http://www.cuminggillespie.com

An amended order from the court on the HMS Financial case has been posted.

This e-mail is to update you on developments since our August 7, 2007 update on the status of this litigation.

As of this update, we do not have a decision from the Court with regard to the Certification of our action as a Class Action.

We continue to work with counsel in the United States to have the HMS investor funds frozen in the First National Bank of San Diego transferred to the Alberta Courts.

We are also working with counsel in Indiana to recover funds which were invested by Garth Bailey, and which we believe are HMS investor funds.

We continue to prepare and submit Assurance Fund Applications for those clients who responded that they would like us to do so on their behalf. To date we have submitted over 60 applications. To date the Law Society has responded with requests for further information, which we are now responding to in advance for all new applications. No other timeline for response has yet been
given.

On November 23, 2007 an application was heard with respect to a request by the Alberta Lawyers’ Insurance Association (”ALIA”) and the Canadian Lawyers’ Insurance Association (”CLIA”) to have a referee appointed with respect to the review and production of the Defendant Lawyers Bailey and Carlson’s Trust Records, at the Plaintiffs’ cost. The application by ALIA/CLIA was dismissed,
however, ALIA/CLIA are permitted to use the referee they were proposing at their cost. ALIA/CLIA was given 60 days to make a decision on whether or not they wished to proceed with their referee. Further, 60 days after November 23, all documents requested from Bailey and Carlson will be released to Plaintiffs’ counsel, unless ALIA/CLIA have elected to pay for and invoke the referee process.

Please note that Mr. Bill McNally of McNally Cuming Raymaker has retired. With his retirement, the firm of McNally Cuming Raymaker has changed its name to Cuming Gillespie Raymaker. The new website containing the information on our action is
www.cuminggillespie.com/practice-areas/class-action/securities/
hms-financial-inc.html.

Also, please remember that we try our best to keep you up to date on how things are proceeding and that we will provide you with updates as there is news to update you with. If you do not receive an update for several months, this means that there is nothing newsworthy to share with you.

Yours truly,

Lynn Dechaine (for Graham McLennan)
Paralegal - Litigation
McLennan Ross LLP
Toll Free: 1-800-567-9200
Direct Line: (780) 482-9281
Fax: (780) 482-9100

McLENNAN ROSS LLP / McNALLY CUMING RAYMAKER

This is to update you on developments since our April 26, 2006 update on the status of this litigation.

As of this update, we do not have a decision from the Court with regard to the Certification of our action as a Class Action.

We continue to work with counsel in the United States to have the HMS investor funds frozen in the First National Bank of San Diego transferred to the Alberta Courts.

We are also working with counsel in Indiana to recover funds which were invested by Garth Bailey, and which we believe are HMS investor funds.

On July 25, 2007 the Court approved our application for settlement with Garth S. Bailey, Garth S. Bailey Professional Corporation, Katherine Rodrigue-Bailey and her company Kirby Audit Services Inc. In summary, the terms of the Settlement are as follows:

• Judgment against Garth S. Bailey and Garth S. Bailey Professional Corporation for an amount to be determined;
• Garth S. Bailey and Garth S. Bailey Professional Corporation will disclose all trust records in their possession as they relate to the operation of the HMS Scheme to Plaintiff Class Counsel;
• Garth S. Bailey and Garth S. Bailey Professional Corporation shall provide full cooperation, without compensation, to the Plaintiffs with respect to the operation of HMS and related Defendant corporations, and with respect to any details regarding information as to the possible whereabouts of HMS investor funds;
• Payment of $27,504.00 by Katherine Rodrigue-Bailey and Kirby Audit Services Inc.

While the settlement amount may seem minimal, Mr. and Mrs. Bailey’s assets are minimal. The purpose of settlement with Mr. Bailey is to obtain his full co-operation in assisting us with pursuing other, more realistic avenues of recovery. Mr. Bailey has already sworn affidavits in support of our applications in San Diego and Indiana with respect to transferring investor funds to the Alberta Courts.

Yours truly,

Lynn Dechaine (for Graham McLennan)
Paralegal - Litigation
McLennan Ross LLP
Toll Free: 1-800-567-9200
Direct Line: (780) 482-9281
Fax: (780) 482-9100

The April 26, 2007 HMS Certification update has been posted to the HMS Financial documents page.

Discontinuance of Actions filed to date have been listed on the HMS Financial page.