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An order that is made regarding a licence holder reflects a situation at a particular point in time. The status of a licence holder can change. Readers should check the current status of a person’s or entity’s licence on the Licensing Link section of FSRA’s website. Readers may also wish to contact the person or entity directly to get additional information or clarification about the events that resulted in the order.
Financial Services Regulatory Authority of Ontario

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, 21, 38 and 39;

AND IN THE MATTER OF Sumit Pal Singh.


NOTICE OF PROPOSAL TO REFUSE TO RENEW LICENCE and
NOTICE OF PROPOSAL TO IMPOSE AN ADMINISTRATIVE PENALTY

TO: Sumit Pal Singh

TAKE NOTICE THAT pursuant to sections 16 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 & Enforcement (the “Director”) is proposing to refuse to renew the mortgage agent licence issued to Sumit Pal Singh.

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 of $10,000 on Sumit Pal Singh for receiving remuneration from a person other than his brokerage, contrary to subsection 4(1) of Ontario Regulation 187/08.

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), 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 West, 7th 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. 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

  1. These are reasons for the proposal by the Director to:

    1. Refuse to renew the mortgage agent licence issued to Sumit Pal Singh (“Singh”); and

    2. Impose an administrative penalty of $10,000 on Singh.


    2. II. BACKGROUND

    A. Parties

  2. Singh was licensed as a mortgage agent (licence #M20001196) under the Act from May 26, 2020, until March 31, 2023.

  3. On March 8, 2023, Singh applied to renew his mortgage agent licence.

  4. As a mortgage agent, Singh was licensed through Pineapple Financial Inc. (“Pineapple Financial”) (licence #12830).

    5. B. Dealing in mortgages outside the brokerage

  5. Singh was interviewed by FSRA investigators on May 18, 2023 (the “Interview”). In the Interview, Singh admitted that:

    1. In 2022, a family in Ontario (the “Clients”) entered into an agreement to purchase a property for approximately $1,800,000;

    2. The Clients approached Singh and asked that he arrange a mortgage to enable them to purchase this property;

    3. Singh went to the Clients’ house several times to collect documents related to this purchase;

    4. Singh exchanged approximately 40 emails with the Clients related to this purchase. He used a personal email account for these communications to avoid monitoring by his brokerage;

    5. Singh prepared the Clients’ mortgage application documents and brought them to the Clients for their signature;

    6. Singh claims that he started to submit the mortgage application through his brokerage Pineapple Financial, but didn’t know how to use the software and so didn’t continue;

    7. Instead, Singh contacted a friend, who was also a licensed mortgage agent through a different brokerage. The friend spoke with the Clients and submitted the Clients’ mortgage application to Canadian Mortgages Inc. (“CMI”);

    8. On June 29, 2022, CMI issued two mortgages to the Clients in the amounts of $805,000 and $189,000;

    9. The Clients had agreed to pay Singh $14,952 as a service fee for arranging the mortgages. On July 18, 2022, the Clients provided Singh’s numbered company with a cheque for $7,500, which he cashed. The Clients provided Singh’s numbered company with a second cheque for $7,452, which they cancelled due to insufficient funds; and

    10. Singh has commenced a civil lawsuit against the Clients in an effort to obtain payment of this $7,452.


  6. Pineapple Financial confirmed that they have no records of the Clients or the mortgages that Singh arranged on their behalf.

    7. III. CONTRAVENTIONS OR FAILURES TO COMPLY WITH THE ACT

    A. Dealing in Mortgages not on Behalf of a Mortgage Brokerage

  7. Subsection 2(3) of the Act states that “No individual shall deal in mortgages in Ontario for remuneration, whether direct or indirect, as an employee or otherwise, unless he or she has a mortgage broker’s or agent’s licence and is acting on behalf of a mortgage brokerage or is exempted from the requirement to have such a licence.”

  8. The Director is satisfied that Singh contravened subsection 2(3) of the Act by dealing in mortgages for the Clients for remuneration, without acting on behalf of Pineapple Financial. Singh has admitted that he intentionally used a personal email account to avoid monitoring by his brokerage.

