A Toronto-based mortgage investment company has been accused of raising $26-million from 200 investors without registering with the Ontario Securities Commission.
The regulator announced Friday it will hold a hearing on March 18 to approve a settlement with Kuber Mortgage Investment Corp. and its founding director, Sutharsan Kunaratnam.
Kuber is one of the latest companies specializing in mortgage investments in Toronto’s red-hot real estate market to have fallen on the radar of Ontario’s securities regulator. The commission currently has another hearing under way into Paramount Equity Financial Corp., which raised $78-million for two mortgage funds from 500 investors between 2014 and 2017. The OSC has also alleged that Paramount did not register and did not file prospectuses.
In the case of Kuber, the OSC alleges that between June, 2016, and January, 2019, Kuber and Mr. Kunaratnam raised the funds without registering – a process which the OSC described as a “cornerstone of Ontario securities law.”
“The registration requirement serves an important gate-keeping function by ensuring that only properly qualified and suitable persons are permitted to trade with or on behalf of the public.”
Mr. Kunaratnam did not respond to requests for comment.
The OSC has alleged in a statement of allegations that, although some of the investments were made, “from time to time” through a registered exempt market dealer, most were not.
Mr. Kunaratnam was the person primarily responsible for promoting the investment and soliciting investors, the OSC alleges. In January, 2019, at the request of the OSC, Kuber ceased trading in securities, except for trades that were distributed through an exempt market dealer, the statement of allegations alleges.
In its offering materials, Kuber told potential investors that it was relying on a 2010 blanket order from the OSC that, it said, allowed it to sell its products without registering, the OSC has charged. The OSC contends that the order “did not provide any relief to the requirement to be registered as a dealer.”
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