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IN THE MATTER OF the Pension Benefits Act, R.S.O. 1990, c. P.8 (the “Act”), in particular sections 18 and 89;
AND IN THE MATTER OF the Pension Plan for Presidents of 1479888 Ontario Inc., Registration Number 1073147 (the “Plan”).
NOTICE OF INTENDED DECISION
1479888 Ontario Inc.
16 Fieldwood Drive,
Toronto, ON M1V 3G4
Attention: Elbert Ross
TAKE NOTICE THAT pursuant to sections 18 and 89 of the Act, and by delegated authority from the Chief Executive Officer of the Financial Services Regulatory Authority of Ontario (the “Chief Executive Officer”), the Head, Pension Plan Operations and Regulatory Effectiveness (the “Head”) intends to make an order revoking registration of the Plan. Details of this intended decision are described below.
SI VOUS DÉSIREZ RECEVOIR CET AVIS EN FRANÇAIS, veuillez nous envoyer votre demande par courriel immédiatement à: firstname.lastname@example.org.
YOU ARE ENTITLED TO A HEARING BY THE FINANCIAL SERVICES TRIBUNAL (THE “TRIBUNAL”) PURSUANT TO SUBSECTION 89(6) OF THE ACT.
A hearing by
the Tribunal about this Notice of Intended Decision may be requested by completing the enclosed Request for Hearing Form (Form 1) and delivering it to the Tribunal within thirty (30) days after this Notice of Intended Decision is served on you. The Request for Hearing Form (Form 1) must be mailed, delivered, faxed or emailed to:
Financial Services Tribunal
25 Sheppard Avenue West, 7th floor
Toronto, ON M2N 6S6
TAKE NOTICE THAT if you do not deliver a written request for a hearing to the Tribunal within thirty (30) days after this Notice of Intended Decision is served on you, an order will be issued as described in this Notice of Intended Decision.
For additional copies of the Request for Hearing Form (Form 1), visit the Tribunal’s website at www.fstontario.ca.
The hearing before the Tribunal will proceed in accordance with the Rules of Practice and Procedure for Proceedings before the Financial Services Tribunal
(“Rules”) made under the authority of the Statutory Powers Procedure Act
, R.S.O. 1990, c. S.22. The 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 extension 7294.
REASONS FOR INTENDED DECISION
- The Head intends to issue an order revoking the registration of the Plan on the grounds that the Plan does not comply with the Act and the regulations made under the Act, and the Plan is not being administered in accordance with the Act, the regulations and the Authority rules made under the Act.
- The Plan is a defined benefit pension plan and a designated plan, as defined under the Income Tax Act (Canada), established on August 1, 2001. The Plan is registered with the Financial Services Regulatory Authority of Ontario (“FSRA” or the “Authority”) and with Canada Revenue Agency under registration number 1073147.
- A trust agreement dated August 1, 2001 established a trust fund for Plan assets. The initial trustee of the Plan funds was M.R.S. Trust Company, which was later acquired by B2BTrustCo., a subsidiary of Laurentian Bank (“Laurentian”). A new trust agreement dated October 1, 2013 appointed Elbert Ross, Indrauti Ross and David Singh as Plan trustees (the “Trustees”).
- 1479888 Ontario Inc. (the “Company”) is the sponsor and Administrator of the Plan. Elbert Ross is the individual appointed by the Administrator to carry out administrative tasks on behalf of the Plan, and he is the sole member of the Plan.
- In July 2016, the Chief Financial Officer (“CFO”) at Rockfort Mortgage Investment Corporation (“Rockfort”) contacted the Financial Services Commission of Ontario (“FSCO”), FSRA’s predecessor, to report a suspected fraud of over $1 million in Plan funds. The CFO also provided copies of Plan investment statements issued on March 7, 2016, printed on Rockfort letterhead and addressed to the attention of Elbert Ross. The CFO alleged that such statements were fraudulent and that the Plan had no assets invested with Rockfort.
- The Plan’s financial statements filed with FSCO dated December 31, 2015, indicated the same value of Plan assets as the investment statement the CFO sent to FSCO. Therefore, FSCO staff determined that it was necessary to further investigate the discrepancy and the CFO’s allegations.
- Plan funds were transferred from Laurentian to Hampton Securities (“Hampton”), in accordance with the October 1, 2013 trust agreement. Hampton’s Compliance and Operations Manager confirmed that an account had been opened at Hampton to hold Plan funds, and the account balance as of December 23, 2016 was $840.20 in cash, with shares held in the WTS-CARRIBEAN DVS 28FB16 fund, which could not be traded and therefore had no value (referred to as a “Valueless Position”). The notional book value of the Plan funds held in the Valueless Position was
- FSRA staff investigated further to confirm what transpired with the Laurentian Plan account, including sending several compliance letters to Elbert Ross between 2016 and 2018.
- On March 11, 2022, Laurentian confirmed with FSRA that 4 withdrawals were made from the Laurentian Plan fund account, made payable to Elbert Ross, between June 16, 2009 and May 3, 2013, totaling $200,000. Laurentian also disclosed to FSRA three Resolutions of the Board of Directors of the Company (the “Resolutions”) dated June 10, 2009, April 2, 2013, and November 1, 2012 which directed that surplus Plan assets be released to E. Ross, and the Resolutions were signed by Elbert Ross.
- Laurentian also confirmed that $881,684.47 was transferred out of the Laurentian Plan account on January 26, 2014, which was authorized by the Trustees. There is a large discrepancy between the $881,684.47 in Plan funds that the Trustees authorized to be transferred out of the Laurentian Plan fund (in accordance with the October 1, 2013 trust agreement), and the December 23, 2016 Hampton Plan account balance of $840.20 in cash and the Valueless Position.
- In addition to the discrepancy between the Plan fund assets as indicated in the Plan’s last filed financial statements, and the Plan fund asset balance provided by Hampton, many of the Plan’s filings required under the Act have been delinquent since 2016, including the Annual Information Returns, Actuarial Valuation Reports, Pension Fund Financial Statements, and Statement of Investment Policies and Procedures. The Administrator has not responded to FSCO or FSRA’s several compliance letters requesting that Plan filings be brought up to date. Failure to file the required plan documentation contravenes section 20 of the Act, and sections 14, 76 and 78 of Regulation 909.
- The Company has also failed to make contributions to the Plan required to provide the pension benefits under the Plan, in contravention of sections 55 and 56 of the Act.
- The Administrator has failed to ensure that the Plan is administered in accordance with the Act, the regulations made under the Act and the Authority rules, in contravention of section 19 of the Act.
- Clauses 18(1)(b) and (c) of the Act state that the CEO may revoke the registration of a pension plan that does not comply with the Act and the regulations made under the Act, or a pension plan that is not being administered in accordance with the Act, the regulations and the Authority rules made under the Act.
- The information obtained by the CEO supports a finding that the Plan does not comply with the Act and the regulations made under the Act, and that the Plan is not being administered in accordance with the Act, the regulations and the Authority rules made under the Act.
- Accordingly, the preconditions for the issuance of an order under clauses 18(1)(b) and (c) of the Act have been met in this case and the Head intends to issue an order under clauses 18(1)(b) and (c) of the Act to revoke the registration of the Plan under the Act.
- Such further and other reasons as may come to my attention.
DATED at Toronto, Ontario, June 21, 2023
Original signed by
Head, Pension Plan Operations and Regulatory Effectiveness Financial Services Regulatory Authority of Ontario
By delegated authority from the Chief Executive Officer
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