IN THE MATTER OF the Insurance Act, R.S.O. 1990, c.I.8, as amended (the “Act”), in particular sections 392.5, 407.1, 441.2 and 441.3;

AND IN THE MATTER OF Jonathan Matthew Warden.

NOTICE OF PROPOSAL TO REVOKE LICENCE
AND TO IMPOSE AN ADMINISTRATIVE PENALTY

TO: Jonathan Matthew Warden

TAKE NOTICE THAT pursuant to sections 392.5 and 407.1 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 life and accident & sickness insurance agent licence issued to Jonathan Matthew Warden (“Warden”).

AND TAKE NOTICE THAT pursuant to section 441.3 of the Act, and by delegated authority from the Chief Executive Officer, the Director is proposing to impose an administrative penalty in the amount of $10,000 on Warden for failing to answer promptly, explicitly, and completely to an inquiry in the manner and within the period specified contrary to section 442.1(5) of the Act.

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 407.1(2), 407.1(3), 441.3(2) AND 441.3(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

For additional copies of the Request for Hearing Form (Form 1), visit the Tribunal’s website at www.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 5 of Ontario Regulation 408/12, 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.

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

These are the reasons of the Director to revoke Warden’s life insurance agent licence and to impose an administrative penalty on Warden.
Warden facilitated DT, a former licensee, continuing to work as an insurance agent despite knowing that DT was unlicensed. Further, Warden failed to cooperate with an investigation by an insurer and failed to respond promptly, explicitly, and completely to inquiries by FSRA, slowing down the investigation and putting the public at risk.
An agent who enables and conceals unlicensed activity, and who fails to cooperate promptly and completely with the regulator is not suitable to be licensed.

II. BACKGROUND

Warden is a life insurance agent (licence # 21198812) under the Act. He was first licensed on November 19, 2021. His licence expires on November 18, 2025.
DT was a licensed life insurance agent under the Act. DT’s licence expired on February 7, 2019. DT has been the subject of two Notices of Proposal from FSRA for unlicensed activity under the Act. The first, dated January 25, 2023, is currently pending before the Tribunal. The second, dated April 24, 2023, was uncontested and resulted in an administrative penalty of $50,000.
Warden was initially contracted with two Managing General Agencies (“MGAs”), OM Financial Inc. (“OM Financial”) and BridgeForce Financial Group Inc. (“BridgeForce”). He was contracted to sell for insurers including Canada Life Assurance Company (“Canada Life”), and Manufacturers Life Insurance Company (“Manulife”). BridgeForce terminated Warden’s contract on November 1, 2022.
On December 1, 2022, Manulife submitted to FSRA a Life Agent Reporting Form (“LARF”) regarding Warden with allegations of possible “fronting.”
After Warden refused to cooperate with the investigation by Manulife, OM Financial terminated Warden’s contract on December 19, 2022. Warden’s contracts with Manulife and Canada Life were also terminated on December 19, 2022.

III. FACTS

A. Warden’s Relationship with DT

Warden was previously an insurance client of DT. DT helped Warden complete the agent licensing exam and to get licensed as an insurance agent. After getting licensed, Warden began working with DT and continues to work with him.
Warden signs paperwork prepared by DT’s assistant and serves as the Agent-of- Record (“AOR”) for clients provided to him by DT. DT has an existing list of clients and continues to solicit clients, including through a newsletter. At least 12 clients of DT had Warden as their AOR.
DT provides clients with insurance advice, including the selection of specific policies and segregated funds that correspond to his investment philosophy. He changes the clients’ insurance policies and their AORs frequently.

B. Warden’s Relationship with Clients

As AOR, Warden submitted applications for insurance on behalf of clients, including ST and SD, to various insurers. The forms were typically prepared by DT’s assistant and reflected advice DT gave to consumers, however the forms said they were prepared by Warden and he signed on the advisor line. This concealed DT’s unlicensed activity and allowed Warden to profit from it.
A FSRA Investigator (the “Investigator”) interviewed three consumers who were serviced by Warden as their AOR. Two consumers, ST and SD, reported receiving insurance advice primarily from DT and very limited engagement with Warden.
Some consumers serviced by Warden as their AOR refused to talk to the Investigator. DT has instructed clients not to communicate with FSRA and/or to mislead investigators.

