IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act, 2006,
S.O. 2006, c.29, as amended (the “Act”), in particular sections 16 and 21;

AND IN THE MATTER OF KAREN GRAHAM

NOTICE OF PROPOSAL TO REFUSE TO RENEW LICENCE

TO: Karen Graham

TAKE NOTICE THAT pursuant to sections 14 and 21 of the Act, 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 refuse to issue a Mortgage Agent, Level 2, licence to Karen Graham.

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. The Applicant, Karen Graham (“Graham”), is not suitable to be licensed as a mortgage agent. Between 2018 and 2023 Graham applied eight (8) times to FSRA to be licensed as a mortgage agent under the Act. On all applications, Graham made a false statement or provided false information to the Chief Executive Officer.
2. These are the reasons for the proposal by the Director to refuse to renew the Mortgage Agent Licence, Level 2, to Graham.

II. BACKGROUND

FSRA Licensing History and Licence Application Dates

3. Graham was initially licensed under the Act on July 5, 2018, and was licensed until the licence expired on March 31, 2020.
4. Graham reapplied and was actively licensed between June 24, 2020, and April 15, 2021, when the sponsoring brokerage terminated sponsorship.
5. From April 15, 2021, Graham remained without a sponsoring brokerage until the licence expired on March 31, 2022.
6. On June 1, 2022, (June 2022 Application) Graham submitted a renewal application with sponsoring brokerage “A”. On June 24, 2022, the sponsoring brokerage withdrew sponsorship.
7. On September 19, 2022, (September 2022 Application) Graham again submitted a renewal application with sponsoring brokerage “B”. That sponsorship was withdrawn on November 2, 2022.
8. On January 13, 2023, (January 2023 Application) Graham submitted a third renewal application with sponsoring brokerage “C”. That sponsorship was withdrawn on February 10, 2023.
9. On July 26, 2023, (the “July 2023 Application”) Graham submitted a fourth renewal application under the Act with sponsoring brokerage “D”.
10. Graham is not currently licensed under the Act.

Court Judgment

11. On April 17, 2003, Graham was involved in a car accident where she was deemed to be at fault. At the time of the accident, Graham was operating her vehicle without the mandatory minimum automobile insurance coverage.
12. As a result of being an uninsured motorist, Graham was personally sued civilly by Aviva Insurance Company of Canada. On December 28, 2004, a default judgment was entered against Graham and a co-defendant in the amount of $27,696.60, plus $816.50 for costs (the “Aviva Judgment”).
13. To date, Graham has neither acknowledged nor has she satisfied the judgment against her.

Bankruptcy

14. In or around March 2007, Graham filed for bankruptcy which was discharged on February 1, 2010.

FSRA Applications

15. Graham submitted multiple applications between May 2018 and July 2023. In all the applications, Graham made a false statement or provided false information to questions intended to assess her suitability for licensing. Graham declared she had truthfully answered all application questions, and certified she understood that “providing false, misleading or incomplete information may be sufficient grounds to reject the application.
16. Graham answered “no” to the following questions on all applications submitted to the CEO between 2018 and 2023:
    1. “Have you ever been successfully sued or has a complaint ever been made against you to a regulatory body in any province, territory, state or country that was or is based in whole or in part on fraud, theft, deceit, misrepresentation, forgery, or similar conduct; or based in whole or in part, on professional negligence or misconduct (including claims paid by your errors or omissions insurance carrier or bonding company.) [Emphasis added]
    2. “Have you ever declared bankruptcy or made a voluntary assignment in bankruptcy, or are you currently an undischarged bankrupt or are you currently a defendant in any civil proceeding or are there any unsatisfied judgments imposed by a civil court in Canada or elsewhere against you personally? (If yes, include the trustee’s name and address, location of the bankruptcy filing, Assignment in Bankruptcy or Receiving Order Statement of Affairs, a list of creditors and an explanation as to the circumstances of the bankruptcy. Keep your documents handy. Once we review your application you may be required to email us electronic copies. [Emphasis added]
17. Each time she failed to disclose the Aviva Judgment and the 2007 Bankruptcy, Graham made a false statement or provided false information on the applications for a licence.

