IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c.29, as amended (the “Act”), in particular sections 14, 16, 19 and 21;

AND IN THE MATTER OF RENKAI LIN and ZK FINANCIAL INC.

NOTICE OF PROPOSAL TO REFUSE TO RENEW LICENCE AND
REVOKE A LICENCE

TO: Renkai Lin

AND TO:
ZK Financial Inc.
16th Avenue, Unit 3011
Markham, ON L3R 0K7

TAKE NOTICE THAT pursuant to sections 14 and 21 of the Act, by delegated authority from the Chief Executive Officer of the Financial Services Regulatory Authority of Ontario (the “Chief Executive Officer”), the Director Licensing (A), Market Conduct is proposing to refuse to renew the mortgage broker licence issued to Renkai Lin (licence # M18000659).

AND TAKE NOTICE THAT pursuant to sections 19 and 21 of the Act, by delegated authority from the Chief Executive Officer of the Financial Services Regulatory Authority of Ontario (the “Chief Executive Officer”), the Director is proposing to revoke the mortgage brokerage licence issued to ZK Financial Inc. (licence # 13335).

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 refuse to renew the licence of Renkai Lin (“Lin”) and revoke the licence of ZK Financial Inc.
2. The Director believes, on reasonable grounds, that Lin and ZK Financial Inc., are not suitable to be licensed having regard to the circumstances prescribed under the Act and Regulations for conduct contrary to the statute and for failing to make disclosure on multiple consecutive licensing applications and Annual Information Returns.

II. BACKGROUND

FSRA Licensing History and Licence Application Dates

1. Lin has been actively licensed since 2018 (licence number M18000659). He has been the principal broker of ZK Financial Inc. (the “Brokerage”), since 2021.
2. The Brokerage (Corporation Number 1242044-9) has been duly incorporated under the laws of Canada since October 15, 2020. The Brokerage is principally engaged as a mortgage brokerage. Lin is the only corporate Director.
3. The Brokerage (FSRA Licence number 13335) has been licensed under the Act since January 19, 2021.

Criminal Charges

4. On June 29, 2022, Lin was charged under the Criminal Code of Canada and made his first court appearance on August 5, 2022.

FSRA Applications

5. On February 2, 2023, and March 5, 2024, Lin submitted two individual applications for his Mortgage Agent licence. In each application, Lin made a false statement or provided false information by answering “no” to the following questions intended to assess his suitability for licensing:
   1. Have you ever pleaded guilty or been found guilty of an offence under any law in any province, territory, state or country or are you currently the subject of any charges? [Emphasis added].
6. Lin declared he had truthfully answered all application questions, and certified he understood that “providing false, misleading or incomplete information may be sufficient grounds to reject the application.

Annual Information Returns on behalf of ZK Financial Inc

7. Annual Information Returns (AIRs) are collected by FSRA each year to help identify, assess and monitor risk in the mortgage brokering sector. The deadline to file AIRs is March 31 of each year.
8. Only the principal broker of a licensed mortgage brokerage can complete and submit the AIR.
9. As the principal broker, Lin was required to submit AIRs on behalf of the Brokerage. Lin was required to file the Brokerage’s AIR prior to March 31, 2023, to report all information pertaining to the period covering January 1 to December 31, 2022.
10. Lin was required to file the Brokerage’s AIR prior to March 31, 2024, to report all information pertaining to the period covering January 1 to December 31, 2023.
11. The AIR includes questions to assess the suitability of a brokerage. Despite pending charges, at the time of the AIR filed in 2023 and 2024, Lin answered “no” to the following question:
    1. During the reporting period, was the brokerage or any of its Directors, Officers or Partners subject to any charges laid under the laws of any Canadian province / territory?
12. By failing to disclose the criminal charges on each AIR, Lin has made a false statement or provided false information to FSRA. Before submitting each AIR, Lin certified that he was aware it was an offence to make a false statement to the FSRA Chief Executive Officer under the Act, and the information provided in the AIR was true to the best of his information and belief.

GROUNDS FOR REFUSAL TO ISSUE LICENCE

13. 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.
14. 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.
15. Pursuant to section 18(1) of the Act, the Chief Executive Officer may, by order, suspend a licence:
    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. In such other circumstances as may be prescribed.
16. 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 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.
17. 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 regarding 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.
18. Section 1(2) of Ontario Regulation 408/07 states that in determining whether a corporation is not suitable to be licensed as a mortgage brokerage, the Chief Executive Officer is required by subsection 14(1) of the Act to have regard to the following prescribed circumstances:
    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.
19. The Applicant is not suitable to be licensed as a mortgage broker and the Brokerage is not suitable to be licensed as a mortgage brokerage. The Applicant’s repeat failure to disclose the criminal charges to FSRA gives the Director reasonable grounds for belief that the Applicant and Brokerage will not deal or trade in mortgages in accordance with the law and with integrity and honesty if licensed.
20. The public interest cannot be adequately protected by attaching terms or conditions to the licence.
21. Such further and other reasons as may come to my attention.

DATED at Toronto, Ontario, October 24, 2024.

Original signed by

Yovanka McBean
Director Licensing (A), Market Conduct

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.