Bmo Nesbitt Burns Securities Ltd.

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT INCORRECTLY CALCULATED ITS NET CAPITAL CAUSING IT NOT TO CONTINUOUSLY MAINTAIN ITS REQUIRED LEVEL OF NET CAPITAL. THE FINDINGS STATED THAT THE FIRM HAD A NET CAPITAL REQUIREMENT OF $250,000. THE FIRM COUNTED AS NET CAPITAL APPROXIMATELY $4 MILLION IN UNITED STATES TREASURY BILLS THAT WERE HELD IN TWO ACCOUNTS AT ANOTHER BANK. HOWEVER, THE ACCOUNT DOCUMENTS DID NOT SPECIFY THAT THE FIRM, AND NOT ITS ULTIMATE PARENT, A CANADIAN-BASED BANK (THE BANK), CONTROLLED THESE TWO ACCOUNTS, AND THEREFORE THESE ASSETS SHOULD HAVE BEEN DISALLOWED FROM THE NET CAPITAL CALCULATION. THE FIRM HAD A NET CAPITAL DEFICIENCY DURING EIGHT MONTHS RANGING FROM $26,815 TO $259,764. THE FINDINGS ALSO STATED THAT THE FIRM MAINTAINED TWO CHECKING ACCOUNTS WITH THE BANK. THE FIRM'S CASH BALANCE IN ITS ACCOUNTS WITH THE BANK EXCEEDED THE THREE-MONTH TRAILING AVERAGE OF ITS OPERATING EXPENSES. THAT OVERAGE SHOULD NOT HAVE BEEN COUNTED AS AN ASSET FOR PURPOSES OF THE NET CAPITAL CALCULATION. THE FINDINGS ALSO INCLUDED THAT THE FIRM CREATED A NEW INTERNAL CONTROL PROCEDURE, A WORKSHEET THAT TRACKED CASH VERSUS THE TRAILING THREE-MONTH AVERAGE OF OPERATING EXPENSES. THE FIRM TRANSITIONED FROM A SELF-CLEARING BROKER TO AN INTRODUCING BROKER. AS AN INTRODUCING BROKER, THE FIRM NO LONGER HAD TO MAINTAIN CASH IN A RESERVE ACCOUNT WITH THE AMOUNT OWED TO CUSTOMERS. HOWEVER, AFTER TRANSITIONING TO AN INTRODUCING BROKER, THE FIRM FAILED TO TREAT THE FUNDS IN ITS RESERVE ACCOUNT AT THE BANK AS A NON-ALLOWABLE ASSET WHEN CALCULATING ITS NET CAPITAL. FINRA FOUND THAT THE FIRM FAILED TO REINVEST MATURING U.S. TREASURY BILLS HELD IN THAT RESERVE ACCOUNT. THE FIRM THEREFORE HELD CASH THAT WAS $1.77 MILLION IN EXCESS OF THE TRAILING THREE-MONTH AVERAGE OF ITS OPERATING EXPENSES AND IMPROPERLY IDENTIFIED AS AVAILABLE NET CAPITAL IN THE FIRM'S NET CAPITAL CALCULATION. FINRA ALSO FOUND THAT THE FIRM FAILED TO PREPARE AN ACCURATE COMPUTATION OF ITS NET CAPITAL AND FILED INACCURATE FOCUS REPORTS BECAUSE OF ITS ERRORS IN THE NET CAPITAL CALCULATION. Status: Final Sanction Detail: THE FIRM WAS CENSURED AND FINED $75,000. FINES PAID IN FULL ON SEPTEMBER 27, 2018. Summary: SEE QUESTION 7 ABOVE.

