An order that is made regarding a licence holder reflects a situation at a particular point in time. The status of a licence holder can change. Readers should check the current status of a person’s or entity’s licence on the Licensing Link section of FSCO’s website. Readers may also wish to contact the person or entity directly to get additional information or clarification about the events that resulted in the order.
REGARDING the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c.29, in particular sections 7, 8, 18, 19, and 21;
AND REGARDING Metrozen Capital Inc. and Roya Seifollahi Nanehkaran.
INTERIM ORDER SUSPENDING LICENCE AND NOTICE OF PROPOSAL TO REVOKE LICENCE
Metrozen Capital Inc.
100 Consilium Place
Toronto, ON M1H 3E3
Roya Seifollahi Nanehkaran
Subsection 19(1) of the Mortgage Brokerages, Lenders and Administrators Act, 2006 (the “Act”) provides that the Superintendent of Financial Services (the “Superintendent”) may, by order, revoke a licence in certain specified circumstances.
Section 21 of the Act provides that if the Superintendent proposes to revoke a licence without the licensee’s consent, the Superintendent shall give written notice of the proposal to the licensee, including the reasons for the proposal.
Subsection 19(3) of the Act provides that, if in the Superintendent’s opinion, the interests of the public may be adversely affected by any delay in the revocation of a licence as a result of the steps required by section 21, the Superintendent may, without notice, make an interim order suspending the licence.
INTERIM ORDER SUSPENDING LICENCE
IT IS ORDERED THAT pursuant to subsection 19(3) of the Act and for the reasons described below, the mortgage brokerage licence of Metrozen Capital Inc. is suspended. During the suspension, Metrozen Capital Inc. is not authorized to deal or trade in mortgages in Ontario.
IT IS ORDERED THAT, pursuant to subsection 19(3) of the Act, and for the reasons described below, the mortgage broker licence of Roya Seifollahi Nanehkaran is suspended. During the suspension, Roya Seifollahi Nanehkaran is not authorized to deal or trade in mortgages in Ontario.
TAKE NOTICE THAT this Interim Order takes effect immediately and will remain in effect until the expiry of the period for requesting a hearing in respect of the Superintendent’s Notice of Proposal set out below (15 days after the Notice is given, or deemed to have been delivered).
AND TAKE NOTICE THAT pursuant to subsections 48(4) and 49(1) and (2) of the Act, every person who fails to comply with an order made under this Act is guilty of an offence and every individual convicted of an offence under the Act is liable to a fine of not more than $100,000.00 or imprisonment for a term of not more than a year or both a fine and imprisonment. Every corporation convicted of an offence under the Act is liable to a fine of not more than $200,000.00.
Pursuant to subsection 48(5) of the Act, every director or officer of a corporation that commits an offence under this Act who directed, authorized, assented to, acquiesced in or participated in the commission of the offence, or who failed to take reasonable care to prevent the corporation from committing the offence, is guilty of an offence, whether or not the corporation is prosecuted or convicted.
Subsection 48(6) of the Act provides that every partner of a partnership and every individual who is a member of the directing body of an entity, other than a person or partnership, who directed, authorized, assented to, acquiesced in or participated in the commission of an act or omission by the partnership or entity which, if committed by a person, would be an offence under the Act, is guilty of an offence.
Si vous désirez recevoir cet ordre en français, veuillez envoyer votre demande immédiatement à: Adjointe, audiences, Greffe, Commission des services financiers de l’Ontario, 5160 rue Yonge, 14em, Toronto ON M2N 6L9.
NOTICE OF PROPOSAL TO REVOKE LICENCE
TAKE NOTICE THAT pursuant to sections 19 and 21 of the Act, the Superintendent is proposing to revoke the mortgage brokeragelicence of Metrozen Capital Inc.The reasons for this proposal are described below.
AND TAKE NOTICE THAT pursuant to sections 19 and 21 of the Act, the Superintendent is proposing to revoke the mortgage brokerlicence of Roya Seifollahi Nanehkaran.The reasons for this proposal are described below.
