IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act, 2006,
S.O. 2006, c.29, as amended (the “Act”), in particular sections 19 and 21;

AND IN THE MATTER OF First Swiss Mortgage Corp. and Reza Nezami-Nia.

NOTICE OF PROPOSAL TO REVOKE LICENCES

TO:
First Swiss Mortgage Corp.
5775 Yonge Street, Suite 525
Toronto, ON M2M 4J1

Reza Nezami-Nia
Principal Broker

AND TO:  Reza Nezami-Nia

TAKE NOTICE THAT pursuant to sections 19 and 21 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 Director, Litigation and Enforcement (the “Director”) is proposing to revoke the mortgage brokerage licence and the mortgage administrator licence issued to First Swiss Mortgage Corp. and the mortgage broker licence issued to Reza Nezami-Nia.

Details of these contraventions and reasons for this proposal are described below. This Notice of Proposal includes allegations that may be considered at a hearing.

SI VOUS DÉSIREZ RECEVOIR CET AVIS EN FRANÇAIS, veuillez nous envoyer votre demande par courriel immédiatement à: contactcentre@fsrao.ca.

YOU ARE ENTITLED TO A HEARING BY THE FINANCIAL SERVICES TRIBUNAL (THE “TRIBUNAL”) PURSUANT TO SECTIONS 21(2) AND 21(3) OF THE ACT. A hearing by the Tribunal about this Notice of Proposal may be requested by completing the enclosed Request for Hearing Form (Form 1) and delivering it to the Tribunal within fifteen (15) days after this Notice of Proposal is received by you. The Request for Hearing Form (Form 1) must be mailed, delivered, faxed or emailed to:

Address:
Financial Services Tribunal
25 Sheppard Avenue West, 7^th Floor
Toronto, Ontario
M2N 6S6

Attention: Registrar

Fax: 416-226-7750

Email: contact@fstontario.ca

TAKE NOTICE THAT if you do not deliver a written request for a hearing to the Tribunal within fifteen (15) days after this Notice of Proposal is received by you, orders will be issued as described in this Notice of Proposal.

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, as amended. 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.

At a hearing, your character, conduct and/or competence 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 PROPOSAL

I. INTRODUCTION

1. These are reasons for the proposal by the Director to revoke the mortgage brokerage licence and the mortgage administrator licence issued to First Swiss Mortgage Corp. (“First Swiss”) and the mortgage broker licence issued to Reza Nezami-Nia (“Nezami-Nia”).



II. BACKGROUND

2. First Swiss is licensed as a mortgage brokerage (licence # 10550) under the Act. First Swiss is also licensed as a mortgage administrator (licence # 11956) under the Act.


3. Nezami-Nia is licensed as a mortgage broker (licence # M08003821) under the Act and is the principal broker of First Swiss. Nezami-Nia is also an officer and the sole director of First Swiss.


4. In regulatory filings with the Financial Services Regulatory Authority of Ontario (“FSRA”), First Swiss lists the address for its principal place of business as 5775 Yonge Street, Suite 525, Toronto, Ontario.


5. In corporate records, First Swiss lists its address as 5700 Yonge Street, Suite 200, Toronto, Ontario.


6. In fact, First Swiss does not operate from either Toronto address. First Swiss appears to have operated from 7191 Yonge Street, Suite 911, Thornhill, Ontario.


7. On March 15, 2023, First Swiss filed for bankruptcy.


8. In regulatory filings and statements to lenders, First Swiss provided materially false or deceptive information. In particular, First Swiss provided false information to lenders and regulators regarding the value or existence of mortgages held by First Swiss in trust for private lenders.


9. On March 19, 2023, the Ontario Superior Court of Justice granted an application by FSRA to appoint a receiver, without security, of all of the assets, undertakings and properties of First Swiss acquired for, or used in relation to its business, pursuant to section 37 of the Act.



III. GROUNDS FOR REVOCATION OF LICENCE

10. Section 19(1) of the Act states that the Chief Executive Officer may, by order, revoke a licence in any of the circumstances in which he or she is authorized to suspend a licence.


11. According to section 18(1) of the Act, such circumstances are:
    
    
    1. if the licensee ceases to satisfy the prescribed requirements for issuance or renewal, as the case may be, of the licence;
    
    
    2. if the Chief Executive Officer believes, on reasonable grounds, that the licensee is no longer suitable to be licensed having regard to the circumstances, if any, prescribed for the purposes of subsection 14(1) or 16(4), as the case may be, and such other matters as the Chief Executive Officer considers appropriate;
    
    
    3. if the licensee contravenes or fails to comply with a requirement established under this Act; or
    
    
    4. if such other circumstances as may be prescribed.
    
    



A. First Swiss

12. Pursuant to section 1(2) of Ontario Regulation 408/07, a mortgage brokerage is unsuitable for licensing where “having regard to its financial position, the corporation cannot reasonably be expected to be financially responsible in the conduct of its business.” Section 1(2) of Ontario Regulation 411/07 sets out the same requirement for mortgage administrators.


13. Section 28 of Ontario Regulation 189/08 requires a mortgage administrator to maintain a financial guarantee in an amount equal to $25,000. This guarantee may be unimpaired working capital or it may be another form of financial guarantee acceptable to the Chief Executive Officer.


14. Due to its bankruptcy, First Swiss cannot reasonably be expected to be financially responsible in the conduct of its business. Further, due to its bankruptcy, First Swiss no longer maintains the financial guarantee required of a mortgage administrator.,/
    
15. Pursuant to section 6 of Ontario Regulation 193/08, a licensee is required to inform FSRA within 5 days of any change to the licensee’s mailing address.


16. First Swiss failed to inform FSRA of the change to its mailing address. In fact, First Swiss provided FSRA with false or misleading information contrary to section 45 of the Act by continuing to list the Toronto address in regulatory filings when it no longer conducted business at this address.


17. First Swiss contravened section 43 of the Act by giving false or deceptive information to lenders when administering mortgages. First Swiss contravened section 45 of the Act by giving false or deceptive information to FSRA.



B. Nezami-Nia

18. Pursuant to section 2 of Ontario Regulation 410/07, as principal broker, Nezami- Nia is required to take reasonable steps to ensure First Swiss, and each broker and agent authorized to deal or trade in mortgages on its behalf, complies with all requirements under the Act.


19. As an officer and sole director of First Swiss, Nezami-Nia is responsible for ensuring that First Swiss complies with all requirements under the Act.


20. Nezami-Nia failed to take reasonable steps to ensure that First Swiss and its agents and brokers complied with all applicable regulatory requirements. When First Swiss’ fraudulent and deceptive activities were identified, Nezami-Nia blamed First Swiss’ agents.


21. Acting through First Swiss, Nezami-Nia provided false information to FSRA or failed to take reasonable steps to ensure that accurate information was provided.


22. Having regard to the circumstances, the Director believes, on reasonable grounds, that First Swiss and Nezami-Nia are no longer suitable to be licensed pursuant to section 10 of Ontario Regulation 409/07.


23. Such further and other reasons as may come to my attention.

DATED at Toronto, Ontario, March 22, 2023

Original signed by

Elissa Sinha
Director, Litigation and Enforcement

By delegated authority from the Chief Executive Officer

Si vous desirez recevoir eel avis en frani;:ais, veuillez nous envoyer votre demande par courriel immediatement a : contactcentre@fsrao.ca.