Disclaimer
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.

 

 

Superintendent of
Financial
Services
Ontario Coat of Arms
Surintendant des
services
financiers

REGARDING the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c.29, in particular section 19;

AND REGARDING First Commonwealth Mortgage Corporation, Tier 1 Mortgage Corporation, Bhaktraj Singh, Jude Cassimy, and Dave Balkissoon.



INTERIM ORDER SUSPENDING LICENCE

TO:

First Commonwealth Mortgage Corporation
337 Castlemore Ave.
Markham, ON L6C 2Y1

AND TO:

Tier 1 Mortgage Corporation
604 Four Winds Way
Mississauga, ON L5R 3M4

AND TO:

Bhaktraj Singh

AND TO:

Jude Cassimy

AND TO:

Dave Balkissoon

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 provided the Superintendent follows the steps required by section 21 including the issuance of a Notice of Proposal and, if requested, the holding of a hearing before the Financial Services Tribunal (the “Tribunal”). 

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.

First Commonwealth Mortgage Corporation (“First Commonwealth”) and Tier 1 Mortgage Corporation (“Tier 1 Mortgage”) are licensed mortgage brokerages under the Act. Jude Cassimy (“Mr. Cassimy”) and Dave Balkissoon (“Mr. Balkissoon”) are licensed mortgage brokers under the Act and the principal brokers of First Commonwealth and Tier 1 Mortgage respectively. Bhaktraj Singh (”Mr. Singh”) is a licensed mortgage agent under the Act and a director, officer and sole shareholder of Tier 1 Transaction Advisory Services Inc. (“Tier 1 Transaction”).

The Superintendent has issued a Notice of Proposal to revoke the licences Tier 1 Mortgage, First Commonwealth, Mr. Balkissoon, Mr. Cassimy and Mr. Singh (the “NOP”).  For the reasons outlined in the NOP and for the reasons set out below, the Superintendent is of the opinion that the interests of the public may be adversely affected by any delay in the revocation of these licences.  Accordingly, the criterion for the issuance of an interim suspension order under section 19 has been met.

Examinations of the First Commonwealth and Tier 1 Mortgage and other enquiries by FSCO staff revealed a number of serious contraventions of the Act. The contraventions are widespread and reveal systemic disregard for the basic consumer protection measures set out in the Act. The most serious contraventions relate to the failure to provide written disclosure of material risks, disclosure of conflicts of interest, the failure to ensure that syndicated mortgage investments (“SMIs”) (a mortgage for which there is more than one lender or investor) were suitable for the investor to whom they were presented and the provision of false and misleading information as to the characterization of appraisals as reflecting the “as is” value of the relevant properties when such appraisals were actually premised on the successful completion of the proposed development.

These contraventions exacerbate the risk inherent to the type of SMIs sold by the brokerages in this case. Such SMIs function as a form of mezzanine-like financing provided by individual, consumer lenders, which allows the developer to finance early development costs. Where the value of the property is misrepresented to investors whose security will be subordinated to senior ranking construction loans and where investors are provided with incomplete disclosure, the risks to investors are significant.

As the principal brokers of First Commonwealth and Tier 1 Mortgage respectively, Mr. Balkissoon and Mr. Cassimy have a statutory duty to take reasonable steps to ensure that their brokerage, and each broker and agent authorized to deal or trade in mortgages on its behalf, complies with every requirement established under the Act. They must also ensure that the brokerage itself takes reasonable steps to deal with any contravention of the Act by the brokerage or an authorized broker or agent. Mr. Balkissoon and Mr. Cassimy have neglected these obligations as several of the brokerages’ agents have not performed statutory duties, including duties respecting suitability analyses, review of materials risks, timing of disclosure, providing required documentation, and false or misleading information in disclosure forms. Further, Mr. Balkissoon and Mr. Cassimy are themselves in violation of the standards of practice expected of mortgage brokers as both have signed investor disclosure documents that are incomplete or inaccurate.