Si vous désirez recevoir cet avis en français, veuillez envoyer votre demande immédiatement à: Adjointe, audiences, Greffe, Commission des services financiers de l’Ontario, 5160 rue Yonge, 14em, Toronto ON M2N 6L9.
AND TAKE NOTICE THAT pursuant to subsection 21(3) of the Act, a hearing before the Financial Services Tribunal about this proposal may be requested by completing the enclosed Request for Hearing (Form 1) and submitting it to the Tribunal within 15 days after the Notice is received. A copy of that form is included with this notice. Additional copies can be obtained by visiting the Tribunal’s website at www.fstontario.ca.
If a Request for Hearing (Form 1) is submitted to the Tribunal within 15 days after the Notice is received, subsections 21(3) and 21(4) of the Act provide that the Tribunal shall hold a hearing and decide whether or not to direct the Superintendent to carry out this proposal, with or without changes, or substitute its opinion for that of the Superintendent, and the Tribunal may impose such conditions as it considers appropriate in the circumstances.
If no Request for Hearing (Form 1) is submitted to the Tribunal within 15 days after the Notice is received, TAKE NOTICE THAT the Superintendent will carry out the proposal to revoke the mortgage brokerage licence of Metrozen Capital Inc. and the mortgage brokerlicence of Roya Seifollahi Nanehkaran.
Completed Request for Hearing Forms must be received by the Tribunal within 15 days after this notice is received. They may be mailed, faxed or delivered:
Financial Services Tribunal
5160 Yonge Street, Box 85
Toronto ON M2N 6L9
Superintendent of Financial Services
Regulatory Discipline Officer
Licensing and Market Conduct Division
5160 Yonge Street, Box 85
Toronto ON M2N 6L9
The hearing before the Tribunal will proceed in accordance with the Rules of Practice and Procedure for Proceedings before the Financial Services Tribunal, made under the authority of the Statutory Powers Procedure Act, R.S.O. 1990, c. S. 22. Those Rules are available at the website of the Tribunal: www.fstontario.ca. Alternatively, a copy can be obtained by telephoning the Registrar of the Tribunal at 416-590-7294, or toll free at 1-800-668-0128 ext. 7294.
At a hearing, your character, conduct and/or competence or the character, conduct and/or competence of a director of officer of Metrozen Capital Inc. may be in issue. You may be furnished with further and or other particulars, including further or other grounds, to support this proposal.
REASONS FOR INTERIM ORDER
AND PROPOSAL TO REVOKE LICENCE
REGARDING the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c.29 (the “Act”), in particular sections 7, 8, 18, 19 and 21;
AND REGARDING Metrozen Capital Inc. and Roya Seifollahi Nanehkaran
- These are the reasons to support the Superintendent’s Notice of Proposal to Revoke the Mortgage Brokerage Licence of Metrozen Capital Inc. (“Metrozen Capital”) and the Mortgage Broker Licence of Roya Seifollahi Nanehkaran, also known as Roya Seifollahi (“Ms. Seifollahi”) and to support the Interim Order to suspend the licences of Metrozen Capital and Ms. Seifollahi.
- Metrozen Capital holds a mortgage brokerage licence (Licence #12588).
- Ms. Seifollahi holds a licence as a mortgage broker (licence number #M08005417) which authorizes her to deal or trade in mortgages on behalf of, and under the supervision of, a mortgage brokerage. Ms. Seifollahi is currently authorized to deal in mortgages on behalf of Metrozen Capital. She is also the principal broker, a Director and President of Metrozen Capital.
- Ms. Seifollahi’s licence was most recently renewed on April 1, 2014, with an expiry date of March 31, 2016.