Allegations: IN ITS STATEMENT OF ALLEGATIONS, OSC STAFF ALLEGED TO THE OSC COMMISSION THAT THERE WERE INADEQUACIES IN THE BMO REGISTRANTS' SYSTEMS OF CONTROLS AND SUPERVISION WHICH FORMED PART OF THEIR COMPLIANCE SYSTEMS WHICH RESULTED IN CERTAIN CLIENTS OF THE BMO REGISTRANTS PAYING, DIRECTLY OR INDIRECTLY, EXCESS FEES THAT WERE NOT DETECTED OR CORRECTED BY THE BMO REGISTRANTS IN A TIMELY MANNER. AS THIS WAS A NO CONTEST SETTLEMENT AGREEMENT, NO DETERMINATIONS WERE MADE REGARDING THE ALLEGATIONS. BMO AGREED TO MAKE THE PAYMENTS AND ISSUE THE REPORTS AND ATTESTATION LETTERS DESCRIBED ABOVE IN "PRINCIPAL SANCTION". Status: Final Sanction Detail: SEE DETAILS IN "PRINCIPAL SANCTION" AS WELL AS "DETAILS RELATED TO THE ACTION STATUS AND (OR) DISPOSITION", PART II, QUESTION 13. Summary: THE BMO REGISTRANTS BEGAN TO MAKE PAYMENTS TO AFFECTED CLIENTS IN DECEMBER 2016 AND THIS PROCESS WILL CONTINUE INTO 2018, AS IT WILL TAKE SOME TIME TO COMPLETE, PARTICULARLY WITH RESPECT TO FORMER CLIENTS. ANY AMOUNTS THAT ARE NOT PAID TO CLIENTS OR PURSUANT TO UNCLAIMED PROPERTY LEGISLATION WILL BE PAID TO THE CANADIAN FOUNDATION FOR ECONOMIC EDUCATION NO LATER THAN DECEMBER 31, 2018.

Allegations: BETWEEN JANUARY 2011 AND MARCH 31, 2017, BMO NBI FAILED TO ADEQUATELY SUPERVISE THE ACTIVITIES OF AN RR IN RELATION TO THE ACCOUNTS BOTH ON THE TIER 1 AND TIER 2 COMPLIANCE LEVELS CONTRARY TO DEALER MEMBER RULES 38.1 AND 2500. Status: Final Sanction Detail: A: MONETARY FINE $125,000; B: BMO NB PAID COSTS OF $15,000 Summary: SETTLEMENT AGREEMENT IN WHICH BMO NBI ADMITTED TO FAILING TO ADEQUATELY SUPERVISE THE ACTIVITIES OF AN REGISTRANT IN RELATION TO TWO CLIENT ACCOUNTS THAT INVOLVED HIGH NEW ISSUE COMMISSIONS AND HIGH TURNOVER RATIOS WHICH SHOULD HAVE RAISED SUITABILITY AND CONFLICT OF INTEREST CONCERNS.

Allegations: FAILURE TO ADOPT ADEQUATE POLICIES AND PROCEDURES TO PREVENT THE SUBMISSION OF ERRONEOUS ORDERS INTO THE TMX MARKET ON CLOSE FACILITY. Status: Final Sanction Detail: TOTAL AMOUNT $50,000.00 PAID AS FINE AND $5,000.00 IN INVESTIGATION COST. THE FINE WAS PAID ON 04/17/12. Summary: SETTLEMENT AGREEMENT WHEREIN BMO NESBITT BURNS INC. ADMITTED THAT IT FAILED TO ADOPT ADEQUATE POLICIES AND PROCEDURES TO PREVENT THE SUBMISSION OF ERRONEOUS ORDERS INTO THE TMX MARKET ON CLOSE FACILITY.

Allegations: BETWEEN DECEMBER 2017 AND MAY 2019, BMO NBI FAILED TO IMPLEMENT A SYSTEM OF SUPERVISION AND CONTROL IN RESPECT OF THE TRADING ACTIVITY (I.E. SHORT SELLING GOVERNMENT OF CANADA FIXED INCOME AND USING THE PROCEEDS TO INVEST IN PREFERRED SHARES) IN THE CLIENT ACCOUNTS, PARTICULARLY WITH RESPECT TO THE SUITABILITY OBLIGATIONS OWING BY IT AND ITS REGISTERED REPRESENTATIVE AND IN RESPECT OF THE SUPERVISION OF THE CLIENT ACCOUNTS, CONTRARY TO DEALER MEMBER RULES 38.1 AND 2500A. Status: Final Sanction Detail: SETTLEMENT AGREEMENT WHERE BMO NBI AGREED TO VIOLATIONS OF CIRO DEALER MEMBER RULES 38.1 AND 2500A. FINE OF $1,500,000, DISGORGEMENT OF $146,876 AND COSTS OF $50,000. Summary: INFORMATION SUMMARIZED IN SETTLEMENT AGREEMENT WITH CIRO. THE ACTIVITY IN QUESTION HAPPENED ONLY AT NESBITT BURNS, INC., THE REP IN QUESTION WAS NOT AFFILIATED WITH NBSL, AND NO NBSL CLIENTS WERE AFFECTED.