C. Warden’s Non-Cooperation with FSRA Inquiries

On February 17, 2023, the Investigator sent an inquiry letter to Warden under Sections 442.1 and 442.3 of the Act (the “First Inquiry Letter”). The First Inquiry Letter required that Warden provide specific information by March 3, 2023. It also required Warden to contact the Investigator before February 24, 2023, to arrange an interview.
Specifically, Warden was required to provide the source of his leads, a list of clients referred from DT, notes from client meetings, and the details of any compensation sharing arrangements that he had with other individuals or entities.
The First Inquiry Letter made specific reference to section 442.1(5) of the Act and explained that Warden was required to respond to the inquiry promptly, explicitly, completely, and in the manner and within the period specified in the letter.
On February 23, 2023, Warden confirmed receipt of the First Inquiry Letter and told the Investigator that he was seeking legal advice. The next day, the Investigator requested Warden provide his counsel’s contact information.
Warden corresponded with the Investigator on March 14, 15 and 22, 2023. Warden provided some minimal information in respect of some of the questions in the First Inquiry Letter, but he did not provide all of the requested information or a date to attend an interview and suggested that the investigation was illegal.
Warden did provide the source of his leads, who he identified as SW, a licensee under the Act.
On May 9, 2023, the Investigator sent a second inquiry letter to Warden (the “Second Inquiry Letter”). The Second Inquiry Letter reiterated that the information requested in the First Inquiry Letter must be provided and that Warden was required to contact the Investigator by May 16, 2023, to arrange an interview.
On May 11, 2023, Warden emailed the Investigator, noting that he would be out of the country until May 23, 2023, and that he would contact the Investigator on his return.
On September 20, 2023, the Investigator sent a third inquiry letter to Warden (the “Third Inquiry Letter”) and reminded him that he had not responded to the First and Second Inquiry letters. The First, Second and Third Inquiry Letters are referred to collectively as the “Inquiries”).
On September 27, 2023, Warden’s lawyer informed FSRA that Warden would shortly be retaining him.

D. Warden’s FSRA Interview

On January 24, 2024, the Investigator interviewed Warden.
During the interview, Warden stated that DT was his mentor and that he agreed to pay DT $400/hour for “training.” Warden said he paid $55,000 to DT prior to being licensed and additional funds monthly. Warden did not have a record of this agreement, alleged training sessions, or the payments made to DT.
Warden stated that DT had many clients that were looking to DT for “representation” but since he was unlicensed, DT would “refer them to” Warden.

E. Warden’s Commissions

Between November 19, 2021, and December 19, 2022, Warden earned $188,923.92 in gross commissions. Net of chargebacks and holdbacks, he received $158,447.26.

IV. GROUNDS FOR REVOKING LICENCE

Section 392.5(1) of the Act states that the Chief Executive Officer may revoke or suspend an insurance agent’s licence if the agent has failed to comply with the Act, the regulations or a condition of the licence. As described below, Warden has failed to comply with sections 442.1(5) and 442.3(3) of the Act.
Further, section 392.5(2) of the Act states that the Chief Executive Officer may revoke or suspend an agent’s licence if any prescribed grounds for revoking or suspending a licence, or for refusing to issue a licence, exist.
The prescribed grounds are set out in sections 4 and 8 of O. Reg. 347/04. The ground listed in section 8(d) of O. Reg. 347/04 is that the licensee has demonstrated incompetence or untrustworthiness to transact the insurance agency business for which the licence has been granted.
The Director has reasonable grounds to believe that Warden is not suitable to be licensed under the Act. Warden has demonstrated incompetence and untrustworthiness to transact insurance business in multiple ways including by facilitating DT’s work as an unlicensed agent; failing to cooperate with an insurer’s investigation; and failing to answer promptly, explicitly, and completely the Inquiries, including obfuscating his relationship with DT.
Warden’s continued facilitation of DT’s unlicensed activities demonstrates both incompetence and untrustworthiness. Agents are expected to know of the obligation to be licensed, and facilitating the unlicensed activities of others demonstrates a lack of understanding of their obligations. Further, it demonstrates a willingness to assist others in breaking the law.
In addition, Warden’s lack of full cooperation during the investigation demonstrates untrustworthiness. FSRA relies on licensees to provide it with truthful and accurate information in order to regulate the insurance sector and to protect the public.
The Director is satisfied that a sanction less than revocation, such as suspension or licence conditions, would not reflect the severity of Warden’s conduct and would not adequately protect the public. Agents who do not cooperate fully with insurer and FSRA investigations cannot be trusted to abide by conditions.

