The Ontario Securities Commission (OSC) is calling on participants in the mortgage market to ensure that they are registered if they intend to trade mortgage securities.
The OSC on Friday announced it has recently entered into settlement agreements with mortgage investment entities (MIEs), mortgage brokers, administrators and their principals, which have been found to be trading securities without registration, and in violation of securities law.
“These settlements involved substantial penalties and costs being levied against businesses and individuals, as well as the requirement to reimburse investors where the investment was not suitable,” the commission says in a statement.
The registration requirements are set out in both securities legislation and regulations, and both the OSC and the Canadian Securities Administrators (CSA) have also issued additional guidance that aims to clarify how these requirements apply to MIEs and firms that invest their assets in mortgages. The OSC is calling on participants in the mortgage business to look into whether they must be registered under these rules.
“If your business involves trading in securities such as units or common shares of a mortgage investment entity, you may require registration with the OSC in addition to registration with the Financial Services Commission of Ontario (FSCO),” says Debra Foubert, director of compliance and registrant regulation at the OSC.
“We encourage these entities to review the registration requirements and obtain legal advice if necessary,” she adds.