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, 21, 35, 38, and 39;

AND IN THE MATTER OF Nasir Syed Zaidi Hussain, Upanshuman Pandey, Expert Financial Corporation and Varinder Singh Virk.

NOTICE OF PROPOSAL TO REVOKE LICENCES,
TO ISSUE COMPLIANCE ORDER AND
TO IMPOSE ADMINISTRATIVE PENALTIES

TO: Nasir Syed Zaidi Hussain

AND TO: Upanshuman Pandey

AND TO: Expert Financial Corporation

AND TO: Varinder Singh Virk

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 broker licence issued to Upanshuman Pandey (“Pandey”) (licence # M08002621).

AND TAKE NOTICE THAT pursuant to sections 19 and 21 of the Act, and by delegated authority from the Chief Executive Officer, the Director is proposing to revoke the mortgage brokerage licence issued to Expert Financial Corp. (“Expert Financial”) (licence # 12744).

AND TAKE NOTICE THAT pursuant to section 35 of the Act, and by delegated authority from the Chief Executive Officer, the Director is proposing to issue a permanent compliance order on Nasir Syed Zaidi Hussain (“Hussain”) prohibiting him from:

using the titles of “mortgage agent”, “mortgage broker,” their equivalents in another language, or a variant or abbreviation of either title; and
carrying on the business of dealing in mortgages in Ontario.

AND TAKE NOTICE THAT pursuant to section 39 of the Act, and by delegated authority from the Chief Executive Officer, the Director is proposing to impose administrative penalties on Hussain in the total amount of $100,000 as follows:

nine (9) administrative penalties in the amount of $10,000 each, for a total amount of $90,000, for contravening section 2(3) of the Act by dealing in mortgages without a licence; and
an administrative penalty of $10,000 for contravening section 11 of the Act by describing himself in a way that may reasonably be expected to lead to the belief that he is a mortgage agent or broker.

AND TAKE NOTICE THAT pursuant to section 39 of the Act, and by delegated authority from the Chief Executive Officer, the Director is proposing to impose administrative penalties on Pandey in the total amount of $40,000 as follows:

an administrative penalty of $10,000 for contravening section 3.1 of Ontario Regulation 187/08 by doing or omitting to do anything in circumstances where he ought to know that he was facilitating dishonesty, fraud, crime or illegal conduct;
an administrative penalty of $10,000 for contravening section 3 of Ontario Regulation 187/08 by failing to verify the identities of borrowers and causing his brokerage to violate section 10 of Ontario Regulation 188/08; and
an administrative penalty of $10,000 for contravening section 2(1) of Ontario Regulation 410/07 by not taking reasonable steps to ensure the brokerage and each broker or agent complies with requirements established under the Act, in particular the brokerage’s record keeping obligations under section 46 of Ontario Regulation 188/08;
an administrative penalty of $10,000 for contravening section 45 of the Act by providing false or misleading information to the Chief Executive Officer.

AND TAKE NOTICE THAT pursuant to section 39 of the Act, and by delegated authority from the Chief Executive Officer, the Director is proposing to impose administrative penalties on Expert Financial in the total amount of $45,000 as follows:

an administrative penalty of $20,000 for contravening section 46 of Ontario Regulation 188/08 by not maintaining complete and accurate records of all documents or written information obtained from a borrower; and
an administrative penalty of $25,000 for contravening section 14.2 of Ontario Regulation 188/08 for acting, or omitting to do anything, in circumstances where the brokerage ought to know that by acting or not doing the thing, the brokerage is being used to facilitate dishonesty, fraud, crime or illegal conduct.

AND TAKE NOTICE THAT pursuant to section 39 of the Act, and by delegated authority from the Chief Executive Officer, the Director is proposing to impose an administrative penalty on Varinder Singh Virk in the amount of $5,000 for contravening section 3.1 of Ontario Regulation 187/08 by doing or omitting to do anything in circumstances where he ought to know that he was facilitating dishonesty, fraud, crime or illegal conduct.

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), 21(3), 35(3), 35(4), 39(2) AND 39(5) 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 W, Suite 100
Toronto, ON 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. TAKE FURTHER NOTICE of the payment requirements in section 4 of Ontario Regulation 192/08, which state that the penalized person or entity shall pay the penalty no later than thirty (30) days after the person or entity is given notice of the order imposing the penalty, after the matter is finally determined if a hearing is requested or such longer time as may be specified in the order.