Mr. Singh fills several roles in respect of both the development projects and the syndicated mortgage transactions. He is a director, officer and sole shareholder of Tier 1 Transaction, which is engaged in unlicensed activity including the solicitation of borrowers and lenders on the security of real property, the provision of information about a prospective borrower to a prospective lender, the assessment a prospective borrower on behalf of a prospective lender and the negotiation or arrangement of a mortgage. Mr. Singh is also a licensed mortgage agent authorized to deal or trade in mortgages for First Commonwealth, a shareholder of several of the borrower development companies in the syndicated mortgage transactions. He is the sole director, officer and shareholder of the special purpose trustee corporations incorporated to hold and administer the mortgage on behalf of the investors. Finally, Mr. Singh has an ownership interest in the borrower companies. In contravention of the Act, these conflicts of interest and interrelationships were not disclosed to investors and give rise to significant risks to investors because Mr. Singh, through the special purpose trustee corporations, is required to administer and enforce the mortgages on behalf of the investor as against the entities in which he enjoys an economic interest.  

Although additional investments are not currently being sought  in respect of many of the projects, as the syndicated mortgages approach their renewal or termination dates efforts to secure renewal of the existing investments and, potentially, additional investments from new investors threatens to prolong the risk exposure of existing investors and expose new investors to these same risks. Syndicated investors are also actively being sought for at least one new development project. Consequently, there is ongoing risk to the public.

Further, the issuance of this interim suspension order is the only remedy available to the Superintendent to protect the public from these ongoing risks.  The Superintendent cannot, absent the consent of the licensees, amend the licences to impose conditions prohibiting the marketing and sale of Tier 1 SMI’s without also following the Notice of Proposal and hearing process.  Even if more targeted measures were legally available to the Superintendent, the licensees’ business activities are limited to Tier 1 SMIs.  Consequently, the practical impact on the licensees’ businesses of more targeted measures may not be materially different than the impact of this interim order.

For the reasons outlined in the NOP and for the above reasons, the Superintendent is of the opinion that the interests of the public may be adversely affected by any delay in the revocation of these licences.

Accordingly, the criterion for the issuance of an interim suspension order has been met.

INTERIM ORDER SUSPENDING LICENCE

IT IS ORDERED THAT pursuant to subsection 19(3) of the Act and for the reasons described above, the mortgage brokerage licence of First Commonwealth Mortgage Corporation is suspended. During the suspension, First Commonwealth Mortgage Corporation 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 above, the mortgage brokerage licence of Tier 1 Mortgage Corporation is suspended. During the suspension, Tier 1 Mortgage Corporation 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 above, the mortgage agent licence of Bhaktraj Singh is suspended. During the suspension, Bhaktraj Singh 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 above, the mortgage broker licence of Jude Cassimy is suspended. During the suspension, Jude Cassimy 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 above, the mortgage broker licence of Dave Balkissoon is suspended. During the suspension, Dave Balkissoon 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 as detailed in that Notice of Proposal (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.

AND TAKE NOTICE THAT subsection 17(3)(b) of the Act states that a mortgage broker’s or agent’s licence is suspended if the brokerage’s licence is suspended.

AND TAKE FURTHER NOTICE THAT subsection 17(4)(a) and (b) state that the suspension of the mortgage broker’s or agent’s licence is terminated when the licence suspension of the specified mortgage brokerage on whose behalf the broker or agent is authorized to deal or trade in mortgage is terminated or when the mortgage broker or agent becomes authorized by another mortgage brokerage to deal in mortgages or trade in mortgages on its behalf and his or her licence has been amended accordingly.

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.

DATED at Toronto, Ontario, October 20, 2016.

Original signed by

Anatol Monid
Executive Director, Licensing and Market Conduct Division

By delegated authority from the Superintendent of Financial Services

© Queen's Printer for Ontario, 2016