The recent decision in Jocelyn Grégoire v. Autorité des marchés financiers (2026 QCCQ 4188) raises two points of interest for financial sector players and their advisors. In this first article, we look at how private financing activities are characterized under the rules governing brokerage and securities. A second article will focus on the limits that this same decision places on the sanctioning powers of the Financial Markets Administrative Tribunal.
In Québec, private lending activities may be subject to both mortgage brokerage legislation and the securities regime. Whether these rules apply depends on the true nature of the activities, not on the terms the parties choose. The Grégoire case reminds private financing players and their advisors to consider regulatory obligations from the outset when designing a financing structure.
Intermediation: The key test for brokerage
In Grégoire, the Court of Québec upheld a decision by the Financial Markets Administrative Tribunal (FMAT). The Tribunal had found that Jocelyn Grégoire and Cedma Finance carried on mortgage brokerage activities without the registrations required under the Act respecting the distribution of financial products and services.
Cedma Finance received and assessed financing applications, then forwarded them to a network of private lenders. When lenders expressed interest, Cedma pooled the necessary funds, prepared the financing terms, and coordinated the finalization of the loan. The lenders were described as “partners”, but the Court focused on the economic reality of their relationships. Cedma acted as an intermediary between the borrowers and lenders and was the “effective cause” of the mortgage loans (hypothecary loans).
A mortgage loan can be a security
The decision is also notable from a securities perspective. The appellants argued that a simple loan of money becomes a “security” only when it is converted into a negotiable instrument through securitization. The Court rejected this interpretation. It held that a mortgage loan made for investment purposes can itself be a “security” under the Securities Act (the Act), even if it is not negotiable and has not been securitized.
This characterization matters because the Act regulates not only securities but also the activities carried out in relation to them. The FMAT had found that the syndicated mortgage loans were securities and that the appellants had traded in these securities without complying with the Act. The Court thus confirmed a broad interpretation of the concept of a security, based on the loan’s investment purpose rather than its form or negotiability. This approach is consistent with the broad and liberal interpretation of the Act, given its investor protection function.
Regulatory risks of private financing
For private financing players, the decision highlights a risk that can be hard to identify upfront. Depending on how it works in practice, a structure designed as a financing solution may qualify as both a mortgage brokerage and an activity subject to the securities regime. Regulators and courts are not bound by the terms the parties choose. They may examine the entire business model to determine whether it involves regulated activity.
The consequences can be significant. An unexpected regulatory characterization can lead to an investigation by the Autorité des marchés financiers, proceedings before the FMAT, orders restricting activities, and administrative or penal sanctions under the applicable legislation. Considering these issues from the outset when designing a financing structure helps clarify the obligations to meet and the risks to avoid.
The Autorité des marchés financiers has appealed the ruling, and Mr. Grégoire has filed a cross-appeal. The Court of Québec’s findings thus remain subject to review on appeal.