A former mutual fund salesman with Dundee Private Investors Inc. has been fined $120,000 by the Mutual Fund Dealers Association of Canada for selling investment products that weren’t approved by his employer.

At a disciplinary hearing in Toronto on Wednesday, the MFDA revealed penalties against Meiz Mohammed Majdoub, who was registered in Ontario with Dundee from 2004 to 2008.

The MFDA hearing panel found that between January 2005 and September 2005, Majdoub sold or facilitated the sale to 19 individuals of approximately $840,000 worth of units in investment products that were not approved for sale by Dundee.

In most cases, investors purchased the units by way of a subscription agreement, and were told that money invested would be used to finance the operations of a group of affiliated companies.

Majdoub told investors that they would receive regular monthly payments over a three-year term that would result in a 15% annual rate of return. He distributed marketing materials to potential investors, encouraging them to leverage the equity in their homes to obtain the money required to purchase the investment.

The MFDA found that approximately 90% of the investors paid for the units with borrowed funds.

Majdoub received about $120,000 in compensation for his role in selling or facilitating sales of the units.

In October 2005, the investment ceased making monthly payments to investors, and since then, investors have been unable to recover any of the amounts that they invested.

The MFDA also found that between December 2004 and January 2006, Majdoub engaged in a dual occupation that was not disclosed to or approved by his firm or securities regulators.

Specifically, he incorporated and became an owner, officer and director of two companies without receiving approval from his firm. Through these companies, he carried on business initiatives related to the investment units that he was selling.

The MFDA hearing panel ordered Majdoub to pay a fine of $120,000 and costs of $10,000. He is also permanently prohibited from conducting securities related business while employed by or associated with any MFDA member firm.

Dundee terminated Majboud as a result of his misconduct.

IE