An Ontario court rejected an appeal by the Financial Services Regulatory Authority (FSRA), which sought to overturn a decision by the Financial Services Tribunal that issued an insurance license to an agent the regulator had rejected.
According to a decision of the Superior Court of Justice, an insurance agent and mutual fund rep, Ishaan Ahuja, sought a hearing before the tribunal after FSRA refused to renew his insurance license in late 2024. Following a hearing, in April, the tribunal overruled the regulator and ordered the licence to be issued.
FSRA then appealed that decision to the court.
In its decision, the court noted that while the tribunal found that the conduct that led FSRA to initially deny the license renewal had occurred — that Ahuja allegedly conducted unlicensed insurance business and made false statements on licensing application — the conduct didn’t necessarily render him unsuitable for licensing.
Among other things, the tribunal found that while Ahuja did conduct unlicensed business between late 2023 and early 2024, after his licence expired, the breach was understandable, given the “highly unusual circumstances” when this took place.
In particular, it found that he asked his firm if he was able to continue doing business after his licence expired, while his renewal application was being processed by the regulator, and was told that he was allowed to do that. However, once he was told by FSRA that this advice was incorrect, he immediately ceased doing business.
Additionally, while the tribunal found that Ahuja made misleading statements on his licensing application, it also concluded that not all false statements are created equal, and that they shouldn’t necessarily result in his licence being denied.
It noted that the Ontario Securities Commission was aware of the conduct that he made false statements about when it issued him a licence as a mutual fund rep.
“This is not a case where the misstatements were designed to hide conduct so egregious (fraud or theft are examples) that it is certain that a licence would be refused,” the tribunal noted.
Ultimately, it concluded that the false statements alone weren’t disqualifying, and that Ahuja should be granted a conditional licence with added supervisory conditions, and ordered to pay a $10,000 penalty.
On appeal, FSRA argued that the tribunal made a number of errors in its decision, including that it failed to give sufficient weight to the false statements, the unlicensed activity and the need to protect consumers.
However, the court disagreed with the regulator, saying, “This is not an error in law. The FSRA is really taking issue with the tribunal’s weighing of the evidence.”
“The FSRA submissions simply invite us to weigh the evidence related to suitability and reach a different result. That is not, however, the function of an appellate court,” the decision noted.
The tribunal’s finding that “Ahuja was suitable to be licensed, subject to the conditions imposed, was within a range of reasonable options and involved the exercise of discretion. It was far from clearly unfit,” it said.
And, it dismissed the regulator’s appeal, saying that “FSRA has failed to demonstrate any error of law or any palpable and overriding error of mixed fact and law.”