A former mutual fund salesperson with Coast Capital Investment has been fined $20,000 by the Mutual Fund Dealers Association for distributing securities to clients that were not approved for sale by his firm.

At a disciplinary hearing in Vancouver on Monday, an MFDA hearing panel found Luc Marc Andre Laverdiere guilty of two of three allegations that were revealed in December. Laverdiere was registered in Ontario as a mutual fund salesperson with Coast Capital Investment from 2005 until his termination in 2008. He is not currently registered in the securities industry in any capacity.

The panel found that Laverdiere engaged in securities related business through the facilities of his member firm that was not carried on for the account of the firm.

In particular, in 2006 and 2007, Laverdiere recommended, referred and facilitated purchases of an investment product offered by Horizon FX Limited Partnership by at least six clients and other individuals, for investments totaling more than US$130,000.

The product was not approved for sale by Coast Capital Investment, and Laverdiere failed to disclose his involvement in the investment to the firm.

In 2007, the British Columbia Securities Commission issued a cease trade order against Horizon FX on the basis that the offering memorandum did not comply with disclosure requirements. It was subsequently discovered that the principals running the organization that was receiving the proceeds from the investments were operating a scheme to defraud investors.

“There is no reasonable prospect of recovery of the investors’ funds,” the MFDA said.

The panel also found that Laverdiere breached policies and procedures set out by Coast Capital Investment by recommending securities other than mutual funds and engaging in off-book trading activities.

Laverdiere has been permanently prohibited from conducting securities related business in any capacity while employed by any MFDA member, and has been fined $20,000 and ordered to pay costs of $2,500.

Coast Capital Investment, which was a member of the MFDA since May 2002, resigned from the MFDA in 2009 and transferred all of its mutual fund business to Worldsource Financial Management Inc.

IE