- On October 27, 2015, a FSCO Examiner attended at the offices of Metrozen Capital to conduct an examination of Metrozen Capital (the “Examination”). The results of the Examination and other enquiries both before and after the Examination conducted by FSCO compliance staff reveal that Metrozen Capital is involved in raising funds by way of syndicated mortgage investments (a mortgage for which there is more than one lender or investor) from the general public to support the activities of a related group of companies (the “Metrozen Group”). Metrozen Capital is wholly owned either directly (or through a trust or escrow arrangement) by Pannirshelvan (Shelvan) Kannuthurai. Mr. Kannuthurai also wholly owns both Metrozen entities which are the borrowers for both of the Metrozen Group projects, Metro Zen (Canada) Inc. (“Metrozen Canada”) and McCowanSheppard Fields Inc. (“McCowanSheppard”), as specified below.
- The Examination and other enquiries by FSCO staff revealed a number of serious contraventions of the Mortgage Brokerages, Lenders Administrators Act, 2006, S.O. 2006, c. 29 (the “Act”). These include the failure to disclose the ownership relationship between Metrozen Capital and the borrowers, the failure to take any steps to ensure that investments were suitable for the lenders/investors, the failure to provide written disclosure of the material risks of the investment and the failure to complete the Form 1.1 – Investor/Lender Disclosure Statement for Brokered Transactions: Addendum for Construction and Development Loans. These failures arguably induced investors to invest in the Metrozen developments where it is unlikely that they would have done so if the appropriate disclosure was provided and due diligence conducted.
- From further enquiries, FSCO staff have learned that there are grounds to support the conclusion that the investors who entered into these investments are in imminent risk of substantial losses because the likely value of the relevant properties (as based on the recent purchase prices for both properties and the listing price for one property) is not sufficient to discharge prior ranking encumbrances registered on title. Further, there is little evidence of any development activities on any of the properties and it is unclear to FSCO staff if the amounts invested can be accounted for.
- Despite these facts, Metrozen Capital continues to promote the Metrozen Group developments and to solicit the public to enter into mortgage investments in respect of these properties.
- For these reasons and as particularized in more detail below, the Superintendent is of the view that there are grounds to support the revocation of the licences of Metrozen Capital and Ms. Seifollahi.
II. CORPORATE STRUCTURE
- Through enquiries by FSCO staff and an attendance at the offices of Metrozen Capital, FSCO staff has learned the following in respect of the structure of Metrozen Group.
- Metrozen Capital is wholly owned by Mr. Kannuthurai either directly or through a trust or escrow arrangement. Mr. Kannuthurai was the sole Director and President of Metrozen Capital until December 22, 2014 at which time he resigned as both a Director and Officer and Ms. Seifollahi and Wan Ling Leung were elected as directors. Ms. Seifollahi was also elected President and Wan Ling Leung was elected Secretary Treasurer.
- Aside from Metrozen Capital which acts as the licensed brokerage for the Metrozen Group, the companies in the Metrozen Group are represented as being involved in the acquisition and development of the real estate properties. These Metrozen entities are the owners of the real estate and borrowers in the mortgage transactions.
- Metrozen Canada is the owner of and borrower for the Milner Avenue property as described below. Metrozen Canada is wholly owned by Mr. Kannuthurai. Mr. Kannuthurai is also the President and sole director of Metrozen Canada.
- McCowanSheppard is the owner of and borrower for the Sheppard Avenue property as described below. McCowanSheppard is also wholly owned by Mr. Kannuthurai. Mr. Kannuthurai is also the sole director, has signing authority and is a guarantor of the syndicated mortgage brokered by Metrozen Capital and placed on the property.
III. METROZEN DEVELOPMENTS
- The following development projects are promoted on Metrozen Capital’s website (www.metrozencapital.com).
a) 189 - 195 Milner Avenue, Toronto, Ontario (“Milner Property”)
- The Milner Property is located at 189 - 195 Milner Avenue Toronto Ontario in the vicinity of the intersection of Markham Road and Highway 401 and is billed as the “Living Zen” project. The project is described on Metrozen Capital’s website as featuring “a hotel, meditation centre, convention centre, Zen innovation centre, commercial space and seniors’ housing in a 3-phase development over 1.25 million square feet on 8 acres of industrial land.”