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

Nasir Syed Zaidi Hussain (“Hussain”) has never been licensed as a mortgage agent or broker under the Act. He sometimes goes by Syed Nasir Hussain Zaidi, Nasir Zaidi, or other variants of his name.
Between 2020 and 2023, Hussain posed as a mortgage agent or broker and dealt in mortgages without a licence. He collected “downpayments” from clients, which he often kept.
Hussain used licensed principal broker Upanshuman Pandey (“Pandey”) and Pandey’s brokerage, Expert Financial Corporation (“Expert Financial”), to submit mortgage applications to lenders.
Pandey was aware that Hussain was not licensed but still facilitated Hussain’s dealing in mortgages. Pandey received referrals from Hussain who met with the clients, including collecting their information and meeting with them to sign the mortgage documents, which were produced by Pandey.
Pandey reported on Expert Financial’s Annual Information Returns (“AIRs”) that the brokerage never received referrals from non-licensees despite the referrals from Hussain. Pandey also indicated that the brokerage had received no complaints, when at least two complaints had been received.
Formerly licensed agent Varinder Singh Virk (“Virk”) worked for Hussain while Virk was licensed under the Act. Virk ought to have known that he was facilitating the illegal or deceptive conduct of Hussain.
Hussain has been charged criminally in relation to some of the conduct described in this Notice. The charges are pending and have not been proven in court.

II. BACKGROUND

A. Parties

Hussain applied twice to be licensed as a mortgage agent, on August 7, 2014 and on August 22, 2022. Both applications were declined by the brokerages and withdrawn.
Hussain has two sole proprietorships through which he sometimes deals in mortgages without a licence: Referral and Solutions, and QSAB Traders.
Pandey is a mortgage broker (licence # M08002621) under the Act. He was first licensed as an agent in 2008 and has been a principal broker since 2011. Pandey has been the principal broker of Expert Financial since 2016. He was a director of Expert Financial until June 30, 2022. His wife, a non-licensee, is now the sole director and officer of Expert Financial.
Expert Financial is a brokerage licensed under the Act (licence # 12744). Pandey owns half the brokerage, while his wife owns the other half. In 2023, Expert Financial reported to FSRA that it brokered 20 mortgages worth around $13.7 million and had three licensed agents in addition to Pandey.
Virk was a licensed mortgage agent under the Act (licence # M20002949). He was first licensed on October 29, 2020. His licence expired on March 31, 2023. At all times he was authorized as an agent for Premium Financial Services (licence # 12953).
Between July 17, 2022, and August 22, 2022, FSRA received ten complaints alleging improper conduct by Hussain, Pandey, Expert Financial, and/or Virk, for mortgages arranged between December 2020 and June 2022. Nine of these complaints involve borrowers who are described in this Notice (the “Borrowers”).
Between December 2022, and May 2023, FSRA received seven additional complaints relating to Hussain and others similar to the complaints of the Borrowers.

B. Hussain Presents Himself as a Mortgage Agent or Broker

Since at least December 1, 2021, Hussain has had a social media account where he explicitly referred to himself as a “Mortgage Broker.” The account remains active.
In posts, Hussain presents himself as a broker or agent, offering to get new Canadians mortgages in one post and adding hashtags such as “#topmortgagebroker” and “#mortgageagent” to another post.
In addition, when meeting with the Borrowers, Hussain presented himself as an experienced mortgage broker or agent who could help them secure financing with a reputable lender.

C. Referral Arrangement Between Hussain and Pandey

Hussain and Pandey met in or prior to 2016. Hussain offered to refer clients to Pandey for a fee. Pandey was aware that Hussain was not licensed under the Act.
Prior to the COVID pandemic in 2020, clients would come to Pandey’s office accompanied by Hussain and Pandey would do the paperwork and explain the mortgages. When the mortgage closed, Pandey would pay Hussain 50% of the brokerage fee as a commission.
After March 2020, Pandey no longer met any clients referred to him by Hussain in person. He had three-way phone calls with the clients and Hussain. Pandey did not take steps to verify the identities of the clients, besides relying on his “gut feeling.”
The policies and procedures manual for Expert Financial requires brokers and agents to “make every effort to verify the identity of their borrowers.” If they are unable to do so, the broker or agent is to notify the potential lenders. Pandey did not make this notification to lenders for the Borrowers.
Between 2016 and 2022, Pandey received 54 referrals from Hussain, 21 of which were closed.
Pandey paid Hussain at least $97,000 in commissions between April 2021 and May 2022. Pandey often paid Hussain in cash, and the amount of commissions he paid Hussain may have been even higher.
When interviewed by a FSRA Investigator in December 2023, Pandey indicated that he had received a referral from Hussain as recently as that month. In this case, Pandey insisted that the clients come to his office and sign the documents with him present. However, the client never attended at his office and the deal did not close.

