A registered mutual fund salesperson in Ontario has been fined and ordered to pay a former client $50,000 for facilitating the sale of an investment product that wasn’t approved by his member firms.

At a Mutual Fund Dealers Association of Canada settlement hearing in Toronto on Wednesday, a hearing panel approved a settlement agreement with Alan Roy Kruss.

The MFDA found that between 2004 and 2006, while Kruss was an approved person at Equity Associates Inc. and ASL Direct Inc., he “sold, referred or facilitated the sale of” debentures that were not approved by the member firms for sale by their representatives.

Specifically, Kruss recommended that a client invest in the debentures of an Ontario-based company. The client invested $50,000 in the debentures, and Kruss received approximately $4,000 in referral fees for the investment.

He did not disclose the sale to either Equity Associates or ASL Direct, according to the MFDA.

In 2006, the company that received proceeds from the debentures filed for bankruptcy, and the investors have received neither interest or principal payments from the company.

The MFDA suspended Kruss from acting as a mutual fund salesperson for one month, ordered him to pay a fine of $10,000 and costs of $2,500. In addition, the regulator ordered him to pay the client $50,000.

Kruss is also required to successfully complete the IFSE (IFIC) Mutual Fund Dealer Compliance course. If he fails to complete the course within one year, the suspension from acting as a mutual fund salesperson will resume until he successfully completes the course.

Kruss has been a registered fund salesperson at Partners in Planning Financial Services Ltd. since July 2007.

IE