    9. B. Receiving Remuneration from Person Other Than Brokerage

  9. Subsection 4(1) of Ontario Regulation 187/08 states that “A mortgage broker or agent shall not receive, directly or indirectly, any fee or other remuneration for dealing or trading in mortgages from a person or entity other than the brokerage on whose behalf he or she is authorized to deal or trade in mortgages.”

  10. The Director is satisfied that Singh contravened subsection 4(1) of Ontario Regulation 187/08 by receiving a fee of $7,500 from the Clients, a person other than Pineapple Financial, indirectly through a numbered company that Singh controls.

    11. IV. GROUNDS FOR REFUSAL TO RENEW LICENCE

  11. Section 16(4) of the Act states that the Chief Executive Officer shall renew the licence of an applicant who satisfies the prescribed requirements for renewal of 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.

  12. Section 10 of Ontario Regulation 409/07 under the Act provides 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 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 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.

  13. The Director is satisfied that Singh’s past conduct with respect to the Clients affords reasonable grounds for belief that he will not deal or trade in mortgages in accordance with the law and with integrity and honesty.

  14. Singh’s conduct contravened the Act and speaks to a concerted effort to avoid the monitoring and compliance functions of his brokerage, a key aspect of the regulatory scheme. The Director has reasonable grounds for the belief that Singh has demonstrated unwillingness to operate in the mortgage industry in accordance with the law, particularly given his breaches of subsection 2(3) of the Act and subsection 4(1) of Ontario Regulation 187/08.

  15. Given Singh’s actions with respect to the Clients, the Director reasonably believes that he is not suitable for licensing having regard to the circumstances prescribed in paragraphs 1 of section 10 of Ontario Regulation. 409/07.

  16. Accordingly, the Director proposes to refuse to renew the mortgage agent licence issued to Singh.

    17. V. GROUNDS FOR IMPOSING AN ADMINISTRATIVE PENALTY

  17. The Director is satisfied that imposing an administrative penalty on Singh under section 39 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 or entity from deriving, directly or indirectly, any economic benefit as a result of contravening or failing to comply with a requirement established under the Act.


  18. The Director is satisfied that an administrative penalty of $10,000 should be imposed on Singh for receiving remuneration from a person other than his brokerage, contrary to subsection 4(1) of Ontario Regulation 187/08.

  19. In determining the amount of the administrative penalty, the Director has considered the following criteria as required by section 3 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.


  20. In respect of the first criterion, the Director is satisfied that Singh’s actions were intentional. Singh knew that his actions were contrary to the regulations, as evidenced by the fact that he used a personal email account for his communications with the Clients to avoid monitoring by his brokerage.

  21. In respect of the second criterion, the Director is satisfied that Singh’s activities had the potential to cause significant harm. Requiring that all fees flow through a brokerage is key to ensuring that all fees charged are compliant with the Act and regulations. Singh’s breach of this requirement resulted in the Clients paying inflated fees, which increased their cost of borrowing and their risk of default.

  22. In respect of the third criterion, the Director is unaware of any efforts by Singh to mitigate any loss or take other remedial action. To the contrary, Singh has commenced a civil claim against the Clients in an effort to require them to pay him an additional $7,452.

  23. In respect of the fourth criterion, as a result of Singh’s failure to comply with the Act, he received fees of approximately $7,500. He has commenced a lawsuit to obtain payment of an additional $7,452.

  24. In respect of the fifth criterion, the Director is unaware of any further contraventions or failures to comply in the preceding five years by Singh.

  25. The Director is satisfied, having regarded all the circumstances, that the proposed amount of the administrative penalty is not punitive in nature, and the amount is consistent with one or both purposes of section 38 of the Act.

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

DATED at Toronto, Ontario, July 10, 2023

Original signed by

Elissa Sinha
Director, Litigation & Enforcement

By delegated authority from the Chief Executive Officer

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