Allegations: THE U.S. COMMODITY FUTURE TRADING COMMISSION ("CFTC") ALLEGED THAT, FROM AT LEAST 2019 THROUGH THE DATE OF THE ORDER, BANK OF MONTREAL ("BMO") (I) FAILED TO KEEP CERTAIN REQUIRED RECORDS IN VIOLATION OF SECTIONS 4S(F)(1)(C) AND 4S(G)(1) AND (3) OF THE COMMODITY EXCHANGE ACT ("CEA") AND CFTC REGULATIONS 23.201(A) AND 23.202(A)(1) AND (B)(1), (II) FAILED TO KEEP RECORDS IN THE MANNER REQUIRED BY CFTC REGULATION 1.31, AND (III) FAILED TO SUPERVISE ITS SWAP DEALER BUSINESS ACTIVITIES DILIGENTLY IN VIOLATION OF SECTION 4S(H)(1)(B) OF THE CEA AND CFTC REGULATION 23.602(A). Status: Final Sanction Detail: BANK OF MONTREAL ("BMO") ADMITTED TO THE FACTS IN THE CFTC'S ORDER, ACKNOWLEDGED ITS CONDUCT VIOLATED THE COMMODITY EXCHANGE ACT ("CEA") AND CFTC REGULATIONS, AND AGREED TO (I) THE ENTRY OF THE CFTC'S FINDINGS; (II) CEASE AND DESIST FROM VIOLATING SECTIONS4S(F)(1)(C), 4S(G)(1) AND (3), AND 4S(H)(1)(B) OF THE CEA AND CFTC REGULATIONS 1.31, 23.201(A), 23.202(A) Summary: ON AUGUST 8, 2023, THE U.S. COMMODITY FUTURES TRADING COMMISSION ("CFTC") ALLEGED THAT BANK OF MONTREAL ("BMO") (I) FAILED TO KEEP CERTAIN REQUIRED RECORDS IN VIOLATION OF SECTIONS 4S(F)(1)(C) AND4S(G)(1) AND (3) OF THE COMMODITY EXCHANGE ACT ("CEA") AND CFTC REGULATIONS 23.201(A) AND 23.202(A)(1)AND (B)(1), (II) FAILED TO KEEP RECORDS IN THE MANNER REQUIRED BY CFTC REGULATION 1.31, AND (III) FAILED TO SUPERVISE ITS SWAP DEALER BUSINESS ACTIVITIES DILIGENTLY IN VIOLATION OF SECTION 4S(H)(1)(B) OF THE CEA AND CFTC REGULATION 23.602(A). BMO ADMITTED TO THE FACTS IN THE CFTC'S ORDER, ACKNOWLEDGED THAT ITS CONDUCT VIOLATED THE CEA AND CFTC REGULATIONS, AND AGREED TO (I) THE SERVICE OF THE CFTC'S ORDER;(II) CEASE AND DESIST FROM VIOLATING SECTIONS 4S(F)(1)(C), 4S(G)(1) AND (3), AND 4S(H)(1)(B) OF THE CEA AND CFTC REGULATIONS 1.31, 23.201(A), 23.202(A)(1) AND (B)(1), AND 23.602(A); (III) PAY A CIVIL MONETARY PENALTY IN THE AMOUNT OF $35,000,000; AND (IV) COMPLY WITH CERTAIN UNDERTAKINGS.