A former fund rep was fined and banned by the Mutual Fund Dealers Association of Canada (MFDA) for putting clients into inappropriate leveraged investing strategies.
An MFDA hearing panel ruled that Lachman Hassaram Balani, a former rep with Shah Financial Planning Inc. in Brampton, Ont., is permanently banned, fined $125,000 and ordered to pay $7,500 in costs.
Following a hearing in December 2019, the panel found that Balani breached MFDA rules in implementing leverage strategies for clients.
Specifically, it found that he submitted new account and investment loan applications for at least two clients that contained false information, and that he failed to ensure that leveraged investment recommendations were suitable.
In its reasons, the panel said that, “The respondent completely failed his two clients,” adding, “Not only did he fail to carry out his [know-your-client] and suitability obligations, he completely misled his clients by providing one set of [new account] and loan applications to them which contained their correct information and a completely different and false set of [account] and loan applications to his dealer and the lender.”
The panel also found that he failed to co-operate with the self-regulatory organization’s (SRO) investigation. Balani did not participate in the MFDA proceedings against him.
A hearing on sanctions was held on May 26, and the SRO released the panel’s decision and reasons June 18.
“The respondent has demonstrated by this conduct that he is completely untrustworthy in an industry that requires a high level of trust,” the panel said.
After suffering losses due to the leverage strategies, the clients complained to the firm.
Following an investigation of the complaint, the firm provided compensation to both clients. Balani was subsequently dismissed.