FINANCIAL SERVICES TRIBUNAL
2013 ONFST 2
Decision No. M0448-2010-2
Date: 2013/03/12
IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c. 29 (the “Act”), in particular sections 19(1) and 21, and the Mortgage Brokers and Agents Licensing Regulation, O. Reg. 409/07, in particular section 10;
AND IN THE MATTER OF the Notice of Proposal of the Superintendent of Financial Services dated October 13, 2010, to revoke the mortgage agent’s licence of Mr. Giuseppe Strazzeri;
AND IN THE MATTER OF a Request for Hearing filed by Mr. Strazzeri dated October 21, 2010, pursuant to subsection 21(3) of the Act;
AND IN THE MATTER OF the Reasons for Decision of the Financial Services Tribunal dated March 29, 2012;
AND IN THE MATTER OF the Notice of Appeal filed by Mr. Strazzeri with the Divisional Court dated April 27, 2012;
AND IN THE MATTER OF the Judgment of the Divisional Court dated January 9, 2013.
BETWEEN:
GIUSEPPE STRAZZERI
Applicant
- and -
SUPERINTENDENT OF FINANCIAL SERVICES
Respondent
BEFORE:
Mr. Denis Boivin Member of the Tribunal and Chair of the Panel
Mr. Shiraz Bharmal Member of the Tribunal and Member of the Panel
Ms. Heather Gavin Member of the Tribunal and Member of the Panel
PARTIES:
Mr. Bruce C. Robertson, representing the Applicant
Mr. Robert Conway, representing the Respondent
SUPPLEMENTARY REASONS FOR DECISION
On March 29, 2012, the Tribunal concluded that there was clear, convincing and cogent evidence that the Applicant’s past conduct afforded reasonable grounds for a belief that he would not deal or trade in mortgages in accordance with the law and with integrity and honesty. On January 9, 2013, the Ontario Divisional Court described this conclusion as “within the range of possible reasonable outcomes on the evidence before the Tribunal” and concluded that “[t]here [was] no basis for this Court to interfere.”
Nevertheless, the Divisional Court remitted the matter back to the Tribunal to reconsider the order that was ultimately made. In its decision, the Tribunal ordered the Superintendent to carry out his Notice of Proposal to revoke the Applicant’s licence. The Divisional Court described this outcome as being “not outside the range of what was open to the Tribunal in all of the circumstances”. However, the Court found that the decision of the Tribunal failed “to provide some reasons, even if brief, as to why” an order of revocation was appropriate given other, less severe, possible outcomes.
Following the decision of the Divisional Court, the Tribunal invited both parties to make written submissions regarding the appropriate penalty. As a result, counsel for the Applicant submitted that the licence of Mr. Strazzeri be suspended for a period of six months, starting March 29, 2012, and that his license be issued, thereafter, subject to a number of conditions that would expire following a six-month period. These conditions are similar to the ones imposed by the Tribunal in two cases cited by the Applicant, Janet Pereira v. Superintendent of Financial Services (FST Decision No. M0407-2009-2) (“Pereira”) and Patrice De-Ann Gooding v. Superintendent of Financial Services (FST Decision No. M0326-2008-1) (“Gooding”).
For the following reasons, we reject the supplementary submissions made by the Applicant and confirm the order made on March 29, 2012.
Pereira and Gooding can easily be distinguished. These cases involved applicants who were found suitable to be licensed, notwithstanding their respective past conduct. In both decisions, the Tribunal weighed the factors identified in Ian Douglas Henderson v. Superintendent of Financial Services (FST Decision No. M0319-2008-1) (“Henderson”) and concluded that the past conduct relied upon by the Superintendent did not support a belief that the applicants would be unable to deal or trade in mortgages in accordance with the law and with integrity and honesty. In this case, however, the Tribunal reached the opposite conclusion when applying the Henderson factors to the evidence heard. We concluded that the Applicant’s past conduct did afford reasonable grounds for such a belief and that, accordingly, he was unsuitable to remain licensed as a mortgage agent. This conclusion was upheld by the Divisional Court.
We continue to believe that revocation is a proportional response in light of the past conduct established at the Applicant’s hearing. As noted in our decision of March 29, 2012, three former clients lost considerable amounts of money because of the reckless disregard shown by the Applicant towards their financial interests. One client lost most of her pension funds, whereas the two others lost $113,920 from their retirement savings and from the equity accumulated in their family home. In the latter case, the Applicant used his skills as a mortgage specialist in order to help his clients obtain the funds that were invested and lost, the same skills that are now supervised by the Superintendent under the licensing scheme established by the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c. 29. In both cases, the Applicant benefited financially from the reckless investments made with the funds entrusted to him, a fact that all three clients ignored. Furthermore, even though the Applicant paid a price for the investments made with his own funds, he has not been officially reprimanded – in any forum – for the manner in which the funds of his clients were invested and managed. In addition, the Applicant has shown contempt towards the licensing process established by the Act by describing himself as a mortgage broker, despite the nature of the licence issued by the Superintendent. Finally, none of the remorse or professed change in the Applicant’s conduct described in his latest submission was evident during the three-day hearing. On the contrary, during the hearing, the Applicant failed to recognise the seriousness of his past conduct. He did not express any remorse towards his former clients, nor did he accept any degree of responsibility for their significant losses. In essence, his attitude was that all of them were in the same boat – they had all lost money at the hands of a third party named David Braganza. The difference, however, is that he was the one providing financial services.
Revocation is one of the most serious enforcement measures available under the Act and regulations. The Tribunal is mindful of this fact. However, we are also cognisant of the following reality: in itself, revocation does not amount to a lifetime ban from the mortgage industry. On the contrary, the legislative scheme allows agents and brokers whose licences have been revoked to apply for new licences once twelve months have passed from the date of revocation: O. Reg. 409/07, s. 8. When reapplying for a licence, the individual in question must satisfy the Superintendent that new or other evidence is available or that material circumstances have changed. Accordingly, revocation protects the public in two distinct ways: 1) by taking away the licence of someone, like the Applicant, found unsuitable to remain licensed on the basis of clear, convincing and cogent evidence, and 2) by encouraging this person to change the conduct that formed the basis of the order, if this person wishes to regain the privilege of a licence. In our view, a suspension of the Applicant’s licence would not adequately protect the public. Given the nature of his past conduct, he must be given greater incentive to change and the Superintendent must be given the opportunity to assess whether he has been successful in this regard.
DATED at the City of Toronto, this 12th day of March, 2013.
“Denis Boivin”
Denis Boivin Member of the Tribunal and Chair of the Panel
“Shiraz Bharmal”
Shiraz Bharmal Member of the Tribunal and Member of the Panel
“Heather Gavin”
Heather Gavin Member of the Tribunal and Member of the Panel