D. Hussain Acts as the Mortgage Agent for the Borrowers

Initially, Hussain provided some of the Borrowers with signed commitments that appeared to be from reputable lenders. However, near or on the closing date, Hussain informed them that the financing was not available and directed them to a higher interest rate lender.
Hussain collected from the Borrowers the supporting documents necessary to apply for a mortgage, such as income and tax documents. Hussain passed this information to Pandey.
Pandey then generated the necessary mortgage documentation using his brokerage’s software. Pandey provided the mortgage application documents to Hussain. Hussain presented the mortgages to the Borrowers and obtained their signatures on the documents. He then returned them to Pandey, who submitted them to the lenders.
In the case of four of the Borrowers, Hussain provided information, including documents, directly to a lender, who believed that he worked for Expert Financial as a mortgage agent.

E. Hussain Keeps Client Downpayments

Hussain required the Borrowers to pay him a “downpayment”, purportedly so that he could secure their mortgages. However, the amounts were not applied to the mortgages.
From the Borrowers, Hussain collected approximately $678,000 in “downpayments”. When they complained, Hussain would sometimes provide cheques for a portion or all of the outstanding amount. Many of these cheques did not clear.
Hussain has not repaid approximately $405,000 of the downpayments he took from the Borrowers.

F. Virk Works for Hussain

Virk worked for Hussain from approximately July 2021 until October 2021. Under the arrangement, Virk was to get paid 1% of the mortgage amount if a deal he referred to Hussain closed.
Virk met with at least one of the Borrowers at Hussain’s office, received a “deposit” cheque and collected financial information about two of the Borrowers and provided it to Hussain.
When interviewed by a FSRA Investigator, Virk described his role as that of a receptionist. He told the Investigator that he did not know that Hussain was unlicensed when he worked for him and that he wanted to learn how to do mortgages.
One real estate agent reported that he referred one of the Borrowers to Hussain as he trusted Virk, who he knew was a mortgage agent.
Virk and his wife paid Hussain $20,000 to obtain financing on a property which was never arranged. The funds were not returned.
After they stopped working together, Virk submitted a complaint to police regarding Hussain.

G. Expert Financial’s Lack of Records

FSRA Investigators sought records of documents and communications between Pandey and some clients. Pandey and Expert Financial were unable to provide communication records relating to three of the Borrowers requested by FSRA.
Pandey told FSRA Investigators that he did not have records of email communications between himself and some of the clients or Hussain. He said he deleted emails because he did not want to be charged money for more email storage.

H. Complaints to Expert Financial and Pandey

Two of the Borrowers complained separately to Expert Financial in July 2022.
In writing to one of the Borrowers who complained, Pandey rejected their allegations. When asked by the complainant about Hussain being an employee of Expert Financial, Pandey stated that he “is not employee of our brokerage , just he is referral source and act entirely by his own.”
In the other case, no response was received by the complainant. The complainant emailed the complaint to Pandey twice.

I. False or Misleading Information on AIRs

FSRA uses information provided by brokerages in their AIRs to help identify, assess and monitor the risk in the mortgage brokering sector. Only the principal broker of the brokerage can complete the AIR.
For 2016 – 2023, Pandey submitted AIRs for Expert Financial. In the AIRs, including in 2020, 2021, and 2022 he asserted that:
1. Expert Financial did not receive any simple referrals from unlicensed entities.
2. Expert Financial received no referrals from any sources.
3. Expert Financial received no written complaints.
Expert Financial and Pandey had been receiving referrals from Hussain. Further, Pandey and Expert Financial had received at least two written email complaints in 2022.
At the end of each AIR, the principal broker is required to certify that they are aware that it is an offence to make a false statement to the Chief Executive Officer. Pandey signed the certifications.