V. CONTRAVENTIONS OR FAILURES TO COMPLY WITH THE ACT

Section 442.1(5) states that a person to whom an inquiry is directed to shall answer promptly, explicitly and completely, in the manner and within the period specified by the Chief Executive Officer or the designate.
Similarly, section 442.3 states that a person to whom an inquiry is directed is under a duty to provide full information and records about various listed matters including activities related to the business of a person who holds a licence under the Act.
Warden was required to respond to the Inquiries by providing the documents and information required, and by attendance at an interview to provide information verbally. Warden did not provide the required information promptly or completely.
Warden’s failure to respond to the Inquiries promptly, explicitly and completely delayed and hindered FSRA’s investigation into his and others’ potential non- compliance with the Act, including DT.
The Director is satisfied that Warden contravened sections 442.1(5) and 442.3(3) of the Act by failing to answer the Inquiries within the required period, and for failing in his duty to provide prompt, complete information.

VI. GROUNDS FOR IMPOSING AN ADMINISTRATIVE PENALTY

The Director is satisfied that imposing an administrative penalty under section 441.3(1) of the Act for the contravention of section 442.1(5) described above will satisfy both of the following purposes under section 441.2(1):
1. To promote compliance with the requirements established under the Act; and
2. To prevent a person from deriving, directly or indirectly, any economic benefit because of contravening or failing to comply with a requirement established under the Act.
The Director is satisfied that an administrative penalty of $10,000 should be imposed on Warden. The administrative penalty will promote compliance with sections 442.1(5), and 442.3(3) of the Act. Further, it will prevent Warden from deriving an expected economic benefit from his contravention of the Act.
In determining the amount of the administrative penalty, the Director has considered the following criteria as required by section 4(2) of O. Reg. 408/12:
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; and
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.
In respect of the first criterion, the Director is satisfied that Warden acted intentionally in failing to respond promptly and completely to the Inquiries. The Investigator sent him numerous reminders of the requested records and interview. He provided no satisfactory explanation for the delay.
Further, the information Warden provided in response to the Inquiries was not complete or accurate respecting his relationship with DT and interaction with his clients. For instance, Warden initially told the Investigator that another licensee was the source of clients when it was really DT.
In respect of the second criterion, the Director is satisfied that Warden’s conduct created potential harm to others. Obstructing FSRA’s investigation by delaying his responses to the Inquiries and misrepresenting his relationship with DT made it more difficult for FSRA to investigate Warden’s and DT’s conduct.
In respect of the third criterion, Warden took no steps to mitigate the harm caused by his actions.
In respect of the fourth criterion, the Director is satisfied that Warden received an expected economic benefit from his contravention. By not responding promptly and completely to the Inquiries, Warden likely expected to extend his licensing period, as evidence of contraventions or untrustworthiness would be more difficult to identify. Additional time as a licensee has significant economic benefit, as Warden generated $158,447.26 in commissions during just his first 13 months as an agent.
In respect of the fifth criterion, the Director is unaware of any contraventions or failures to comply with a requirement established under the Act or with any other financial services legislation in Ontario or of any jurisdiction during the preceding five years by Warden.
Such further and other reasons as may come to my attention.

DATED at Toronto, Ontario, November 28, 2024.

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.

NOTICE OF PROPOSAL TO REVOKE LICENCE AND TO IMPOSE AN ADMINISTRATIVE PENALTY