The Mutual Fund Dealers Association of Canada [MFDA] has fined Leslie McIntosh of Calgary $1.6 million for the misappropriation of funds from 11 clients.

The fraud occurred between May 2008 and November 2010, according to MFDA documents, when McIntosh was a mutual fund salesman for Dundee Private Investors Inc. The clients ordered bank drafts or wrote cheques to one of two trade names registered to McIntosh, which were deposited into an account held by the former salesperson.

McIntosh told clients that the money would be invested in alternative mutual funds, pooled funds and gold, however no such investments were made. The MFDA’s notice of hearing details that McIntosh created and sent out account statements and quarterly reports to clients about their supposed investments on Dundee letterhead.

Dundee became aware of McIntosh’s behavior in September 2010 when a client inquired as to why a gold investment made via a bank draft was not on an account statement prepared by the firm. MFDA documents state that when approached by Dundee about the investment McIntosh denied receiving the bank draft. McIntosh later met with the client to further mislead her as to the investment and had her sign a document stating that the matter was caused by confusion on her part.

McIntosh was suspended from Dundee in November 2010 and then fired in December of the same year. During his suspension, McIntosh contacted several clients to see if they had been contacted by the firm as well as to try and mislead them as to the nature of the investigation, according to the MFDA.

Furthermore, when an MFDA investigation was launched in 2011, McIntosh refused to co-operate and to this date has not given a statement to the regulator.

Dundee repaid $1.8 million to 10 of the 11 clients in 2010. While McIntosh did repay one client a little more than $6,000 (from the $50,000 originally invested) in 2010 using funds from other clients, the MFDA states that he has failed to repay or to account for the misappropriated funds.

In addition to the fine, the MFDA hearing panel also permanently banned McIntosh from conducting securities related business with an MFDA member. McIntosh was also fined an additional fine of $50,000 for failing to co-operate with the regulator’s investigation and ordered to pay $10,000 in costs.