III. CONTRAVENTIONS OR FAILURES TO COMPLY WITH THE ACT

A. Hussain Holding Out as a Mortgage Agent or Broker Without a Licence

Section 11 prohibits the use of the titles of mortgage brokerages, mortgage administrators, mortgage brokers and mortgage agents by anyone who is not licensed under the Act. Individuals and entities cannot use these protected titles or descriptions that might reasonably lead to the belief that the person or entity is licensed under the Act.
Hussain presented himself as a mortgage agent or broker through his social media account and when dealing with the Borrowers.
The Director is satisfied that Hussain held himself out to the public as a mortgage agent or broker, or used a description that might reasonably lead to the belief that he is one. In doing so, he violated section 11 of the Act.

B. Hussain Dealing in Mortgages Without a Licence

Section 2 of the Act defines dealing in mortgages to include soliciting another person to borrow money on real property, providing information about a prospective borrower to a prospective mortgage lender, assessing a prospective borrower on behalf of a mortgage lender, and negotiating or arranging mortgages on behalf of another person or entity.
The Director is satisfied that Hussain dealt in mortgages without a licence with respect to the Borrowers. Hussain solicited the Borrowers, collected their information and presented mortgage options, and arranged mortgages. Further, he directly provided information about four of the Borrowers to a lender.

C. Facilitating Dishonesty, Fraud, Crime or Illegal Acts

Section 3.1 of Ontario Regulation 187/08 and section 14.2 of Ontario Regulation 188/08 provide that licensees shall not act, or do anything or omit to do anything, in circumstances where they ought to know that by acting, doing the thing or omitting to do the thing, they are being used to facilitate dishonesty, fraud, crime or illegal conduct.

C.1 Pandey

Pandey knew that Hussain was unlicensed. As he was not meeting with clients himself, he knew that Hussain was soliciting clients, collecting financial information, arranging the terms of mortgages, and even dealing with lenders directly.
As discussed above, Hussain dealt in mortgages without a licence and took downpayment funds from clients with no legal basis while holding himself out as a mortgage agent or broker.
The Director is satisfied that Pandey contravened section 3.1 of Ontario Regulation 187/08 by facilitating Hussain’s illegal holding out as a mortgage agent or broker and facilitating Hussain’s working as an unlicensed agent.

C.2 Expert Financial

Expert Financial, through Pandey, had knowledge of Hussain’s unlicensed status and facilitated his activities as the brokerage which completed the mortgage transactions for the Borrowers.
The Director is satisfied that Expert Financial contravened section 14.2 of Ontario Regulation 188/08 by facilitating Hussain’s illegal holding out as a mortgage agent or broker and facilitating Hussain’s working as an unlicensed agent.

C.3 Virk

Virk was licensed to act as a mortgage agent for only Premium Financial. Licensed agents like Virk are expected to know that non-licensees cannot deal in mortgages. Nonetheless, Virk agreed to work for Hussain.
Licensees cannot facilitate the work of a non-licensee, as Virk did, by recruiting clients, collecting information or otherwise assisting the non-licensee in their mortgage dealings. Virk ought to have known that this conduct was facilitating Hussain’s unlicensed dealing in mortgages and collection of a mortgage deposit.
The Director is satisfied that Virk contravened section 3.1 of Ontario Regulation 187/08 by facilitating Hussain’s illegal holding out as a mortgage agent or broker and facilitating Hussain’s working as an unlicensed agent.

D. Pandey’s Failure to Verify Borrower Identities

Section 3 of Ontario Regulation 187/08 requires that brokers and agents not do or omit to do anything that might reasonably be expected to cause their brokerage to contravene or fail to comply with a requirement established under the Act.
One such requirement is section 10 of Ontario Regulation 188/08, which requires brokerages to take reasonable steps to verify the identities of borrowers.
The Director is satisfied that Pandey did not make reasonable efforts to verify the identity of the Borrowers Hussain referred to him. Pandey did not meet, virtually or in person, the Borrowers, and thus could not even determine if they existed and matched their identity documents. Neither a phone call nor assurances from Hussain were sufficient to satisfy his obligation to verify identities.
In not taking steps to verify identities, Pandey caused Expert Financial to violate section 10 of Ontario Regulation 188/08 and as such violated section 3 of Ontario Regulation 187/08.