- The samples of the prescribed FSCO Form 1 – Investor/Lender Disclosure Statement for Brokered Transaction (“Form 1”) required to be completed by the brokerage and examined by the FSCO Examiner and subsequently supplied by Metrozen Capital disclose that there are total prior encumbrances to the mortgage investments promoted by Metrozen Capital registered against the property in the amount of $5,650,036.03 and property tax arrears in the amount of $507,646.71.
- Also according to the samples of Form 1 examined by the FSCO Examiner and subsequently supplied by Metrozen Capital, the Milner Property was appraised on December 31, 2014 and valued on an “as is” basis at $14,750,000. However, the Form 1s also disclose that the property was purchased for only $6,440,000 on November 14, 2012. In addition, other enquiries by FSCO staff revealed that the Milner Property was listed on MLS as at December 15, 2015 with an asking price of $5,940,000.00 under a power of sale.
- Assuming the prior sale and recent listing price are an accurate reflection of the value of the property, it appears that the sale proceeds will not be sufficient to pay the prior encumbrances and the tax arrears. As such, there is a significant risk that the investors solicited by Metrozen Capital will lose some or all of their investments.
- Although Metrozen Capital has confirmed that it raised $8,875,963.97 in respect of the Milner Property through investors solicited by Metrozen Capital, the Milner Property remains undeveloped. It is not clear to FSCO staff what happened to the amounts invested.
- As of December 31, 2015, the Milner Property continues to be promoted on the Metrozen Capital website.
b) 4570 Sheppard Avenue East, Toronto, Ontario (“Sheppard Property”)
- The Sheppard Property is located at 4570 Sheppard Avenue East, Toronto, Ontario in the vicinity of the intersection of Sheppard Avenue and McCowan Road and is billed as the “McCowan Sheppard Inukshuk Fields” project. The project is described on the Metrozen Capital website as “an all-weather multi-use sports field available and accessible to everyone in the community.”
- The samples of the Form 1 examined by the FSCO Examiner and subsequently supplied by Metrozen Capital disclose that there were total prior encumbrances to the syndicated mortgage investments solicited by Metrozen Capital registered against the property in the amount of $4.6 million.
- According to the copies of the Form 1s obtained by the FSCO Examiner and subsequently supplied by Metrozen Capital, the Sheppard Property was appraised on January 8, 2015 and valued on an “as is” basis at $10,700,000. However, the Form 1 also discloses that the Sheppard Property was subsequently purchased on March 25, 2015 by McCowanSheppard for $4,800,000.
- Metrozen Capital has confirmed that it raised $1,157,745 in relation to the Sheppard Property through investors solicited by Metrozen Capital. Assuming the relatively recent sale price is an accurate reflection of the value of the property, it appears that the value of the Sheppard Property may not be sufficient to cover the prior encumbrances and the amounts raised under the syndicated mortgage by Metrozen Capital. As such, there is significant risk that the investors solicited by Metrozen Capital will lose some or all of their investments.
- Although $1,157,745 has been raised through investors solicited by Metrozen Capital, the Sheppard site remains undeveloped. It is not clear to FSCO staff what happened to the amounts invested.
- As of December 31, 2015, the Sheppard development continues to be promoted on the Metrozen Capital website.
IV. FSCO EXAMINATION
- On October 27, 2015, the FSCO Examiner attended at the offices of Metrozen Capital (which also happen to be the offices of all of the other Metrozen entities). The Examination, as well as other enquiries by FSCO staff, revealed serious and recurrent contraventions on the transactional level as well as general systemic issues of non-compliance with the Act as set out below.
a) Transactional Contraventions
- During the course of the Examination, the examiner reviewed the mortgage files for 5 transactions where Metrozen Capital represented the lender/investor. Specifically, the Examiner reviewed the files relating to KL and MB (for the Milner Property) and AT, JA and RV (for the Sheppard Property). For all 5 files, Ms. Seifollahi was the broker who signed the Form 1 and appears to have brokered the transaction.
