The Ontario Securities Commission has concluded its investigation into the sale to investors of hotel suites in Toronto’s Trump International Hotel and Tower and decided not to take action.
“After a thorough review of the matter, we have determined not to pursue regulatory action,” Carolyn Shaw-Rimmington, a spokeswoman for the commission, said in an emailed statement.
The regulator began looking into the matter after a series of investors complained that they are losing money on the suites. Talon International Development Inc., the tower’s developer, has been at the centre of the controversy.
Some investors alleged that Talon broke an agreement with the OSC by giving them financial projections before they bought their units that suggested the investments would be lucrative, but that actual rates for rooms and hotel occupancy have both been lower than expected, costing them tens of thousands of dollars. A number of investors are suing Talon, which had insisted it did not provide investors with financial forecasts.
Talon began selling units in the Trump building in late 2004. The 65-storey tower has 118 normal condominiums, and 261 “hotel condos,” the latter of which are at the centre of the recent controversy.
The hotel condos were investment properties that people could buy and choose to stay in as much as they wanted. The investor could also sign up for a reservation program so that when they were not in the room it would be placed into a pool that available for hotel guests. The investor would then receive revenues based on the hotel rates, but would also have to pay hotel operating expenses and other costs. They would be responsible for the cost of things ranging from staffing costs for the reception desk to toilet paper and slippers for the room.
An OSC exemption allowed the developers to market the units without a full prospectus, but one of the conditions was that no financial projections would be given to prospective buyers.