A broker of record for a large brokerage becomes aware that one of their salespersons has misrepresented a material fact to a buyer, resulting in a significant financial loss for the buyer. The broker of record promptly reports the incident to RECO and takes immediate internal disciplinary action against the salesperson. Under what circumstances might the broker of record still be found in contravention of REBBA, 2002?

Question: A broker of record for a large brokerage becomes aware that one of their salespersons has misrepresented a material fact to a buyer, resulting in a significant financial loss for the buyer. The broker of record promptly reports the incident to RECO and takes immediate internal disciplinary action against the salesperson. Under what circumstances might the broker of record still be found in contravention of REBBA, 2002?

Answer options:

• If the misrepresentation was proven to be minor and had no significant impact. ✅ If the broker of record failed to implement adequate supervisory systems to prevent such an occurrence.
• If the salesperson apologized directly to the buyer and offered a partial refund.
• If the brokerage had liability insurance that covered the salesperson's actions.

Correct answer: If the broker of record failed to implement adequate supervisory systems to prevent such an occurrence.

Explanation: Brokers of record have a significant responsibility under REBBA, 2002 to ensure proper supervision of all registrants employed by the brokerage. Even with prompt reporting, a failure to implement adequate supervisory systems could lead to a finding of contravention against the broker of record.