- In addition on December 22, 2015, Metrozen Capital provided 5 additional mortgage files for review by FSCO staff. WW, SD, DM, for the Milner Property; and MY and LD for the Sheppard Property. Again, for all 5 files, Ms. Seifollahi was the broker who signed the Form 1 and appears to have brokered the transaction.
- A review of the materials obtained by the Examiner and subsequently obtained by FSCO staff reveal the following serious contraventions:
- Conflict of Interest (sections 26 and 27 of Regulation 188/08): In all 10 files, Metrozen Capital failed to disclose the fact that it was owned by Mr. Kannuthurai who also owned and had close ties to the entities which were the borrowers. In the case of AT, JA, RV, WW, SD, MY and LD, the only explanation of the relationship between the borrowers and Metrozen Capital provided was the statement that “Metrozen Capital Inc. is the exclusive syndicated mortgage provider for Metrozen group of companies.” For KL, MB and DM there was an indication that the borrower was related but there is no explanation as to the nature of that relationship. Further, the relationship between the brokerage and the borrowers give rise to a conflict of interest for the brokerage which is required to be disclosed in writing. This was not done, contrary to section 27 of Regulation 188/08;
- Suitability of the Investment (section 24 of Regulation 188/08): Section 24 of Regulation 188/08 requires that a brokerage take “reasonable steps to ensure” that any mortgage or investment in a mortgage that it presents for the consideration of a lender or investor is suitable for the lender or investor “having regard to the needs and circumstances of the” lender or investor. In all 10 files, there is no evidence that Metrozen Capital took any steps to ensure that the proposed investments were suitable;
- Material Risk (section 25 of Regulation 188/08): Section 25 of Regulation 188/08 requires that a brokerage “disclose in writing” to a lender or investor the “material risks” associated with each mortgage or investment in a mortgage which the brokerage presents to the lender/investor. In the case of KL, MB and DM, there is no record of any written disclosure of material risks. In the case of AT, JA, RV, WW, SD, MY and LD, the written disclosure of material risks is limited to the vague statement “decrease or fluctuation of the value of the property.” In all cases, the written disclosure of material risks falls well short of the requirements of section 25 of Regulation 188/08.
- Form 1.1 - Addendum for Construction and Development Loans (section 31 of Regulation 188/08): Effective July 1, 2015, brokerages were required to complete an addendum to the Form 1 where a construction or development loan is involved (“Form 1.1”). The Form 1.1 contains important additional information and disclosures necessary for a lender/investor to properly assess an investment in a construction or development loan. In the case of AT, JA, RV, WW, SD, MY and LD, the Form 1 was completed after July 1, 2015. However, a Form 1.1 was not completed.
- Cooling Off Period (section 36 of Regulation 188/08): Section 36 states that every disclosure of information to a lender or investor (i.e.: Form 1) must be completed at least two days prior to the earliest of a number of events including the date that the “lender enters into an agreement to enter into a mortgage”. This time period may be abridged to 1 day if the lender/investor consents in writing. In the case of KL, MB and DM, the lender/investor did not consent to an abridgment of the 2 day cooling off period. In the case of AT, JA, RV, SD, MY, WW and LD, the lender/investor consented to the abridgement of the 2 day period. However, in all of these files, all of the loan documentation was signed on the same day that the Form 1 was provided. Accordingly, in all of these files, section 36 of Regulation 188/08 was contravened.
- Other Non-disclosures (section 31(1) of Regulation 188/08): Further, the brokerage failed to disclose the following additional information in all five files:
- Complete copies of appraisals as referred to in the Form 1 (section 31(1) 3);
- The Agreement of Purchase and Sale (section 31(1) 5);
- Documentary evidence of the Borrower’s ability to meet the mortgage payments (section 31(1) 6);
- Other information, in writing, that a lender or investor of ordinary prudence would consider to be material to a decision about whether to lend money on the security of real property (section 31(1)10).
