A Toronto-based mortgage investment firm and its CEO have agreed to settle allegations that they violated securities law by selling shares without registration.
An Ontario Securities Commission (OSC) hearing panel approved a settlement with Kuber Mortgage Investment Corp. and CEO Sutharsan Kunaratnam that sees them to agree to pay a $400,000 administrative penalty, along with $30,000 in costs, and to follow the terms of an undertaking.
The undertaking includes a commitment for the firm to comply with registration requirements; to revise its offering memorandum; to hire an exempt market dealer to review the adequacy of the know-your-client and suitability documentation the firm collected on its existing investors; and to unwind any trades deemed unsuitable.
The settlement follows allegations that Kuber sold $26 million worth of preferred shares to approximately 200 investors in the exempt market, largely without the involvement of a registered dealer. Doing so violates registration requirements.
The settlement noted several mitigating factors, including that the respondents cooperated with regulators and had no prior record, and that Kunaratnam “has accepted responsibility and demonstrated his desire to make things right.”
The settlement added that Kunaratnam voluntarily completed two securities industry courses and paid the $400,000 penalty personally “so as not to affect the dividend distributions payable to Kuber’s investors.”