FSCO issues $1.1M in penalties over syndicated mortgage investments

The Financial Services Commission of Ontario (FSCO) has handed out $1.1 million in administrative monetary penalties, and revoked the licenses of several brokerages and brokers, over their use of syndicated mortgage investments, the commission said Friday in a release.

Following an FSCO investigation, the Superintendent of Financial Services has handed down orders against eight parties over their involvement with syndicated mortgage investments tied to real estate development projects in Ontario and elsewhere in Canada, the release said.

Four brokerages must pay a combined total of $1.1 million in administrative monetary penalties as part of the settlement agreement with the FSCO, the release said. Those brokerages are:

• Building Development and Mortgages Canada Inc. (BDMC), formerly known by the name Centro Mortgage Inc.
• FFM Capital Inc.
• FMP Mortgage Investments Inc., and
• FDS Broker Services Inc.

The FSCO also ordered the mortgage brokerage or broker licenses revoked for BDMC, Vince Petrozza, Rosalia Spadafora, Michael Daramola and Glenn May-Anderson. Ildina Galati-Ferrante, principal broker of BDMC, has chosen to also surrender her broker license, the release said.

Fortress Real Developments, which was a developer or development consultant for the projects tied to the mortgage investments, is not a mortgage brokerage or administrator so is not a party to the settlement or the subject of any of the orders.

BDMC has agreed that a new arms-length administrator—FAAN Mortgage Administrators—will now manage its existing syndicated mortgage investments in real estate development projects for which Fortress Real Development Inc. is a developer or development consultant, the release said.

“FSCO considers syndicated mortgages investments to be high risk, and notes they may not be suitable for the average lender or investor,” the release said.

Also read: Protect clients from risky syndicated mortgages

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.