Ontario regulator levies $200,000 in penalties for deception and churning

The Financial Services Regulatory Authority of Ontario (FSRA) announced June 2 that it has revoked Yogender Jain’s life accident and sickness agent’s license and imposed administrative penalties on Jain and on Gold Standard Group Inc., of which Jain is a part owner.

According to the regulator’s notice of proposal, which Jain and Gold Standard have not contested, Jain contravened the province’s Insurance Act and regulations by making false statements and by inducing insureds with existing contracts to surrender those contracts, despite the fact that it was decidedly not in their best interests to do so. The firm and Jain also allowed compensation to be paid to an unlicensed agent with a history of disciplinary action and provided false and misleading information to FSRA during the course of its investigation. The firm is also accused of making false or misleading statements to insurers.

In addition to having his license revoked, Jain and the firm were assessed administrative monetary penalties of $100,000 each.

The unlicensed agent, Daniel Emerson Tiffin was also called out in the regulator’s notice of proposal. His proceedings are still ongoing, according to the regulator.

The notice of proposal states that the three – two agents and the firm – operated an illegal scheme from 2019 until 2021 where the firm paid Tiffin for placing and negotiating life insurance policies for clients. Jain and Gold Standard are further accused of inducing numerous clients to switch their policies. “The associated fees were detrimental to the clients and the associated commissions benefitted Jain and Gold Standard,” the notice states.

Jain, licensed between February 2019 and February 2023, first joined Gold Standard at the behest of its owner, AA. At the time the notice of proposal was drafted, Jain owned 20 per cent of Gold Standard, while AA, an unlicensed individual, retained an 80 per cent ownership stake. AA encouraged Jain to work with Tiffin after Tiffin was charged with violating a cease trade order, convicted and terminated by at least one insurer.

Tiffin had been licensed from April 1994 until February 2019. When he applied to renew his license that month, he withdrew his application when his suitability to hold a license was questioned. After his license expired and Jain was made agent of record, Tiffin continued to meet with his clients, sometimes without Jain present. Some clients indicated that they’d never met with Jain at all. “Several clients specifically identified Tiffin as the person managing their segregated funds and providing them with insurance advice,” the notice states.

Between November 2019 and December 2020, Jain transferred 41 clients from one insurer to another; 40 of the clients were former Tiffin clients. All 41 were invested in segregated funds; several reported that they were unaware of the related deferred sales charge (DSC) fees they would incur. Clients paid more than $196,918. All of his 59 clients were invested in a combination of the three same funds, a U.S. growth fund, a science and technology fund and a money market fund.

“Jain could provide no satisfactory explanation for the mass transfer of clients,” the notice states. “Jain told a FSRA investigator during his August 2021 interview that clients did not care about DSCs and that they were adamant about wanting to move, despite the costs.” In a later written statement he told investigators that clients were moving because they were unhappy with the service and wanted to adjust their portfolios for an expected drop in the stock market. “Jain did not explain how a U.S. growth or science and technology fund would be well-positioned for a stock market drop.” 

Jain also repeatedly told investigators that he had no business relationship with Tiffin and that he was not a director of Gold Standard and had no direct knowledge that the firm was distributing commissions to the unlicensed agent.

“Tiffin was intimately involved with clients and Jain must have been aware that these contracts and Tiffin’s advice did not come for free. Jain generated over $800,000 in commissions which he transferred or directed to Gold Standard. As an officer of Gold Standard, he knew that a portion of revenues were directed to Tiffin or his companies,” the notice of proposal continues. “Jain’s claims surrounding having no business relationship with Tiffin, among others, were demonstrably false and well within Jain’s knowledge.”