E. Failure to Comply with Record Keeping Requirements

Section 46(1) of Ontario Regulation 188/08 provides that a mortgage brokerage shall maintain records, including:
1. complete and accurate records of all documents or written information given to or obtained from a borrower or prospective borrower, a lender or prospective lender, an investor or prospective investor, or any other person or entity pursuant to a requirement established under the Act.
Section 2 of Ontario Regulation 410/07 provides that the principal broker shall take reasonable steps to ensure that the brokerage complies with every requirement established under the Act.

E.1 Expert Financial

Expert Financial was unable to provide records for three of the Borrowers. The Director is satisfied that Expert Financial failed to maintain complete and accurate records of all written information or documents given by borrowers, in contravention of section 46 of Ontario Regulation 188/08.

E.2 Pandey

Pandey, as principal broker of Expert Financial, was required to take reasonable steps to ensure that Expert Financial complied with its record-keeping obligations under section 46 of Ontario Regulation 188/08. Those obligations are reflected in Expert Financial’s policies and procedures.
Pandey admitted to deleting his own email communications with mortgage documents. Accordingly, the Director is satisfied that Pandey failed to take reasonable steps to ensure the brokerage’s compliance with its record-keeping obligations, thereby contravening section 2 of Ontario Regulation 410/07.

F. False or Misleading Information on AIRs by Pandey

Section 45(1) of the Act states that no person shall give false or misleading information to the Chief Executive Officer in respect of any matter related to the Act or the regulations.
Section 45(2) of the Act states that no person or entity shall include false or misleading information in any document required to be created, stored or given to the Chief Executive Officer under the Act.
Pandey submitted on his AIRs, including specifically the 2020, 2021, and 2022 AIRs that the brokerage received no referrals and had no complaints. This was false because in 2022, Expert Financial received two complaints and in all three years Expert Financial received referrals from Hussain.
The Director is satisfied that Pandey contravened section 45 of the Act by making false or misleading statements on his AIRs with respect to the lack of referrals and the lack of complaints.

IV. GROUNDS FOR REVOCATION OR REFUSAL

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.
According to section 18(1) of the Act, such circumstances where a licence may be suspended include:
1. 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) of the Act, as the case may be, and such other matters as the Chief Executive Officer considers appropriate; or
2. if the licensee contravenes or fails to comply with a requirement established under the Act.
According to section 1(2) of Ontario Regulation 408/07, the circumstances that the Chief Executive Officer must consider when determining that a mortgage brokerage is not suitable to be licensed include:
1. Whether, having regard to its financial position, the corporation cannot reasonably be expected to be financially responsible in the conduct of its business.
2. Whether the past conduct of any director or officer of the corporation affords reasonable grounds for belief that the business of the corporation will not be carried on in accordance with the law and with integrity and honesty.
3. Whether the corporation is carrying on activities that contravene or will contravene the Act or the regulations if the corporation is licensed.
4. Whether a director or officer of the corporation has made a false statement or has provided false information to the Chief Executive Officer with respect to the application for a licence.
Section 10 of Ontario Regulation 409/07 under the Act states that in determining whether an individual is not suitable to be licensed as a mortgage broker or agent, the Chief Executive Officer is required by sections 14(1) and 16(4) of the Act to have regard to the following prescribed circumstances:
1. Whether the individual’s past conduct affords reasonable grounds for belief that he or she will not deal or trade in mortgages in accordance with the law and with integrity and honesty.
2. Whether the individual is carrying on activities that contravene or will contravene the Act or the regulations if he or she is licensed.
3. Whether the individual has made a false statement or has provided false information to the Chief Executive Officer with respect to the application for the licence.

A. Pandey

As described above, the Director has determined that Pandey has contravened the Act and regulations. Pursuant to sections 18(1) and 19(1) of the Act, his licence can be revoked as a result of these contraventions.
Further, Pandey’s actions demonstrate that he is not suitable to be licensed as a mortgage broker under the Act. In particular, the Director is of the opinion that Pandey’s past conduct provides reasonable grounds for the belief that he will not deal or trade in mortgages in accordance with the law and with integrity and honesty.
Pandey failed to meet some of the most basic obligations of a mortgage broker. He failed to verify the identities of borrowers. Further, he facilitated the unlicensed conduct of an individual that he knew was unlicensed. He harmed the Borrowers and reduced their confidence in the overall mortgage brokering scheme. By making false or misleading statements on the AIRs about the referrals and complaints, Pandey delayed FSRA’s ability to intervene and protect the public.
The seriousness of Pandey’s misconduct is compounded by the fact he was the principal broker of Expert Financial and had a heightened responsibility regarding the regulatory requirements of the Act and its regulations.