- The above contraventions are not merely technical contraventions. The information and disclosures which were not provided in this case were critical for the lender/investor to accurately assess the proposed investment. Without this information, it is difficult to conclude that adequate due diligence was performed before the investments were entered into. Given the state of those investments, it is unlikely that any properly informed and advised lender/investor would proceed with the investment had the required disclosures been provided.
- Nor are the contraventions isolated or can be attributed to mere inadvertence. The contraventions occurred in 100% of the files reviewed by FSCO staff and appear to have been part of the regular business practices of the Metrozen Capital.
b) Systemic Contraventions
- The Examination also revealed a number of significant contraventions of the Act in respect of the practices, policies and administration of the brokerage. Those contraventions include the following.
- Referral Fees: The brokerage pays referral fees to unlicensed individuals for the referral of clients to the brokerage. The unlicensed individuals are carrying on unlicensed activity contrary to the Act by providing the referrals. The exemption in section 6 of the Act does not apply because the referrals are to the brokerage and not directly to the borrower or lender as contemplated in section 6 of the Act. In paying these referral fees, Metrozen Canada has contravened section 44(1) of Regulation 188/08 which prohibits a brokerage from paying “a fee or other remuneration for dealing or trading in mortgages” to another person or entity “unless the other person or entity either has a brokerage licence or is exempted from the requirement to have such a licence.”
- Policies and Procedures: The policies and procedures for the brokerage do not include provisions relating to the requirements for the collection and retention of records, the identification of material risks and conflicts of interest, the providing of non-monetary incentives to brokers and agents of the brokerage and the verification of the identity of borrowers, lenders and investors. The failure to have provisions in the policies and procedures relating to these items is a contravention of section 40 of Regulation 188/08 which requires that a brokerage “establish and implement policies and procedures” including policies and procedures on the matters identified in the Examination.
- Public Relations Materials: Section 7 of Regulation 188/08 states that a “brokerage shall not include false, misleading or deceptive information in its public relations materials.” On the Metrozen Capital website, the brokerage has posted a promotional statement entitled “The Power of 9%”. The statement includes an illustration of the returns generated from an investment “in a fixed return compounded annually 9%” as compared to other investments. However, the terms of the loans promoted by Metrozen Capital do not provide compounding interest and pay only simple interest. The inclusion of this example, leads to the false impression that the Metrozen loans will yield a higher return than is the case. This statement is misleading and deceptive and is, therefore, contrary to section 7 of Regulation 188/08.
V. GROUNDS FOR REVOCATION
a) Metrozen Capital
- The above particulars indicate that Metrozen Capital has conducted itself as a promotional arm of the Metrozen group of companies with which it shares common ownership and close corporate ties. In so doing, Metrozen Capital has failed to provide critical disclosure to its clients which would permit those clients to accurately assess the suitability and the risks associated with the investments it is promoting and to evaluate the information provided by Metrozen Capital given its common ownership and close corporate ties. The results are clear. Investors have invested in high risk, unsuitable investments and face a substantial risk of losing some or all of their investment.
- Under subsection 19(1) of the Act, the Superintendent may, by order, revoke a licence in any circumstances in which the Superintendent is authorized to suspend a licence. The circumstances under which the Superintendent may suspend a licence are listed in section 18(1) and include the following:
- if the Superintendent believes, on reasonable grounds, that the licensee is no longer suitable to be licenced having regard to the circumstances, if any, prescribed for the purposes of subsections 14(1) or 16(4) and such other matters as the Superintendent considers appropriate (section 18(1)(b)); and
- if the licensee contravenes or fails to comply with a requirement established under this Act (section 18(1)(c)).
- With respect to clause 18(1)(c), Metrozen Capital contravened or failed to comply with numerous provisions of the Act and Regulations as specified above. Individually, these contraventions are serious, however the cumulative magnitude of contraventions affords ample grounds to revoke the licence of Metrozen Capital.
