Feb 2, 2018
The chief regulator for Canada’s syndicated mortgage sector has sanctioned four individual brokers and four brokerages as part of a $1.1 million settlement. As Barbara Shecter reports in an article in the Financial Post, the eight parties were involved in the distribution of syndicated mortgage investments for projects linked to Fortress Real Developments Inc., although Fortress itself was not a party to the settlement or the subject of any orders. After a “complex and detailed” investigation, the Financial Services Commission of Ontario (FSCO) reached a settlement with the parties which included the revocation on consent of the broker licences of the four individuals and one firm. The growing syndicated mortgages sector is under heightened scrutiny amidst allegations that investors are sometimes put into real estate developments that are far riskier than they are led to believe. FSCO has been criticized for the way it has handled concerns about the sector, leading to a review of its approach by an expert panel. Larry Ritchie, Osler partner and former vice-chair of the Ontario Securities Commission (OSC), was on that panel; it ultimately recommended that oversight of syndicated mortgage investments be transferred to the OSC. Shecter reached out to Larry for his reaction to this latest settlement.
In the article, he comments that the need for “more proactive, visible and consistent enforcement” was frequently referred to during the panel’s months of consultation.
“Visible enforcement is crucial to demonstrate that consumers and investors are adequately protected,” Larry concludes.
Read Barbara Shecter’s full article “FSCO reaches $1.1 million settlement over syndicated mortgages” in the February 2, 2018 edition of the Financial Post.