B. Expert Financial

The Director has determined that Expert Financial is no longer suitable to be licensed as a mortgage brokerage under the Act and that its licence should be revoked.
Pandey is the principal broker of Expert Financial. His wife, a non-licensee, is now the sole director and officer but Pandey was a director until June 2022. Pandey’s actions are indistinguishable from Expert Financial.
The Director is satisfied that criteria 2 and 3 of section 1(2) of Ontario Regulation 408/07 apply to Expert Financial. As described above, Pandey will not carry on business in accordance with the law and with integrity and honesty. Expert Financial is also carrying on activities that contravene or will contravene the Act or the regulations if the corporation is licensed.

V. GROUNDS FOR IMPOSING ADMINISTRATIVE PENALTIES

The Director is satisfied that imposing administrative penalties on Hussain, Pandey, Expert Financial, and Virk under section 39(1) of the Act will satisfy one or both of the following purposes under section 38(1) of the Act:
1. To promote compliance with the requirements established under the Act.
2. To prevent a person from deriving, directly or indirectly, any economic benefit as a result of contravening or failing to comply with a requirement established under this Act.
Administrative penalties in the present circumstances will encourage agents, brokers, principal brokers, brokerages, and non-licensees to comply with their obligations under the Act.
The imposition of administrative penalties also prevents Hussain, Pandey and Expert Financial from benefiting economically from their non-compliance with the Act.
In determining the amount of the administrative penalty below, the Director has considered the following criteria as required by section 3(1) of Ontario Regulation 192/08:
1. The degree to which the contravention or failure was intentional, reckless, or negligent.
2. The extent of the harm or potential harm to others resulting from the contravention or failure.
3. The extent to which the person or entity tried to mitigate any loss or take other remedial action.
4. The extent to which the person or entity derived or reasonably might have expected to derive, directly or indirectly, any economic benefit from the contravention or failure.
5. Any other contraventions or failures to comply with a requirement established under the Act or with any other financial services legislation of Ontario or of any jurisdiction during the preceding five years by the person or entity.
The Director is satisfied, having regard to all the circumstances, that the amount of the penalties proposed is not punitive in nature, and that the amounts are consistent with one or both purposes of section 38 of the Act.

A. Hussain

In respect of the first criterion, the Director is satisfied that Hussain acted intentionally. He was aware of the requirement to be licensed, as he attempted to become licensed in 2014 and 2022. Despite his unlicensed status, he acted as an agent and held himself out on social media as a “mortgage broker.” He led clients and others to believe that he was licensed and dealt in mortgages despite his unlicensed status.
In respect of the second criterion, the harm to the public was significant. Hussain’s actions led some of the Borrowers into last-minute, high fee mortgages at significant cost. He deprived the Borrowers of the protections of the Act, including errors and omissions insurance, which put them at further risk.
In addition, the harm to the sector and licensing regime were significant. Confidence in the licensing system was undermined by a non-licensee working as an agent, arranging mortgages, and taking illegal “downpayments.” Consumers need to be able to trust that those holding themselves out as mortgage agents or brokers in Ontario are licensed and meet the accompanying requirements, like suitability, and education.
In respect of the third criterion, the Director is aware that a portion of the funds that Hussain took were eventually returned to Borrowers. However, Hussain still owes the Borrowers approximately $405,000.
In respect of the fourth criterion, the Director is satisfied that Hussain gained significant economic benefit. He received from Pandey at least $97,000 in commissions. He has also kept from the Borrowers approximately $405,000 of “downpayments”.
In respect of the fifth criterion, the Director is aware of related criminal charges, but not of any contraventions under other financial services legislation within the proceeding five years by Hussain.