November 7, 2022, Warning Letter

18. On November 7, 2022, FSRA issued a warning letter to Graham requiring her to disclose the Aviva Judgment and the 2007 bankruptcy on all future applications.
19. Notwithstanding the warning letter, Graham did not disclose the Aviva Judgment or the bankruptcy on both the January 2023 Application, and July 2023 Application.

III. GROUNDS FOR REFUSAL TO ISSUE LICENCE

20. Section 16(4) of the Act states that the Chief Executive Officer shall issue a licence to an applicant who satisfies the prescribed requirements for the licence unless the Chief Executive Officer believes, on reasonable grounds, that the applicant is not suitable to be licensed having regard to such circumstances as may be prescribed and such other matters as the Chief Executive Officer considers appropriate.
21. Section 10 of Ontario Regulation 409/07 states that in determining whether an individual is not suitable to be licensed as a mortgage agent, the Chief Executive Officer is required by subsections 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 the 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.
22. FSRA assesses suitability for licensing of applicants to ensure consumers receive competent and ethical mortgage brokering services from licensed mortgage agents. Consumers rely on licensees to understand their options to make informed decisions about important financial decisions related to the purchase and refinancing of properties.
23. The Mortgage Broker Regulators’ Council of Canada (MBRCC) Code of Conduct for the Mortgage Brokering Sector (Code of Conduct) has been adopted by FSRA into its supervisory framework and can also be used to assess suitability with regard to the prescribed factors from section 10 of Ontario Regulation 409/07. The Code of Conduct has ten principles that outline professional conduct that Canadians can expect when working with Mortgage Brokers. The ten principles listed are: Compliance / Outcomes, Accountability, Honesty, Competence, Suitability, Disclosure, Management of Conflicts of Interest, Security and Confidentiality, Stewardship, and Co-operation with Regulator.
24. Through her false statements on every application submitted to FSRA, Graham has demonstrated she cannot act in accordance with at least five (5) of the 10 common principles of conduct in the Canadian mortgage brokering sector. Firstly, by not paying or even acknowledging the outstanding civil Judgement against her, she has failed to demonstrate accountability for her actions and her conduct suggests a willingness to ignore court-ordered sanctions. Graham may similarly disregard the requirements of the Act and orders of the CEO. Secondly, knowingly providing false information on all her applications to FSRA is a basis for concern that she will be unable to provide meaningful and honest disclosure in a timely manner to her clients. Thirdly, regulated persons should act ethically, with integrity and respect. Integrity implies trustworthiness. An applicant who repeatedly provides false information on an application is not trustworthy. Finally, Graham’s conduct throughout the application process has demonstrated an inability or unwillingness to cooperate with the Regulator.
25. There are reasonable grounds to believe that Graham is not suitable to be licensed as a mortgage agent. Graham demonstrated a pattern of providing false statements or false information by failing to disclose the Aviva judgment and the 2007 bankruptcy. That pattern continued after FSRA warned Graham in 2022. Further, Graham failed to satisfy a court judgment against her. Graham’s past conduct calls into question her ability or willingness to comply with the requirements of the Act and gives the Director reasonable grounds for belief that Graham will not deal or trade in mortgages in accordance with the law and with honesty and integrity.
26. The public interest cannot be adequately protected by attaching terms or conditions to the licence.
27. Such further and other reasons as may come to my attention.

DATED at Toronto, Ontario, November 21, 2023

Original signed by

Elissa Sinha
Director, Litigation and Enforcement

By delegated authority from the Chief Executive Officer

Si vous desirez recevoir cet avis en français, veuillez nous envoyer votre demande par courriel immediatement a : contactcentre@fsrao.ca.