- In determining suitability to be licensed, the Superintendent is required by subsections 16(4) of the Act and section 10 of Ontario Regulation 409/07 (for individual licensees) and by subsection 1(2) of Ontario Regulation 408/07 (for brokerages) to have regard to the following prescribed circumstances:
- Whether the individual's past conduct, (or the past conduct of a director or officer of the brokerage), affords reasonable grounds for belief that he, she, or the brokerage will not deal or trade in mortgages in accordance with the law and with integrity and honesty.
- Whether the individual or brokerage is carrying on activities that contravene or will contravene the Act or the regulations if he or she or the brokerage is licensed.
- With respect to clause 1 above, the pattern of conduct exhibited by Metrozen Capital and Ms. Seifollahi (as a director and officer of Metrozen Capital) affords reasonable grounds that Metrozen Capital will not deal or trade in mortgages in accordance with the law and with integrity and honesty. Metrozen Capital has disclosed to FSCO staff that transactions respecting the Metrozen Group projects are the only transactions currently handled by the brokerage. It appears that the whole business model of the Metrozen Group is premised on Metrozen Capital’s delivery of investors to the benefit of the group without regard to the interests of its clients and the requirements of the Act.
- With respect to clause 2, it is evident that Metrozen Capital has a habitual disregard for the obligations under the Act and regulations and continues to carry on activities that contravene the Act and regulations. The Examination and subsequent enquiries reveal a litany of serious contraventions and a systemic unwillingness to act in compliance with legal requirements.
- Accordingly, the Superintendent proposes to revoke the mortgage brokerage licence of Metrozen Capital.
b) Ms. Seifollahi
- Section 3 of Regulation 187/08 states that a mortgage broker or agent “shall not do or omit to do anything that might reasonably be expected to result in the brokerage on whose behalf he or she is authorized to deal or trade in mortgages to contravene or fail to comply with a requirement established under the Act.” Ms. Seifollahi signed all 10 of the Form 1 s reviewed by FSCO staff and appears to be the only broker or agent involved in the transactions. By doing so, she has caused the brokerage to contravene the Act as specified above. Accordingly, she has contravened section 3 of Regulation 187/08.
- In addition, Ms. Seifollahi is the principal broker of Metrozen Capital. As such, she has a duty to ensure that the brokerage complies with the requirements of the Act and to remedy any contraventions which do occur (Ontario Regulation 410/07, section 2). Ms. Seifollahi has failed to meet these requirements. To the contrary, the evidence indicates that she is the licensed individual directly involved in the identified contraventions.
- For these reasons, there are grounds under sections 18(1)(b) and (c) to support the revocation of Ms. Seifollahi’s licence.
VI. INTERIM SUSPENSION
- Section 19(3) of the Act provides that, if in the Superintendent’s opinion, the interests of the public may be adversely affected by any delay in the revocation of a licence as a result of the steps required by section 21 (the requesting and holding of a hearing before the Financial Services Tribunal), the Superintendent may, without notice, make an interim order suspending the licence.
- The Superintendent is of the opinion that “the interests of the public may be adversely affected by any delay in the revocation of the licences of” Metrozen Capital and Ms. Seifollahi and, therefore, the issuance of the interim suspension order for both is necessary. The Sheppard and Milner Properties are still being promoted on the Metrozen website despite the fact that these projects pose significant and imminent risks to investors. As such, there is a significant risk that other investors will be induced into further similar mortgage loans and be exposed to the associated risks.
- Accordingly, the interests of the public will be affected by any delay in making the revocation orders. The criteria for issuance of an interim suspension order have, therefore, been met.
- For the reasons set out above and such further and other grounds as the Superintendent may specify, the Superintendent has issued the interim suspension order and proposes to permanently revoke the licences of Metrozen Capital and Ms. Seifollahi.
DATED at Toronto, Ontario, January 4, 2016.
Original signed by
Superintendent of Financial Services
© Queen's Printer for Ontario, 2016