Ontario regulator ignored warnings on risky mortgage investments

In June 2014, regulators were investigating syndicated mortgages linked to Fortress Real Developments, a major force in Canada’s multibillion-dollar market for the risky investments.

Compliance officers at the Financial Services Commission of Ontario (FSCO) had evidence that syndicated mortgages were being marketed and sold in ways that broke the law, putting the savings of thousands of Canadian mom-and-pop investors in danger.

Brokers affiliated with Fortress, the compliance officers had found, were telling clients they could put their investments in retirement savings accounts administered by a trust company not licensed to do business in Ontario, according to three people with direct knowledge of the matter and internal FSCO documents reviewed by Reuters. The activity, the team determined, was a breach of provincial law – by brokers for recommending Olympia Trust Co, and by Olympia for operating without an Ontario license.

 The compliance officers sent their findings to FSCO investigators and later recommended that Olympia be ordered to stop operating in Canada’s most populous province, according to the sources and documents.

FSCO’s investigators did nothing. Their boss, Executive Director for Licensing and Market Conduct Anatol Monid, decided in May 2015 that there was not enough evidence to proceed, the documents show.

READ MORE (subscription may be required): https://www.theglobeandmail.com/report-on-business/ontario-regulator-ignored-warnings-on-risky-mortgage-investments/article37137451/

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