B. Pandey and Expert Financial

In respect of the first criterion, the Director is satisfied that Pandey acted intentionally with respect to facilitating Hussain’s unlicensed work. He was aware of the requirement to be licensed, and he knew that Hussain was unlicensed. He also acted intentionally when he filled out the AIRs to indicate that the brokerage had not received any referrals or complaints, despite knowing that two of the Borrowers had complained and that he had received referrals from Hussain.
Pandey acted recklessly in not verifying the identities of the borrowers, who he did not meet. Further, he acted recklessly in not maintaining the records that Expert Financial is required to keep.
In respect of the second criterion, the harm to the public was significant. As discussed above, Hussain was able to present as a mortgage agent or broker and conduct mortgage business for years without a licence because of Pandey and Expert Financial’s facilitation. In addition to the downpayments that have not been returned to the Borrowers, some Borrowers were placed into mortgages with high fees.
Further, confidence in the sector and licensing system were undermined by Pandey allowing Hussain to work as a mortgage agent without the regulatory supervision that comes with being a licensee. He paid Hussain for these illegal actions. Without the mortgage facilitation and compensation provided by Pandey, Hussain would not have had the means or incentive to work as an unlicensed mortgage agent.
In respect of the third criterion, the Director is not aware of any remedial action by Pandey and Expert Financial.
In respect of the fourth criterion, the Director is satisfied that Pandey derived significant economic benefit from his actions. He received at least $97,000 in commissions that he kept for the mortgages that were done with Hussain.
In respect of the fifth criterion, the Director is not aware of any other contraventions or failures to comply with a requirement established under the Act or with any other financial services legislation of Ontario or of any jurisdiction during the preceding five years by Pandey.

C. Virk

In respect of the first criterion, Virk acted recklessly. He knew or ought to have known that Hussain was unlicensed and that he was assisting Hussain with unlicensed mortgage brokering and with holding out as an agent or broker.
In respect of the second criterion, the harm to the public was significant. While others also facilitated Hussain’s illegal mortgage operation, so did Virk. Virk helped deprive borrowers of the protections offered by brokerage oversight, such as the accompanying insurance and suitability obligations. He also harmed confidence in the mortgage brokering sector by facilitating the work of a non-licensee.
In respect of the third criterion, the Director is aware that Virk initiated a complaint to the police regarding Hussain.
In respect of the fourth criterion, the Director is satisfied that Virk reasonably expected to receive commissions totaling 1% of the transactions he referred to Hussain. Although Hussain ultimately did not pay Virk, Virk expected to benefit economically from the arrangement. Virk, however, lost $20,000 that he paid to Hussain.
In respect of the fifth criterion, the Director is not aware of any other contraventions or failures to comply with a requirement established under the Act or with any other financial services legislation of Ontario or of any jurisdiction during the preceding five years by Virk.

VI. GROUNDS FOR IMPOSING COMPLIANCE ORDER ON HUSSAIN

Section 35(1) of the Act provides that a compliance order can be issued on a person if the Chief Executive Officer or his delegate is satisfied that the person:
1. is committing any act or pursuing any course of conduct that contravenes or does not comply with a requirement established under this Act;
2. is pursuing any course of conduct that might reasonably be expected to result in a state of affairs that would contravene or not comply with a requirement established under this Act; or
3. has committed any act or pursued any course of conduct that contravenes or does not comply with a requirement established under this Act.
The Director is satisfied that (a) and (c) are applicable in the present circumstances.
As described above, Hussain has contravened the Act. In particular, Hussain has presented himself as a mortgage agent or broker, including using the protected titles of “mortgage agent” and “mortgage broker” on social media in contravention of section 11 of the Act. Hussain also acted as an unlicensed agent with the Borrowers in contravention of section 2(3).
Further, Hussain continues to violate the Act. His social media account referring to himself as an agent or broker remains active. He has tried to refer more consumers to Pandey as recently as December 2023. FSRA has also received 7 additional complaints relating to Hussain’s conduct.
The public remains at risk. The proposed compliance order will help protect the public from future harm from Hussain’s unlicensed conduct.
Such further and other reasons as may come to the Director’s attention.

DATED at Toronto, Ontario, July 5, 2024.

Original signed by

Elissa Sinha
Director, Litigation and Enforcement

By delegated authority from the Chief Executive Officer

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NOTICE OF PROPOSAL TO REVOKE LICENCES, TO ISSUE COMPLIANCE ORDER AND TO IMPOSE ADMINISTRATIVE PENALTIES