The Mutual Fund Dealers Association of Canada (MFDA) announced it is fining Lachman Hassaram Balani, a former Shah Financial Planning Inc. mutual fund salesperson, $125,000 plus costs in the amount of $7,500. The MFDA also permanently banned Balani from conducting securities related business with any MFDA member going forward.

The former representative is accused of failing to cooperate with an investigation by MFDA staff into his conduct. He also allegedly prepared and submitted new account application forms and investment loan applications for at least two clients, which he knew or ought to have known contained false, misleading or incorrect information. The MFDA also says he failed to fully explain the risks, benefits, features and costs of a leveraged investment strategy that he recommended to at least two clients, and failed to ensure that the leveraged investment recommendations he made were suitable and in line with the client’s ability to withstand investment losses and afford the investment loan costs.

“The respondent’s failure to cooperate with staff’s investigation was a blatant rejection of the MFDA’s jurisdiction and authority,” the MFDA writes. “By failing to respond to staff’s inquiries the respondent demonstrated that he is not governable within the self-regulatory regime. In addition, the respondent’s leveraging practices demonstrate that he ignored or had a total lack of understanding of his obligations as a registrant to ensure that his leveraging recommendations were suitable for clients.”

The MFDA adds that he not only breached the client’s trust, he “further abused the member’s and the lending institution’s trust by actively misleading them about the client’s true investor profiles.”

“The respondent completely failed his two clients in the manner in which he dealt with them,” they add. “Not only did he fail to carry out his KYC (know your client) and suitability obligations, he completely misled his clients by providing one set of NAAFs (new account application forms) and loan applications to them which contained their correct information, and a completely different and false set of NAAFs and loan applications to his dealer and the lender. The respondent has demonstrated by this conduct that he is completely untrustworthy.”