Fondation Fer de Lance is Pursuing its Claim Against the Attorney General of Quebec and Wishes to Set the Record Straight

MONTREAL, QUEBEC--(Marketwire - Aug. 9, 2011) - On July 12 last, Fondation Fer de Lance ("FFDL") appealed before the Superior Court (Case number: 500-17-066652-119) its motion against the Attorney General of Québec, filed on March 4, 2010.

FFDL has a moral obligation to set the record straight following the recent proceedings instituted against it, its management and its counselors by the Autorité des marchés financiers of Québec (the "AMF"), which were announced in the latter's press release of July 27, 2011. The Sponsors (which are also honorary members of FFDL) have already reacted to the aforesaid press release in their own release dated August 1, 2011. "The Group of Sponsors of FFDL was stupefied to say the least by the nature of the allegations of the AMF in its press release of July 26, 2011 relating to FFDL and in respect to a number of its representations" declared Paul M. Gélinas, Trustee-Executor of FFDL.

"In order to build upon the momentum of the Sponsors, we wish to add to the troubling facts already alluded to by the Sponsors; even though this case is very complicated, we will limit ourselves only to the most salient facts, inasmuch as certain proceedings are still before the Courts", added Mr. Paul M. Gélinas. Here are those facts:

• FFDL had obtained a legal opinion from a large law firm (the "Opinion") confirming that the activities of FFDL and of the other people mentioned in the press release of July 27, 2011, which activities are now being contested by the AMF, were not subject to the Securities Act (Québec);

• On November 20, 2008, Mtre Jean-Pierre Desmarais of the law firm Marchand Melançon Forget ("MMF") clearly informed Mr. Éric Desrosiers of the AMF that FFDL was not carrying out any activities over which the AMF had jurisdiction and offered his full collaboration and that of FFDL to meet with the AMF in order to demonstrate this to its satisfaction (the "Offer"), which the AMF categorically ignored;

• On May 21, 2009, MMF, through Mtre Jean-Pierre Desmarais, sent a letter to all Sponsors and honorary members of FFDL (the "Letter") offering to reimburse them their capital. Certain of the Sponsors accepted this offer and withdrew immediately their capital while others preferred to leave their capital under the absolute and secure control of MMF through Mtre Jean-Pierre Desmarais. These are the funds that were frozen by the AMF on July 17, 2009 and not funds which belong to FFDL;

• On July 16, 2009, in its application before the administrative tribunal known as Bureau de décision et de révision de valeurs mobilières ("BDRVM") requesting the ex parte order against FFDL mentioned in the AMF's press release of July 27 last, the AMF relied inter alia upon, the incomplete and false allegations contained in the affidavit of its principal investigator, Mr. Éric Desrosiers, in support of the application before the BDRVM (the "alleged misrepresentations"), relating to an alleged withdrawal of 4.9 millions dollars allegedly in favor of FFDL, while proof of the contrary was available to the investigator (see the transcript of hearings of July 16, 2009 on the issuance of the ex parte order by the BDRVM and the cross-examination of Mr. Éric Desrosiers before the BDRVM on January 2010, all available on demand);

• Also on July 16, 2009, the AMF indicated a false address for FFDL Turks and Caicos in order to confer upon its jurisdiction over FFDL Turks and Caicos, even though its real address was available, as it had been obtained from the external auditors of FFDL;

• In addition to the alleged misrepresentations mentioned above, the AMF obtained the ex parte order of July 17, 2009 against FFDL, FFDL Turks and Caicos and other respondents mentioned in the press release of July 27, 2011 by failing to divulge to the BDRVM the existence of the Opinion, of the Offer and of the Letter, as well as by using a false address for FFDL Turks and Caicos, on the basis that these facts were not considered relevant by the AMF!

The AMF caused the Ontario Securities Commission to issue an ex parte order similar to the BDRVM ex parte order of July 16, 2009 against FFDL and all other parties mentioned by the AMF in its press release of July 27, 2011, basically upon the same basis.

"The AMF has been multiplying unfounded proceedings since day one, which is tantamount to a witch hunt", reaffirmed Paul Gélinas of FFDL. "All of FFDL's activities are in compliance with the legal Opinion previously obtained. The failure of the Sponsors to recover their capital is due only to the acts of the AMF, which is impugning their reputation without foundation."

Mr. Paul Gélinas further adds: "There were two financial operations carried out by FFDL and there is no missing 2 millions dollars as alleged by the AMF. The second financial operation is far more complex and involves the use of CMOs (collaterized mortgage obligations), which, as alleged, are not similar to commercial paper, and which are being used only as collateral to the funds on deposit. There is a dispute between the AMF, FFDL and the brokers on the value of the CMOs, as there are two distinct values, i.e. a market value and an "enhanced value".

"There is quite a difference between something being complex and something being illegal. However, I wish to assure everyone that there is no dispute between the AMF and FFDL on the action for 4.5 millions dollars in damages and interests taken by the Sponsors of FFDL against the AMF. These proceedings are based, inter alia, upon the unacceptable acts of the AMF described above and, on this latter point, there can be no subsisting dispute", insists Mr. Gélinas. "As for the imprisonment requested by the AMF, the Courts will decide based upon the foregoing", he further states.

"As for the press release of the Sponsors and honorary members of FFDL dated August 1, 2011, no Sponsor ever complained to the AMF about FFDL nor did the Sponsors solicit or wish the AMF's intervention. Furthermore, the AMF attempted to chastise myself for having borrowed money, since July 17, 2009, in order to finance the considerable costs and legal expenses to defend the rights and interest of FFDL. The AMF even attempted, in October 2010, to obtain an ex parte order of the BDRVM seeking to freeze my personal bank accounts and those of my family, an attempt which was unsuccessful", further indicated Mr. Gélinas (BDRVM case number: 2009-017-010, Order dated October 13, 2010).

Mr. Gélinas further adds: "I am particularly proud to represent people such as the Sponsors who, in the face of such a difficult and complicated situation, maintain their focus. FFDL and its Sponsors sincerely believe that there is a need in Québec for a securities regulator capable of bringing its considerable powers to bear on offenders, but only with wisdom and natural justice".

"FFDL is a victim of abusive proceedings, notably, when the AMF alleges exigent circumstances in order to obtain an ex parte order. The Sponsors have successfully contested the AMF's position before the Court of Appeal (case number: 500-09-021055-108). FFDL and its Sponsors will continue to vigorously defend their rights, notably by pursuing their 4.5 millions dollars action in damages and interests against the AMF (case number: 500-17-056804-100)" concluded Mr. Gélinas.

Finally, FFDL has just appealed from a judgment of the Superior Court of Québec on its motion of March 5, 2010 (case number: 500-17-056802-104) which it filed against the Attorney General of Québec seeking to declare unconstitutional certain provisions of the statute creating the BDRVM, insofar as they relate to the independence, as an administrative tribunal of the AMF, of the BDRVM is concerned, and is currently evaluating all other possible recourses available to it in light of these highly extraordinary circumstances, to say the least.

Copies of the judicial proceedings, of the evidentiary documents mentioned above and of the transcripts of hearings and cross-examination, as well as of all judgments, are available on the demand. Please note that this documentation is available in the French language only.