FSRA takes enforcement action against Hi-Rise Capital Ltd. and Dimitrios (“Jim”) Neilas
The Financial Services Regulatory Authority of Ontario (“FSRA”) issued orders revoking the mortgage brokerage licence and mortgage administrator licence of Hi-Rise Capital Ltd., (“Hi-Rise”) and imposing administrative penalties in the total amount of $350,000. FSRA also issued an order and is imposing administrative penalties on Dimitrios (“Jim”) Neilas (“Jim Neilas”) in the total amount of $38,888.
Hi-Rise acted as the mortgage brokerage and mortgage administrator for syndicated mortgage loans (“SML”) on five syndicated mortgage investment projects (“Projects”). Jim Neilas was a mortgage broker with Hi-Rise. He was also the principal broker of Hi-Rise until December 2017. In addition, he was the owner of Hi-Rise and the borrowers/developers of the Projects.
The Financial Services Commission of Ontario (“FSCO”), the previous regulator before FSRA, examined eleven non-qualified syndicated mortgage investments (“NQSMI”) across the Projects. FSCO issued a notice of proposal (NOP) against Hi-Rise and Jim Neilas for various contraventions. Hi-Rise and Jim Neilas requested hearings before the Financial Services Tribunal (Tribunal).
FSRA, Hi-Rise and Neilas have recently settled the proceedings before the Tribunal. FSRA issued the above noted orders as a result of the settlement.
As part of the settlement, Hi-Rise (as mortgage brokerage and mortgage administrator) and Jim Neilas (as mortgage broker and the principal broker of Hi-Rise) admitted to a range of contraventions under the Mortgage Brokerage Lenders and Administrators Act as well as the relevant underlying facts.
The settlement reflects the legislation in place at the time, including the administrative penalties available, applied to the facts of the case and the specific contraventions as well as the administrative penalties imposed by the Tribunal in the past.
Since being established in June 2019, FSRA immediately improved the supervision of non-qualified syndicated mortgage investments. FSRA began real-time supervision of new NQSMI transactions, a new rule took effect requiring brokerages to provide disclosure materials up front, and in November 2019, FSRA provided clarity to investors and mortgage brokers by sharing guidance that clearly defined the hallmarks of a high risk NQSMIs. Effective July 1, 2021, FSRA and the Ontario Securities Commission share the oversight of NQSMIs.
FSRA is working to protect consumers through its monitoring and enforcement activities.
FSRA continues to work on behalf of all stakeholders, including consumers, to ensure financial safety, fairness, and choice for everyone.
Learn more at www.fsrao.ca.
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Sr. Media Relations and Digital Officer
Financial Services Regulatory Authority
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