A mortgage agent working under Principal Broker Emily offers an investment opportunity in a syndicated mortgage to an unsophisticated investor in Toronto's Little Italy, without providing the mandatory Investor Disclosure Statement (Ontario Form 1.2) or ensuring the investor understands the risks. The investor subsequently loses a significant portion of their investment. What potential discipline could Emily face from FSRA, given her supervisory role?

Question: A mortgage agent working under Principal Broker Emily offers an investment opportunity in a syndicated mortgage to an unsophisticated investor in Toronto's Little Italy, without providing the mandatory Investor Disclosure Statement (Ontario Form 1.2) or ensuring the investor understands the risks. The investor subsequently loses a significant portion of their investment. What potential discipline could Emily face from FSRA, given her supervisory role?

Answer options: ✅ Financial penalties, suspension or revocation of her Principal Broker license, and a requirement for enhanced supervision of her brokerage.

• A formal warning letter from FSRA, advising her to improve her supervision practices.
• No direct discipline, as the agent is solely responsible for their individual actions and disclosures.
• A mandatory order to personally compensate the investor for their losses, without further regulatory action.

Correct answer: Financial penalties, suspension or revocation of her Principal Broker license, and a requirement for enhanced supervision of her brokerage.

Explanation: Under the MBLAA, Principal Brokers are directly responsible for the conduct of their agents and for ensuring compliance with all regulatory requirements, including proper disclosure for investment products like syndicated mortgages (Ontario Form 1.2). Failure to adequately supervise can result in significant disciplinary action, including fines, license suspension, or revocation.