carrying on business as an exchange in Alberta without being recognized by the Commission as an exchange the World Stock Exchange violated section 52(1) of the Act;

2.7

on November 10, 1997, the Respondent Seto was asked to take down the web site and shortly thereafter the information pages were removed from the web site, leaving only the front page of the web site available for viewing by Internet users; however, on November 12, 1997, the Individual Respondents caused the World Stock Exchange to be incorporated in the Cayman Islands, British West Indies, (the incorporated entity hereinafter referred to as "WSE") and to retain the services of Cayman On-Line Ltd., an Internet service provider;

2.8

again, the web site hosted by Cayman On-Line Ltd. could be visited by any Internet user who had its address, which was available, inter alia, from the Individual Respondents;

2.9

on the web site, interested parties could obtain information regarding the four listing "boards" offered by the WSE and the fees payable in each case, and could also obtain listing applications;


2.10

as none of the companies listed on the WSE was registered or had filed preliminary prospectuses or prospectuses with the Commission, the Respondents were offering to effect illegal distributions of securities;

2.11

while maintaining the WSE web site and thereby offering information about, and soliciting applications for, listings on the WSE, the Individual Respondents, acting as directors or promoters of the WSE, discussed the mechanics and purpose of the WSE with at least 35 Alberta residents ("Albertans"), all of whom were involved with Alberta corporations;

2.12

on the web site, the Albertans were advised that in order to secure a listing for their companies on the WSE, they would have to pay the fees applicable to the listing board they chose and would also have to purchase shares in the WSE in an amount equal to the sum of such fees;

2.13

the attempts to have the Albertans purchase shares in the WSE constituted acts in furtherance of a trade conducted in the Province of Alberta;

2.14

at no time did the Individual Respondents ever cause the WSE to become registered or to file a preliminary prospectus or prospectus with the Commission and the acts in furtherance of a trade described above were therefore conducted by the WSE in violation of sections 54(1) and 81(1) of the Act, at a time when no exemptions under the Act or Rules were available;

2.15

in March 1998, Cayman On-Line Ltd. ceased to provide service to the WSE web site after being advised by Cayman police and government authorities of the concern that the WSE would be mistaken by investors for the existing Cayman stock exchange;

2.16

between March and July 1998, the Individual Respondents caused the web site to be hosted by Global Communications, an Internet service provider located in Antigua and Barbuda;

2.17

also by July 1998 the web site had been submitted to Internet search engines so that Internet users who did not have the address of the web site could still locate and visit it;

2.18

in approximately August and September 1998, the Respondent Seto on several occasions discussed the mechanics and purpose of the WSE and the opportunity to list on the WSE with Carol Hounsell ("Hounsell"), Scott Ziegler ("Ziegler") and Monty Noseworthy ("Noseworthy"), the directors of ISMC Inc. Internet Sales and Marketing Corp. Inc. ("ISMC"), an Alberta corporation;

2.19

when, based on the Respondent Seto's representations relating to the WSE, Hounsell, Ziegler and Noseworthy expressed an interest in listing ISMC on the WSE, the Respondent Seto directed them to the web site to locate the application for listing;

2.20

the Respondent Seto also offered to help incorporate ISMC in Antigua, to manage ISMC for a fee and to help ISMC raise seed capital;

2.21

Hounsell, Ziegler and Noseworthy did not enter into any agreements with the WSE or the Respondent Seto and ISMC was not listed on the WSE;

2.22

as a result of the foregoing the Respondents acted in a manner contrary to Act, the Rules and the public interest.


3.

 AND FURTHER TAKE NOTICE that at the Hearing the Staff may apply for an order that the Respondents pay, subject to the Rules:


3.1

the costs of the investigation of the Staff into the affairs of the Respondents which were the subject of the Hearing; and

3.2

the costs of or related to the Hearing that are incurred by or on behalf of the Executive Director, including the costs of expert witnesses, if any;

      all pursuant to section 167.1(1) of the Act.

4.

 AND FURTHER TAKE NOTICE that the Commission may order the Respondents to pay the costs of or related to the Hearing that are incurred by or on behalf of the Commission, pursuant to section 167.1(2) of the Act.

5.

 AND FURTHER TAKE NOTICE that the Respondents may obtain further particulars of the facts and allegations contained herein by contacting Lisa J. Rudan, Barrister and Solicitor, c/o Alberta Securities Commission, 4th Fl., The Alberta Stock Exchange Tower, 300 - 5th Avenue S.W., Calgary, Alberta, telephone (403) 297-6454, facsimile (403) 297-6156.

6.

 AND FURTHER TAKE NOTICE that at the Hearing the Commission shall provide an opportunity to counsel for the Staff and the Respondents to speak to the procedure to be followed at the Hearing, and the Hearing may be adjourned there and then from time to time and to such place or places as is reasonably necessary and expedient in the opinion of the Commission in order to conclude the Hearing.

7.

 AND FURTHER TAKE NOTICE that at the Hearing the Commission will follow the rules of procedure provided for under section 19 of the Act which include the right of the Respondents to be represented by legal counsel.

8.

 AND FINALLY TAKE NOTICE that upon the failure of the Respondents to attend at the said time and place of hearing and upon proof satisfactory to the Commission of service of this Notice upon the Respondents, the Hearing may proceed in the Respondents' absence without further notice to the Respondents.

D.C. LINDER
Executive Director