An Alberta Securities Commission (ASC) settlement with Proprietary Industries Inc. (PPI) of Calgary will see the latter pay $125,000 in partial investigation costs.

The settlement ends a Notice of Hearing issued against the troubled merchant banker in January 2002.

The ASC alleged that PPI, under the direction of its CEO, Peter Workum, and CFO, Theodor Hennig, released financial statements that significantly overstated its earnings.

Workum and Hennig, who were also named in the January notice, were not part of the settlement.

Trading in Proprietary shares has been halted since Aug. 21, 2002, at the company’s request. At that time, Workum and Hennig were dismissed by the company after the ASC made a number of allegations against the pair in a separate Notice of Hearing, including accounting misrepresentations, market manipulation, covert insider trading and payment of secret commissions. That hearing is scheduled to begin before the ASC on Sept. 29.

As part of last week’s settlement, PPI admitted that a series of transactions during the 1998, 1999, 2000 and 2001 fiscal years were not accounted for in accordance with generally accepted accounting principles. PPI also acknowledged that gains during these periods were overstated.

On May 23, 2003, PPI filed its financial statements for the period ended Sept. 30, 2002 and restated its balance sheet as of Sept. 30, 2001. The ASC said PPI is now in compliance with financial disclosure requirements.

According to the revised statements for the fiscal year ended Sept. 30, 2001, PPI lost more than $20 million, instead of earning $18.5 as previously claimed.

The company lost $84.4 million for the fiscal year ended Sept. 30, 2002.

The ASC said any further penalty imposed “would only serve to frustrate the current management who had no responsibility for the agreed-upon offences and who have worked diligently and at significant cost to rectify the respondent’s financial disclosure.”

“We are pleased that the cloud of the Notice of Hearing has been lifted from Proprietary,” said Patrick Lavelle, a PPI director and chairman of the audit committee.

“We are also pleased that the ASC recognized the role and contributions of current management in the resolution of this issue.”

PPI is now preparing applications to lift the cease-trade orders. The Alberta Securities Commission is the industry-funded regulatory agency responsible for administering the Alberta Securities Act.

Proprietary owns and manages a portfolio of financial, natural resource and real estate interests, including Calgary’s Eau Claire Market.

Web watch: www.proprietaryinc.com www.albertasecurities.com